AGREEMENT AND PLAN OF SHARE EXCHANGE BY AND BETWEEN BANK OF CHICKAMAUGA AND SOUTHCREST FINANCIAL GROUP, INC.
EXHIBIT
10.1
AGREEMENT
AND PLAN OF SHARE EXCHANGE
BY
AND BETWEEN
BANK
OF CHICKAMAUGA
AND
SOUTHCREST
FINANCIAL GROUP, INC.
AGREEMENT
AND PLAN OF SHARE EXCHANGE
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| Negative Covenants of Chickamauga |
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| Affirmative Covenants of SouthCrest |
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| Negative Covenants of SouthCrest |
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| Adverse Changes in Condition |
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AGREEMENT
AND PLAN OF SHARE EXCHANGE
THIS
AGREEMENT AND PLAN OF SHARE EXCHANGE
(this
“Agreement”) is made and entered into as of
February
23, 2007,
by
and between Bank of Chickamauga (“Chickamauga”), a bank organized and existing
under the laws of the State of Georgia, and SouthCrest Financial Group, Inc.
(“SouthCrest”), a corporation organized and existing under the laws of the State
of Georgia.
Preamble
The
Boards of Directors of Chickamauga and SouthCrest are of the opinion that the
transaction described herein is in the best interest of the parties and their
respective shareholders. This Agreement provides for the acquisition of
Chickamauga with and into SouthCrest.
Certain
terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW,
THEREFORE,
in
consideration of the above and the mutual warranties, representations, covenants
and agreements set forth herein, the parties, intending to be legally bound,
agree as follows:
ARTICLE
1
TRANSACTION
AND TERMS OF THE SHARE EXCHANGE
1.1 Share
Exchange.
Pursuant to the provisions of Section 14-2-1102 of the Georgia Code, Chickamauga
shall become a wholly-owned subsidiary of SouthCrest through the Share Exchange.
The separate corporate existence of each of SouthCrest and Chickamauga shall
continue following the Share Exchange.
1.2 Time
and Place of Closing.
The
Closing will take place at 9:30 a.m. on the date that the Effective Time occurs
(or the immediately preceding day if the Effective Time is earlier than 9:30
a.m.), or at such other time as the Parties, acting through their Chief
Executive Officers, may mutually agree. The place of Closing shall be at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, Atlanta, Georgia, or such other place as may
be
mutually agreed upon by the Parties.
1.3 Effective
Time.
The
Share Exchange contemplated by this Agreement shall become effective on the
date
and at the time the Certificate of Share Exchange reflecting the Share Exchange
shall become effective with the Secretary of State of the State of Georgia.
The
Effective Time shall occur on a date as may be mutually agreed upon in writing
by the Chief Executive Officers of each Party.
1.4 Restructure
of Transaction.
SouthCrest shall have the right to revise the structure of the Share Exchange
contemplated by this Agreement, including substituting a separate entity as
the
acquiror, provided that no such revision to the structure of the Share Exchange
(i) shall result in any changes in the amount or type of the consideration
which
the Chickamauga shareholders are entitled to receive under this Agreement,
(ii)
would unreasonably impede or delay consummation of the Share Exchange,
(iii) would substitute an entity that is unsatisfactory to the Regulatory
Authorities, or (iv) imposes any less favorable terms or conditions on
Chickamauga or Chickamauga’s shareholders. SouthCrest may revise the structure
of the Share Exchange by giving written notice to Chickamauga in the manner
provided in Section 11.8, which notice shall be in the form of an amendment
to
this Agreement or in the form of a proposed amendment to this Agreement or
in
the form of an Amended and Restated Agreement and Plan of Share Exchange, and
the addition of such other exhibits hereto as are reasonably necessary or
appropriate to effect such change and Chickamauga agrees to cooperate in all
respects and to take any necessary or useful actions with respect
thereto.
ARTICLE
2
TERMS
OF SHARE EXCHANGE
2.1 Articles
of Incorporation and Bylaws.
The
Articles of Incorporation of Chickamauga in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of Chickamauga after
the
Effective Time until duly amended or repealed. The Bylaws of Chickamauga
provided for in the Certificate of Share Exchange shall be the Bylaws of
Chickamauga after the Effective Time until duly amended or
repealed.
2.2 Directors.
The
directors provided for in the Certificate of Share Exchange shall serve as
the
directors of Chickamauga from and after the Effective Time in accordance with
the Bylaws of Chickamauga.
2.3 Officers.
The
officers provided for in the Certificate of Share Exchange shall serve as the
officers of Chickamauga from and after the Effective Time in accordance with
the
Bylaws of Chickamauga.
ARTICLE
3
MANNER
OF CONVERTING SHARES
3.1 Conversion
of Shares.
SouthCrest shall pay an aggregate of $18,000,000.00 in cash. As described in
this Section 3.1, this cash will be used to pay certain expenses, with the
net
amount allocated among the shareholders of Chickamauga. At the Effective Time,
subject to the provisions of this Article 3, by virtue of the Share Exchange
and
without any action on the part of SouthCrest, Chickamauga or the shareholders
of
either of them, each share of Chickamauga Stock, excluding shares that are
to be
canceled pursuant to Section 3.3 or those shares held by shareholders who
perfect their statutory dissenters’ rights as described in Section 3.4, issued
and outstanding immediately prior to the Effective Time shall be acquired by
SouthCrest in exchange for the right to a cash payment equal to the Per Share
Purchase Price (as defined below) less applicable withholding taxes, if any,
required to be withheld with respect to such payment.
The
Per
Share Purchase Price shall equal the Share Exchange Consideration (as defined
below) divided by the number of shares of Chickamauga Stock issued and
outstanding immediately prior to the Effective Time. The Share Exchange
Consideration shall equal: (i) $18,000,000; (ii) minus expenses, fees
and costs of Chickamauga or SouthCrest, including, but not limited to,
supplemental contributions, annuity costs, actuarial fees and legal fees, in
excess of $583,500 incurred subsequent to September 30, 2006, related to the
termination of the Defined Benefit Plan, satisfaction of all benefit obligations
thereunder, liquidation of the Defined Benefit Plan trust and/or the expenses,
fees and costs related to such termination pursuant to Section 8.2 of this
Agreement; (iii) minus payments in excess of $230,000 made on behalf of or
to
discharge any payment obligation of Chickamauga for legal, accounting (excluding
payments associated with the audit required by Section 9.2(f) of this
Agreement), investment advisor or similar fees in connection with the Share
Exchange (other than those included in clause (ii)); and (iv) minus payments,
other than and excluding those disclosed on Schedule
3.1(iv),
made on
behalf of or to discharge any payment obligation of Chickamauga for any
termination fees, liquidated damages, or similar charges related to change
of
control or similar provisions in any contract or other agreement, whether
written or oral that are triggered by this Share Exchange.
If
Chickamauga has not fully satisfied all benefit obligations, fully liquidated
the Defined Benefit Plan trust and paid all other fees, costs and expenses
associated with the termination of the Defined Benefit Plan at or before the
Effective Time, SouthCrest may withhold a reasonable, satisfactory amount that
has been mutually agreed to by the Parties (the “Holdback Amount”) from the
Share Exchange Consideration, to complete the termination of the Defined Benefit
Plan, satisfy all benefit obligations, fully liquidate the Defined Benefit
Plan
trust and/or pay the expenses, fees and costs related to such termination.
Within 20 days after the events have occurred, SouthCrest shall distribute
the
Holdback Amount less the amount of all obligations, expenses, fees and costs
of
Chickamauga or SouthCrest, including, but not limited to, supplemental
contributions, annuity costs, actuarial fees and legal fees, in excess of
$583,500 incurred subsequent to September 30, 2006, related to the termination
and complete liquidation of the Defined Benefit Plan (the “Net Holdback”), plus
interest on the Net Holdback starting on the date of Closing at a rate equal
to
LIBOR plus 50 basis points (0.50%) compounded monthly.
3.2 [Reserved.]
3.3 Shares
Held by Chickamauga or SouthCrest
Each of
the shares of Chickamauga Stock held by Chickamauga or any SouthCrest Company,
in each case other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time,
and
no consideration shall be issued in exchange therefor.
3.4 Dissenting
Shareholders.
Each
holder of shares of Chickamauga Stock shall be entitled to exercise dissenters’
rights of appraisal in accordance with and as contemplated by Sections 7-1-537
and 14-2-1301 et
seq.
of the
Georgia Code. Any holder of shares of Chickamauga Stock who perfects his
dissenter’s right of appraisal in accordance with and as contemplated by
Sections 7-1-537 and 14-2-1301 et seq. of the Georgia Code shall be entitled
to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided,
however,
that no
such payment shall be made to any dissenting shareholder unless and until such
dissenting shareholder has complied with the applicable provisions of the
Georgia Code and surrendered to the appropriate Party the certificate or
certificates representing the shares for which payment is being made. In the
event that after the Effective Time a dissenting shareholder of either Party
fails to perfect, or effectively withdraws or loses, his right to appraisal
and
of payment for his shares, SouthCrest shall issue and deliver the consideration
to which such shareholder is entitled under this Article 3 (without interest)
upon surrender by such shareholder of his or her certificate or certificates
representing the shares of common stock of either Party.
EXCHANGE
OF SHARES
4.1 Exchange
Procedures.
Within
20 days after the Effective Time, SouthCrest shall, as exchange agent, mail
to
the former shareholders of Chickamauga appropriate transmittal and election
materials (which shall specify that delivery shall be effected, and risk of
loss
and title to the certificates theretofore representing shares of Chickamauga
Stock shall pass, only upon proper delivery of such certificates to SouthCrest).
After the Effective Time, each holder of shares of Chickamauga Stock (other
than
shares to be canceled pursuant to Section 3.3 of this Agreement or as to which
dissenters’ rights of appraisal have been perfected as provided in
Section 3.4 of this Agreement) issued and outstanding at the Effective Time
shall surrender the certificate or certificates representing such shares to
SouthCrest and shall within 20 days after surrender thereof receive in exchange
therefor the consideration provided in Section 3.1 of this Agreement. SouthCrest
shall not be obligated to deliver the consideration to which any former holder
of Chickamauga Stock is entitled as a result of the Share Exchange until such
holder surrenders his certificate or certificates representing the shares of
Chickamauga Stock for exchange as provided in this Section 4.1. The certificate
or certificates of Chickamauga Stock so surrendered shall be duly endorsed
as
SouthCrest may require. Any other provision of this Agreement notwithstanding,
SouthCrest shall not be liable to a holder of Chickamauga Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property Law.
4.2 Rights
of Former Shareholders.
At the
Effective Time, the stock transfer books of Chickamauga shall be closed as
to
holders of Chickamauga Stock immediately prior to the Effective Time, and no
transfer of Chickamauga Stock by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions
of
Section 4.1 of this Agreement, each certificate theretofore representing shares
of Chickamauga Stock (other than shares to be canceled pursuant to Sections
3.3
and 3.4 of this Agreement) shall from and after the Effective Time represent
for
all purposes only the right to receive the consideration provided in
Sections 3.1 and 3.5 of this Agreement in exchange therefor.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF CHICKAMAUGA
No
representation or warranty contained in this Article 5 shall be deemed untrue
or
incorrect, and Chickamauga shall not be deemed to have breached a representation
or warranty as a consequence of the existence or absence of any fact, event
or
circumstance, unless such fact, event or circumstance, whether individually
or
in the aggregate with all other facts, has had or is reasonably likely to have
a
Material Adverse Effect on Chickamauga and is not set forth in the document
of
even date herewith delivered by Chickamauga to SouthCrest prior to the execution
and delivery of this Agreement and referring to the representations and
warranties in this Agreement (the “Chickamauga Disclosure Schedule”).
Except
as
disclosed in the Chickamauga Disclosure Schedule, Chickamauga hereby represents
and warrants to SouthCrest as follows:
5.1 Organization,
Standing and Power.
Chickamauga is a bank duly organized, validly existing and in good standing
under the Laws of the State of Georgia and its deposits are insured by the
FDIC
up to applicable limits. Chickamauga has the corporate power and authority
to
carry on its business as now conducted and to own, lease and operate its Assets.
Chickamauga does not own any property or conducts any business outside of the
State of Georgia which would require it to be qualified as a foreign corporation
in any jurisdiction.
5.2 Authority;
No Breach By Agreement
(a) Chickamauga
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 this Agreement
and the consummation of the transactions contemplated herein, including the
Share Exchange, have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of Chickamauga, subject to the approval
of
this Agreement by the holders of at least two-thirds of the outstanding shares
of Chickamauga Stock entitled to vote at the Chickamauga Meeting. Subject to
the
Consents of Regulatory Authorities and Chickamauga shareholder approval, this
Agreement represents a legal, valid and binding obligation of Chickamauga,
enforceable against Chickamauga 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 the equitable
remedy of specific performance or injunctive relief 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 Chickamauga nor the consummation
by Chickamauga of the transactions contemplated hereby, nor compliance by
Chickamauga with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of Chickamauga’s Articles of Incorporation
or Bylaws, or (ii) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of
Chickamauga under, any Contract or Permit of Chickamauga, or (iii) subject
to
receipt of the requisite approvals referred to in Section 9.1(a) and
(b) of this Agreement, violate any Law or Order applicable to Chickamauga
or any of its Assets.
(c) No
notice
to, filing with or Consent of any public body or authority is necessary for
the
consummation by Chickamauga of the Share Exchange and the transaction
contemplated in this Agreement other than (i) in connection or compliance with
the provisions of the Securities Laws, applicable state corporate and securities
Laws, (ii) Consents required from Regulatory Authorities, (iii) notices to
or
filings with the IRS or the Pension Benefit Guaranty Corporation with respect
to
any employee benefit plans, (iv) under the HSR Act, and (v) Consents, filings
or
notifications.
5.3 Capital
Stock and Other Securities
(a) The
authorized capital stock of Chickamauga consists of 20,000 shares of Chickamauga
Common Stock, $10.00 par value (the “Chickamauga Stock”). As of
the date
hereof, there
were 20,000 shares of Chickamauga Stock issued and outstanding. All of the
issued and outstanding shares of Chickamauga Stock are duly and validly issued
and outstanding and are fully paid and nonassessable under the Georgia Code.
None of the outstanding shares of capital stock of Chickamauga has been issued
in violation of any preemptive rights of the current or past shareholders of
Chickamauga.
(b) There
are
no shares of capital stock or other equity securities of Chickamauga outstanding
and no outstanding options, warrants, scrip, rights to subscribe to, calls
or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of Chickamauga
or contracts, commitments, understandings or arrangements by which Chickamauga
is or may be bound to issue additional shares of its capital stock or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock.
(c) The
list
of shareholders of Chickamauga attached hereto as Exhibit A
is true
and correct.
5.4 Chickamauga’s
Subsidiaries.
Chickamauga has no subsidiaries.
5.5 Financial
Statements, etc
(a) Chickamauga
has Previously Disclosed, and delivered to SouthCrest prior to the execution
of
this Agreement, copies of all Chickamauga Financial Statements for periods
ended
prior to the date hereof and will deliver to SouthCrest copies of all
Chickamauga Financial Statements and monthly financial statements for
Chickamauga prepared subsequent to the date hereof. The Chickamauga Financial
Statements (as of the dates thereof and for the periods covered thereby)
(i) are or will be, if dated after the date of this Agreement, in
accordance with the books and records of Chickamauga, which are or will be,
complete and correct and which have been or will have been maintained in
accordance with good business practices, and (ii) present or will present
fairly the financial position of Chickamauga as of the dates indicated and
the
results of operations, changes in shareholders’ equity and cash flows of
Chickamauga for the periods indicated, in accordance with GAAP (subject to
any
exceptions as to consistency specified therein or as may be indicated in the
notes thereto or, in the case of interim financial statements, to normal
recurring period-end adjustments that are not Material). To the Knowledge of
Chickamauga, (i) the Chickamauga Financial Statements do not contain any untrue
statement of a fact or omit to state a fact necessary to make the Chickamauga
Financial Statements not misleading with respect to the periods covered by
them
and (ii) the Chickamauga Financial Statement fairly present, in all respects,
the financial condition, results of operations and cash flows of Chickamauga
as
of, and for, the periods covered by them.
(b) Chickamauga
maintains accurate books and records reflecting its respective assets and
liabilities and maintains proper and adequate internal accounting controls
which
provide assurance that (i) transactions are executed with management’s
authorization; (ii) transactions are recorded as necessary to permit
preparation of the consolidated financial statements of Chickamauga and to
maintain accountability for Chickamauga’s consolidated assets; (iii) access
to Chickamauga’s consolidated assets is permitted only in accordance with
management’s authorization; (iv) the reporting of Chickamauga’s
consolidated assets is compared with existing assets at regular intervals;
(v)
accounts, notes and other receivables and inventory are recorded accurately;
and
(vi) proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis.
5.6 Absence
of Undisclosed Liabilities.
Chickamauga does not have any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Chickamauga,
except Liabilities which are accrued or reserved against in the consolidated
balance sheets of Chickamauga as of December 31, 2005 and September 30,
2006 included in the Chickamauga Financial Statements or reflected in the notes
thereto. Chickamauga has not incurred or paid any Liability since September
30,
2006, except for such Liabilities incurred or paid in the ordinary course of
business consistent with past business practice and which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on
Chickamauga.
5.7 Absence
of Certain Changes or Events.
Since
September 30, 2006, (i) 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 Chickamauga (ii) Chickamauga has not taken any
action, or failed to take any action, prior to the date of this Agreement,
which
action or failure, if taken after the date of this Agreement, would represent
or
result in a Material breach or violation of any of the covenants and agreements
of Chickamauga provided in Article 7 of this Agreement, and (iii)
Chickamauga has conducted its business in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and
the
transactions contemplated hereby).
5.8 Tax
Matters.
(a) All
Tax
returns required to be filed by or on behalf of Chickamauga 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, 2005, and on or before
the
date of the most recent fiscal year end immediately preceding the Effective
Time, and all returns filed are complete and accurate in all respects to the
Knowledge of Chickamauga. All Taxes shown on filed returns have been paid as
of
the date of this Agreement, and there is no audit, examination, deficiency,
or
refund Litigation with respect to any Taxes, except as reserved against in
the
Chickamauga Financial Statements delivered 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) Chickamauga
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, and no
unpaid tax deficiency has been asserted in writing against or with respect
to
Chickamauga, which deficiency is reasonably likely to have, individually or
in
the aggregate, a Material Adverse Effect on Chickamauga.
(c) Adequate
provision for any Taxes due or to become due by Chickamauga for the period
or
periods through and including the date of the respective Chickamauga Financial
Statements has been made and is reflected on such Chickamauga Financial
Statements.
(d) Deferred
Taxes of Chickamauga have been provided for in accordance with GAAP. Chickamauga
has adopted Financial Accounting Standards Board Statement 109, “Accounting for
Income Taxes.”
(e) Chickamauga
is in compliance with, and its records contain all information and documents
(including, without limitation, 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.
(f) Chickamauga
has not made any payments, is not obligated to make any payments and is not
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.
(g) There
are
no Material Liens with respect to Taxes upon any of the Assets of
Chickamauga.
(h) There
has
not been an ownership change, as defined in Internal Revenue Code Section
382(g), of Chickamauga that has occurred during or after any Taxable Period
in
which Chickamauga incurred a net operating loss that carries over to any Taxable
Period ending after December 31, 2005.
(i) Chickamauga
has not filed any consent under Section 341(f) of the Internal Revenue Code
concerning collapsible corporations.
(j) Chickamauga
has not nor 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.
5.9 Allowance.
The
Allowance shown on the consolidated balance sheets of Chickamauga included
in
the most recent Chickamauga Financial Statements dated prior to the date of
this
Agreement was, and the Allowance shown on the consolidated balance sheets of
Chickamauga included in the Chickamauga Financial Statements as of dates
subsequent to the execution of this Agreement will be, as of the dates thereof,
to the Knowledge of Chickamauga, adequate (within the meaning of GAAP and
applicable regulatory requirements or guidelines) to provide for losses relating
to or inherent in the loan and lease portfolios (including accrued interest
receivables) of Chickamauga and other extensions of credit by Chickamauga as
of
the dates thereof, except where the failure of such Allowance to be so adequate
is not reasonably likely to have a Material Adverse Effect on
Chickamauga.
5.10 Assets.
(a) As
of the
date hereof, all loans, discounts and financing leases (in which Chickamauga
is
lessor) reflect on the latest Chickamauga Financial Statement were, and with
respect to the latest Chickamauga Financial Statements delivered as of the
dates
subsequent to the execution of this Agreement will be as of the dates thereof,
(i) at the time and under the circumstances in which made, made for good,
valuable and adequate consideration in the ordinary course of business of its
consolidated group and are the legal, valid and binding obligations of the
obligors thereof, (ii) evidenced by genuine notes, agreements or other
evidences of indebtedness and (iii) to the extent secured, have been
secured, to the knowledge of Chickamauga by valid liens and security interests
which have been perfected. Accurate lists of all loans, discounts and financing
leases as of September 30, 2006 and on a monthly basis thereafter, and of the
investment portfolios of Chickamauga as of such date, have been and will be
delivered to SouthCrest concurrently with this Agreement. Except as disclosed
in
the Chickamauga Disclosure Schedule, Chickamauga is not a party to any written
or oral loan agreement, note or borrowing arrangement, including any loan
guaranty, that was, as of the most recent month-end (A) delinquent by more
than 30 days in the payment of principal or interest, (B) known by
Chickamauga to be otherwise in default for more than 30 days,
(C) classified as “substandard,” “doubtful,” “loss,” “other assets
especially mentioned” or any comparable classification by Chickamauga, the FDIC
or the Georgia Department of Banking and Finance, (D) an obligation of any
director, executive officer or 10% shareholder of Chickamauga who is subject
to
Regulation O of the Federal Reserve Board (12 C.F.R. Part 215), or any person,
corporation or enterprise controlling, controlled by or under common control
with any of the foregoing, or (E) in violation of any law, regulation or
rule of any governmental authority, other than those that are immaterial in
amount.
(b) Except
as
disclosed and reserved against in the Chickamauga Financial Statements,
Chickamauga has good and marketable title, free and clear of all Liens, to all
of its Assets. All tangible properties used in the businesses of Chickamauga
is
in good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with Chickamauga’s past practices except
for deficiencies that are not likely to have individually or in the aggregate
a
Material Adverse Effect on Chickamauga. All Assets which are Material to
Chickamauga’s business held under leases or subleases by Chickamauga, 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 equitable remedy of
specific performance or injunctive relief 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. Management believes that the policies of fire, theft,
liability and other insurance maintained with respect to the Assets or
businesses of Chickamauga provide adequate coverage against loss or Liability,
and the fidelity and blanket bonds in effect as to which Chickamauga is a named
insured are, in the reasonable belief of Chickamauga’s management, reasonably
sufficient. Chickamauga has not 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 substantially increased. The Assets of Chickamauga include all assets
required to operate the business of Chickamauga as presently
conducted.
5.11 Environmental
Matters.
(a) Chickamauga,
its Participation Facilities and Loan Properties are, and have been, to the
Knowledge of Chickamauga, in full compliance with all Environmental
Laws.
(b) There
is
no Litigation pending or, to the Knowledge of Chickamauga, threatened before
any
court, governmental agency, board, authority or other forum in which Chickamauga
or any of its Participation Facilities and Loan Properties has been or, with
respect to threatened Litigation, may 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 a site owned, leased or operated by Chickamauga or any of
its
Participation Facilities and Loan Properties.
(c) To
the
Knowledge of Chickamauga, there is no reasonable basis for any Litigation of
a
type described in subsection (b).
(d) During
the period of (i) Chickamauga’s ownership or operation of any of its
current properties, (ii) Chickamauga’s participation in the management of
any Participation Facility or (iii) Chickamauga’s holding of a security
interest in a Loan Property, there have been, to the Knowledge of Chickamauga,
no releases, spills or discharges of Hazardous Material or other conditions
involving Hazardous Materials in, on, under or affecting any Participation
Facility or Loan Property.
(e) To
the
Knowledge of Chickamauga, there is no asbestos or lead paint in the current
properties of any of Chickamauga’s properties.
5.12 Compliance
with Laws.
Chickamauga has in effect all Permits necessary for it to own, lease or operate
its Assets and to carry on its business as now conducted.
(a) Chickamauga
is not in violation of any Laws, Orders or Permits applicable to its business
or
employees conducting its business.
(b) Chickamauga
has not 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 Chickamauga is not in compliance with any of the
Laws
or Orders which such governmental authority or Regulatory Authority enforces,
or
(iii) requiring Chickamauga to enter into or consent to the issuance of a cease
and desist order, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar undertaking, which
restricts the conduct of its businesses, or in any manner relates to their
respective capital adequacy, credit or reserve policies, management or the
payment of dividends.
5.13 Labor
Relations.
Chickamauga is not 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 Chickamauga to bargain with any
labor organization as to wages or conditions of employment, nor is Chickamauga
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 either of them, pending or
threatened, nor is there any activity involving Chickamauga’s employees seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
5.14 Employee
Benefit Plans.
(a) Chickamauga
has disclosed on the Chickamauga Disclosure Schedule a complete list, and
delivered or made available to SouthCrest prior to the execution of this
Agreement, correct and complete copies in each case, of all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plans, all other written
employee programs, arrangements 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 currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by
Chickamauga or any company that together therewith is treated as a single
employer under Section 414 of the Internal Revenue Code (a “Chickamauga
ERISA Affiliate”),
or
with respect to which Chickamauga or any Chickamauga ERISA Affiliate has any
unsatisfied liability whether contingent or otherwise, for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors
or
other beneficiaries (collectively, the “Chickamauga
Benefit Plans”).
Each
of the Chickamauga Benefit Plans which 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, is
referred to herein as a “Chickamauga ERISA Plan.” Other than the Defined Benefit
Plan, neither Chickamauga nor any Chickamauga Affiliate maintains or has ever
maintained a Chickamauga
ERISA Plan that
is
or was subject to Title IV of ERISA or Section 412 of the Internal Revenue
Code.
No Chickamauga ERISA Plan is or has been a “multi-employer plan” within the
meaning of Section 3(37) of ERISA or a “multiple employer welfare
arrangement” within the meaning of Section 3(40) of ERISA.
(b) Chickamauga
has delivered or made available to SouthCrest 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 Chickamauga Benefit
Plans (including insurance contracts), and all amendments thereto, (ii) with
respect to any such Chickamauga Benefit Plans or amendments, all determination
letters, Material rulings, Material opinion letters, Material information
letters or Material advisory opinions issued by the IRS, the United States
Department of Labor or the Pension Benefit Guaranty Corporation after
December 31, 2005, (iii) annual reports or returns, audited or
unaudited financial statements, actuarial valuations and reports and summary
annual reports prepared for any Chickamauga Benefit Plan with respect to the
most recent three plan years, and (iv) the most recent summary plan descriptions
and any Material modifications thereto.
(c) All
Chickamauga Benefit Plans are in material compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws and all
reports and disclosures relating to the Chickamauga Benefit Plans required
to be
filed with or furnished to any governmental entity, participants or
beneficiaries have or will be filed or furnished in a timely manner and in
accordance with applicable law. Each
Chickamauga ERISA Plan which is intended to be qualified under Section
401(a) of the Internal Revenue Code has either obtained from the IRS a
favorable determination letter as to its qualified status under the Code which
remains in effect as to such plan, or the expiration of the requisite period
under applicable regulations promulgated by the IRS under the Code ("Treasury
Regulations") or IRS pronouncements in which to apply for such determination
letter and to make any amendments necessary to obtain a favorable determination
has not occurred, or has been established under a prototype plan for which
an IRS opinion letter has been obtained by the plan sponsor and is valid as
to Chickamauga. Each
Chickamauga Benefit Plan which is subject to Section 401(k) and/or 401(m) of
the
Internal Revenue Code has been tested for compliance with, and has satisfied
the
requirements of Section 401(k) and 401(m) for the most recent three plan years.
Neither Chickamauga nor any Chickamauga ERISA Affiliate has engaged in a
transaction with respect to any Chickamauga Benefit Plan that would subject
Chickamauga to a Tax or penalty imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA. Each fiduciary as to each
Chickamauga Benefit Plan has complied in all material respects with the
requirements of Section 404 of ERISA.
(d) Except
as
required under Title I, Part 6 of ERISA and Internal Revenue Code Section 4980
B, Chickamauga has no obligations to provide health and life benefits under
any
of the Chickamauga Benefit Plans to former employees, and there are no
restrictions on the rights of Chickamauga to amend or terminate any such plan
without incurring any Liability thereunder.
(e) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby solely as a result of such actions, will
(i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
officer, director or any employee of Chickamauga from Chickamauga under any
Chickamauga Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any Chickamauga Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting
of any benefit; except that it is contemplated that the Defined Benefit Plan
will be frozen and will be terminated, and as a result thereof, participants
in
such plan will be fully vested in their accrued benefits and will become
entitled to a payment upon termination of the plan.
Except
as set forth on Schedule 5.14(e), each Chickamauga Benefit Plan can be
terminated without liability to Chickamauga or any Chickamauga ERISA Affiliate
or SouthCrest, including without limitation any additional contributions,
penalties, premiums, fees or any other charges as a result of such termination.
Other than routine claims for benefits, there are no actions, audits,
investigations, suits or claims pending, or threatened with respect to any
Chickamauga Benefit Plan, or any trust or other funding agency created
thereunder. Each Chickamauga Benefit Plan or agreement that is or contains
a
“non-qualified deferred compensation plan” within the meaning of Section 409A of
the Internal Revenue Code is operated in reasonable good faith compliance with
the requirements of paragraphs (2), (3), and (4) of Section 409A(a) and the
applicable provisions of IRS Notice 2005-1.
(f) Chickamauga
and all Chickamauga ERISA Affiliates have made full and timely payment of,
or
has accrued pending full and timely payment, all amounts which are required
under the terms of each of the Chickamauga Benefit Plan and in accordance with
applicable laws to be paid contribution to each Chickamauga Benefit Plan. The
actuarial present values of all accrued deferred compensation entitlements
(including, without limitation, entitlements under any executive compensation,
supplemental retirement, or employment agreement) of directors and employees
and
former directors and employees of Chickamauga and its beneficiaries have been
fully reflected on the Chickamauga Financial Statements to the extent required
by and in accordance with GAAP.
(g) No
payment or benefit made, to be made or due to any participant under a
Chickamauga Benefit Plan, or other arrangement on account of the transactions
contemplated hereunder will be deemed to constitute an “excess parachute
payment” within the meaning of Internal Revenue Code Section 280G and the
regulations promulgated thereunder unless such payment receives shareholder
approval as required by the Internal Revenue Code.
5.15 Material
Contracts.
Except
as reflected in the Chickamauga Financial Statements, neither Chickamauga nor
any of its Assets, businesses or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (ii) any Contract
relating to the borrowing of money by Chickamauga or the guarantee by
Chickamauga of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase agreements,
trade payables, letters of credit and Contracts relating to borrowings or
guarantees made in the ordinary course of business), or (iii) any other
Contract or amendment thereto that would be required to be filed as an exhibit
to a Chickamauga Regulatory Report filed by Chickamauga with any Regulatory
Authority as of the date of this Agreement and that has not been filed by
Chickamauga with any Regulatory Authority as an exhibit to any Chickamauga
Regulatory Report for the fiscal year ended December 31, 2005 (together
with all Contracts referred to in Sections 5.10 and 5.14(a) of this Agreement,
the “Chickamauga Contracts”). With respect to each Chickamauga Contract,
(i) the Contract is in full force and effect, (ii) Chickamauga is not
in Default thereunder, (iii) Chickamauga has not repudiated or waived any
provision of any such Contract, and (iv) no other party to any such Contract
is
in Default in any respect, or has repudiated or waived any provision thereunder.
All of the indebtedness of Chickamauga for money borrowed is prepayable at
any
time by Chickamauga without penalty or premium.
5.16 Legal
Proceedings.
There
is no Litigation instituted or pending, or, to the Knowledge of Chickamauga,
threatened against Chickamauga, or against any of its Assets, interests or
right, nor are there any Orders of any Regulatory Authorities, other
governmental authorities or arbitrators outstanding against
Chickamauga.
5.17 Reports.
Chickamauga 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 Regulatory Authorities and any applicable state securities or banking
authorities. As of their respective dates, each of such reports and documents,
including the financial statements, exhibits and schedules thereto, complied
in
all respects with all applicable Laws. As of their respective dates, each such
report and document did not contain any untrue statement of a fact or omit
to
state a fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
5.18 Statements
True and Correct.
No
statement or certificate furnished or to be furnished by Chickamauga or any
Affiliate thereof to SouthCrest pursuant to this Agreement contains or will
contain as of the date thereof any untrue statement of Material fact or will
omit to state a Material fact necessary to make the statements therein, in
light
of the circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by Chickamauga or any Affiliate thereof
for inclusion in the Proxy Statement to be mailed to Chickamauga shareholders
in
connection with the Chickamauga Meeting, and any other documents to be filed
by
Chickamauga or any Affiliate thereof with any Regulatory Authority in connection
with the transactions contemplated hereby, will, at the time such documents
are
filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of Chickamauga, be false or misleading with respect to any Material
fact, or omit to state any Material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof
or
supplement thereto, at the time of the Chickamauga Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material
fact
necessary to correct any statement in any earlier communication with respect
to
the solicitation of any proxy for such shareholder’s meeting. All documents that
Chickamauga or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all Material respects with the provisions of
applicable Law.
5.19 Regulatory
Matters.
Neither
Chickamauga nor any Affiliate thereof has taken any action or has any Knowledge
of any fact or circumstance that is reasonably likely to materially impede
or
delay receipt of any Consents of Regulatory Authorities referred to in Section
9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the second sentence of such Section.
5.20 Derivatives.
All
interest rate swaps, caps, floors, option agreements, futures and forward
contracts and other similar risk management arrangements, whether entered into
for the Chickamauga’s own account, or for the account of any Chickamauga
customers, were entered into (i) in accordance with prudent business
practices and all applicable Laws, and (ii) with counterparties believed to
be
financially responsible.
5.21 Insurance
Claims.
Since
December 31, 2000, Chickamauga has made no claim under its directors and
officers insurance policy or fidelity bond.
5.22 Bank
Secrecy Act.
Chickamauga has complied in all respects with all requirements of Law under
the
Bank Secrecy Act and the USA PATRIOT Act, and Chickamauga has timely filed
all
reports of suspicious activity and currency transaction reports, including
those
required under 12 C.F.R. § 21.11.
5.23 Brokers
and Finders. Except
for Chickamauga’s Investment Advisor (T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates,
Inc.), neither Chickamauga nor any of its officers, directors, employees or
Representatives has employed any broker, finder or investment banker or incurred
any Liability for any financial advisory fees, investment bankers fees,
brokerage fees, commissions, or finder’s or other fees in connection with this
Agreement or the transactions contemplated hereby.
5.24 Loans
to Executive Officers and Directors. Chickamauga
has not extended or maintained credit, arranged for the extension of credit,
or
renewed an extension of credit, in the form of a personal loan to or for any
director or executive officer (or equivalent thereof) of Seller, except as
permitted by Federal Reserve Regulation O.
ARTICLE
6
REPRESENTATIONS
AND WARRANTIES OF SOUTHCREST
No
representation or warranty contained in this Article 6 shall be deemed untrue
or
incorrect, and SouthCrest shall not be deemed to have breached a representation
or warranty as a consequence of the existence or absence of any fact, event
or
circumstance, unless such fact, event or circumstance, whether individually
or
in the aggregate with all other facts, has had or is reasonably likely to have
a
Material Adverse Effect on SouthCrest and is not set forth in the document
of
even date herewith delivered by SouthCrest to Chickamauga prior to the execution
and delivery of this Agreement and referring to the representations and
warranties in this Agreement (the “SouthCrest Disclosure
Schedule”).
Except
as
disclosed in the SouthCrest Disclosure Schedule, SouthCrest hereby represents
and warrants to Chickamauga as follows:
6.1 Organization,
Standing and Power.
SouthCrest is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Georgia and is duly registered as a
bank
holding company under the BHC Act. The banking subsidiaries of SouthCrest are
duly organized and their deposits are insured by the FDIC up to applicable
limits. SouthCrest has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets.
6.2 Authority;
No Breach By Agreement.
(a) SouthCrest
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 this Agreement
and the consummation of the transactions contemplated herein, including the
Share Exchange, have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of SouthCrest. Subject to the Consents
of
Regulatory Authorities, this Agreement represents a legal, valid and binding
obligation of SouthCrest, enforceable against SouthCrest 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
the equitable remedy of specific performance or injunctive relief 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 SouthCrest, nor the consummation
by SouthCrest of the transactions contemplated hereby, nor compliance by
SouthCrest with any of the provisions hereof, will (i) conflict with or result
in a breach of any provision of SouthCrest’s Articles of Incorporation or
Bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any
SouthCrest Company under, any Contract or Permit of any SouthCrest Company,
or
(iii) subject to receipt of the requisite approvals referred to in
Section 9.1 (a) and (b) of this Agreement, violate any Law or Order
applicable to any SouthCrest Company or any of their respective
Assets.
(c) No
notice
to, filing with or Consent of any public body or authority is necessary for
the
consummation by SouthCrest of the Share Exchange and the transaction
contemplated in this Agreement other than (i) in connection or compliance with
the provisions of the Securities Laws, applicable state corporate and securities
Laws, (ii) Consents required from Regulatory Authorities, (iii) notices to
or
filings with the IRS or the Pension Benefit Guaranty Corporation with respect
to
any employee benefit plans, (iv) under the HSR Act, and (v) Consents, filings
or
notifications.
6.3 Necessary
Capital.
At the
Effective Time, SouthCrest will have sufficient liquidity to pay the aggregate
Share Exchange Consideration and will use such liquidity for the payment of
the
Share Exchange Consideration subject to the completion of the Share Exchange
in
accordance with the terms of this agreement. SouthCrest and its subsidiaries
are, and will be immediately following the Share Exchange, in material
compliance with all capital, debt, and financial and nonfinancial provisions
applicable to each of them under the Bank Holding Company Act of 1956, and
any
other applicable Law or Contract to which they are a party.
6.4 SEC
Filings; Financial Statements.
(a) SouthCrest
has filed all forms, proxy statements, registration statements, reports,
schedules and other documents filed or required to be filed by SouthCrest with
the SEC since December 31, 2003 (the “SouthCrest
SEC Reports”).
The
SouthCrest SEC Reports: (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Laws and other
applicable Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then
on
the date of such filing or, in the case of registration statements, at the
effective date thereof) contain any untrue statement of a material fact or
omit
to state a material fact required to be stated in such SouthCrest SEC Reports
or
necessary in order to make the statements in such SouthCrest SEC Reports, in
light of the circumstances under which they were made, not
misleading.
(b) Each
of
the SouthCrest Financial Statements: (i) complied or, in the case of SouthCrest
Financial Statements filed with the SEC after the date hereof, will comply,
as
to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto; (ii) were 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 interim statements, as permitted by
Form
10-Q of the SEC); and (iii) fairly presented, or will fairly present, in all
material respects, the consolidated financial position of SouthCrest and its
Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were, or will be, subject to normal and recurring
year-end adjustments which were not, or will not be, expected to be material
in
amount or effect.
6.5 Statements
True and Correct.
No
statement, certificate, instrument or other writing furnished or to be furnished
by any SouthCrest Company or any Affiliate thereof to Chickamauga pursuant
to
this Agreement or any other document, agreement or instrument referred to herein
contains or will contain any untrue statement of fact or will omit to state
a
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied
or
to be supplied by any SouthCrest Company or any Affiliate thereof for inclusion
in the Proxy Statement to be mailed to Chickamauga shareholders in connection
with the Chickamauga Meeting, and any other documents to be filed by any
SouthCrest Company or any Affiliate thereof with any Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of Chickamauga, be false or misleading with
respect to any fact, or omit to state any fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof
or
supplement thereto, at the time of the Chickamauga Meeting, be false or
misleading with respect to any fact, or omit to state any fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for such shareholder’s meeting. All documents that any
SouthCrest Company or any Affiliate thereof is responsible for filing with
any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all respects with the provisions of applicable
Law.
6.6 Regulatory
Matters.
No
SouthCrest Company or any Affiliate thereof has taken any action or has any
Knowledge of any fact or circumstance that is reasonably likely to materially
impede or delay receipt of any Consents of Regulatory Authorities referred
to in
Section 9.1(b) of this Agreement or result in the imposition of a condition
or
restriction of the type referred to in the second sentence of such Section
9.1(b).
ARTICLE
7
CONDUCT
OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative
Covenants of Chickamauga.
From
the date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement unless the prior written consent of SouthCrest
shall have been obtained, and except as otherwise contemplated herein,
Chickamauga agrees: (i) to operate its business in the usual, regular and
ordinary course; (ii) to preserve intact its business organizations and Assets
and maintain its rights and franchises; (iii) to use its reasonable efforts
to
cause its representations and warranties to be correct at all times; and (iv)
to
take no action which would (a) adversely affect the ability of any Party to
obtain any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement or (b) adversely affect in any
Material respect the ability of either Party to perform its covenants and
agreements under this Agreement.
7.2 Negative
Covenants of Chickamauga.
From
the date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, Chickamauga covenants and agrees not to do or
agree or commit to do any of the following without the prior written consent
of
the Chief Executive Officer of SouthCrest, which consent shall not be
unreasonably withheld:
(a) amend
the
Articles of Incorporation, Bylaws or other governing instruments of Chickamauga;
or
(b) incur
any
additional debt obligation or other obligation for borrowed money in excess
of
an aggregate of $50,000 except in the ordinary course of the business of
Chickamauga consistent with past practices (which shall include creation of
deposit liabilities, purchases of federal funds and entry into repurchase
agreements fully secured by U.S. government or agency securities), or impose,
or
suffer the imposition, on any Asset of Chickamauga of any Lien or permit any
such Lien to exist other than in connection with deposits, repurchase
agreements, bankers’ acceptances, Federal Home Loan Bank advances, “treasury tax
and loan” accounts established in the ordinary course of business, the
satisfaction of legal requirements in the exercise of trust powers, and Liens
in
effect as of the date hereof that have been Previously Disclosed;
or
(c) repurchase,
redeem or otherwise acquire or exchange (other than exchanges in the ordinary
course under employee benefit plans), directly or indirectly, any shares, or
any
securities convertible into any shares, of the capital stock of Chickamauga,
or
declare or pay any dividend or make any other distribution in respect of any
Chickamauga capital stock, other than as disclosed in the Chickamauga Disclosure
Schedule; or
(d) except
for this Agreement, issue or sell, pledge, encumber, authorize the issuance
of,
enter into any Contract to issue, sell, pledge, encumber or authorize the
issuance of, or otherwise permit to become outstanding, any additional shares
of
Chickamauga Stock, or any stock appreciation rights, or any option, warrant,
conversion or other right to acquire any such stock; or
(e) adjust,
split, combine or reclassify any capital stock of Chickamauga or issue or
authorize the issuance of any other securities in respect of or in substitution
for shares of Chickamauga Stock or sell, lease, mortgage or otherwise dispose
of
or otherwise encumber any Asset having a book value in excess of $50,000 other
than in the ordinary course of business for reasonable and adequate
consideration; or
(f) acquire
direct or indirect control over any real property, other than in connection
with
(i) foreclosures in the ordinary course of business, or (ii) acquisitions of
control by Chickamauga in its fiduciary capacity; or
(g) except
for purchases of U.S. Treasury securities or U.S. Government agency securities,
which in either case have maturities of 15 years or less, or of mortgage-backed
securities of maturity or grade consistent with past practices, purchase any
securities or make any Material investment, either by purchase of stock or
securities, contributions to capital, Asset transfers or purchase of any Assets,
in any Person other than Chickamauga, or otherwise acquire direct or indirect
control over any Person, other than in connection with (i) foreclosures in
the ordinary course of business, (ii) acquisitions of control in a fiduciary
capacity, or (iii) the creation of new, wholly-owned Subsidiaries organized
to
conduct or continue activities otherwise permitted by this Agreement;
or
(h) grant
any
increase in compensation or benefits to the employees or officers of Chickamauga
(including such discretionary increases as may be contemplated by existing
employment agreements) exceeding 5% individually or in the aggregate on an
annual basis, except in accordance with past practice Previously Disclosed
or as
required by Law, pay any bonus other than pursuant to a written policy or
Contract in effect on the date of this Agreement and disclosed in the
Chickamauga Disclosure Schedule enter into or amend any severance agreements
with officers of Chickamauga, grant any increase in fees or other increases
in
compensation or other benefits to directors of Chickamauga; or
(i) enter
into or amend any employment Contract between Chickamauga and any Person (unless
such amendment is required by Law) that Chickamauga does not have the
unconditional right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Effective Time;
or
(j) adopt
any
new employee benefit plan of Chickamauga or make any Material change in or
to
any existing employee benefit plans of Chickamauga other than any such change
that is required by Law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan; or
(k) make
any
significant change in any Tax or accounting methods or systems of internal
accounting controls, except as may be appropriate to conform to changes in
Tax
Laws, regulatory accounting requirements or GAAP; or
(l) commence
any Litigation other than in accordance with past practice or settle any
Litigation involving any Liability of Chickamauga for money damages in excess
of
$25,000 or Material restrictions upon the operations of Chickamauga;
or
(m) except
in
the ordinary course of business, modify, amend or terminate any Material
Contract or waive, release, compromise or assign any Material rights or claims;
or
(n) make
any
loan or extension of credit to any borrower of Chickamauga in excess of an
aggregate of $350,000; or
(o) make
any
Material election with respect to Taxes.
7.3 Affirmative
Covenants of SouthCrest.
From
the date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement unless the prior written consent of Chickamauga
shall have been obtained, and except as otherwise contemplated herein,
SouthCrest agrees: (i) to operate its business and cause any SouthCrest Company
to operate its business in the usual, regular and ordinary course; (ii) to
preserve intact its business organizations and Assets and maintain its rights
and franchises; (iii) to use its reasonable efforts to cause its representations
and warranties to be correct at all times; and (iv) to take no action which
would (a) adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentence of
Section 9.1(b) of this Agreement or (b) adversely affect in any Material
respect the ability of either Party to perform its covenants and agreements
under this Agreement.
7.4 Negative
Covenants of SouthCrest.
From
the date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, SouthCrest covenants and agrees that SouthCrest
will not take, without the prior written consent of the Chief Executive Officer
of Chickamauga, which consent shall not be unreasonably withheld, any action
which would materially impair its ability to obtain regulatory approval or
would
delay consummation of this transaction.
7.5 Adverse
Changes in Condition.
Each
Party agrees to give written notice promptly to the other Party upon becoming
aware of the occurrence or impending occurrence of any event or circumstance
relating to it or any of its Subsidiaries which (i) is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on it or
(ii)
is reasonably likely to 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.
ARTICLE
8
ADDITIONAL
AGREEMENTS
8.1 Shareholder
Approvals.
Chickamauga shall take, in accordance with applicable Law and its Articles
of
Incorporation and Bylaws, all action necessary to convene the Chickamauga
Meeting to consider and vote upon the approval of this Agreement and any other
matters required to be approved by Chickamauga shareholders for consummation
of
the Share Exchange, as promptly as practicable. The Board of Directors of
Chickamauga shall (subject to compliance with its fiduciary duties as advised
by
counsel) unanimously recommend such approval to its shareholders, and the Board
of Directors of Chickamauga (subject to compliance with its fiduciary duties
as
advised by counsel) shall use its best efforts to obtain such approval by its
shareholders.
8.2 Defined
Benefit Plan Termination.
Chickamauga shall arrange for the termination of the Defined Benefit Plan,
satisfaction of all benefit obligations thereunder, and complete liquidation
of
the Defined Benefit Plan trust, on terms satisfactory to SouthCrest. SouthCrest
shall have the right to submit any Chickamauga termination plan to an attorney
and actuarial firm for review and comments. The Share Exchange Consideration
shall be reduced and withheld in accordance with Section 3.1.
8.3 Applications.
SouthCrest shall promptly prepare and file, and Chickamauga shall cooperate
in
the preparation and, where appropriate, filing of, applications 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. SouthCrest shall permit Chickamauga
to review (and approve with respect to information relating to Chickamauga)
such
applications prior to filing same.
8.4 Filings
with State Office.
Upon
the terms and subject to the conditions of this Agreement, SouthCrest shall
execute and file the Certificate of Share Exchange with the Secretary of State
of the State of Georgia in connection with the Closing.
8.5 Agreement
as to Efforts to Consummate.
Subject
to the terms and conditions of this Agreement, each Party agrees to use its
reasonable efforts to take all actions, and to do all things necessary, proper
or advisable under applicable Laws, as promptly as practicable so as to permit
consummation of the Share Exchange at the earliest possible date and to
otherwise enable consummation of the transactions contemplated hereby and shall
cooperate fully with the other Party hereto to that end, including, without
limitation, using its reasonable efforts to lift or rescind any Order adversely
affecting its ability to consummate the transactions contemplated herein and
to
cause to be satisfied the conditions referred to in Article 9 of this Agreement;
provided, that nothing herein shall preclude either Party from exercising its
rights under this Agreement. Each Party shall use, and shall cause each of
its
Subsidiaries to use, its reasonable efforts to obtain all Consents necessary
or
desirable for the consummation of the transactions contemplated by this
Agreement.
8.6 Investigation
and Confidentiality.
(a) Prior
to
the Effective Time, each Party will keep the other Party advised of all Material
developments relevant to its business and to consummation of the Share Exchange
and shall permit the other Party to make or cause to be made such investigation
of the business and properties of it and its Subsidiaries and of their
respective financial and legal conditions as the other Party reasonably
requests, provided that such investigation shall be reasonably related to the
transaction contemplated hereby and shall not interfere unnecessarily with
normal operations. No investigation by a Party shall affect the representations
and warranties of the other Party.
(b) Each
Party shall, and shall cause its advisers and agents to, maintain the
confidentiality of all Confidential
Information furnished
to it by any other Party concerning its and its Subsidiaries’ businesses,
operations and financial condition except in furtherance of the transactions
contemplated by this Agreement. In the event that a Party is required by
applicable Law or valid court process to disclose any such Confidential
Information,
then
such Party shall provide the other Party with prompt written notice of any
such
requirement so that the other Party may seek a protective order or other
appropriate remedy and/or waive compliance with this Section 8.6. If in the
absence of a protective order or other remedy or the receipt of a waiver by
the
other Party, a Party is nonetheless, in the written opinion of counsel, legally
compelled to disclose any such Confidential Information to any tribunal or
else
stand liable for contempt or suffer other censure or penalty, a Party may,
without liability hereunder, disclose to such tribunal only that portion of
the
Confidential Information which such counsel advises such Party is legally
required to be disclosed; provided that such disclosing Party use its best
efforts to preserve the confidentiality of such Confidential
Information, including without limitation, by cooperating with the other Party
to obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded such Confidential Information by such
tribunal. If this Agreement is terminated prior to the Effective Time, each
Party shall promptly return all documents and copies thereof and all work papers
containing Confidential Information received from the other Party.
(c) Each
Party agrees to give the other Party notice as soon as practicable after any
determination by it of any fact or occurrence relating to the other Party which
it has discovered through the course of its investigation and which represents,
or is reasonably likely to represent, either a Material breach of any
representation, warranty, covenant or agreement of the other Party or which
has
had or is reasonably likely to have a Material Adverse Effect on the other
Party.
(d) Neither
Party nor any of their respective Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of its customers, jeopardize the attorney-client
or similar privilege with respect to such information or contravene any Law,
rule, regulation, Order, judgment, decree, fiduciary duty or agreement entered
into prior to the date of this Agreement. The Parties will use their reasonable
efforts to make appropriate substitute disclosure arrangements, to the extent
practicable, in circumstances in which the restrictions of the preceding
sentence apply.
(e) Notwithstanding
Section 8.6(b) or any other written or oral understanding or agreement to which
the Parties are parties or by which they are bound, the Parties acknowledge
and
agree that any obligations of confidentiality contained herein and therein
that
relate to the tax treatment and tax structure of the Share Exchange (and any
related transaction or arrangements) have not applied from the commencement
of
discussions between the Parties and will not hereafter apply to the Parties;
and
each Party (and each of its employees, representatives, or other agents) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the Share Exchange and all materials of any
kind
that are provided to such party relating to such tax treatment and tax
structure, all within the meaning of Treasury Regulation Section 1.6011-4;
provided,
however,
that
each Party recognizes that the other Party has a right to maintain, in its
sole
discretion, any privilege that would protect the confidentiality of a
communication relating to the Share Exchange, including a confidential
communication with its attorney or a confidential communication with a federally
authorized tax practitioner under Section 7525 of the Internal Revenue Code
and that such privilege is not intended to be affected by the foregoing. These
principles are meant to be interpreted so as to prevent the Share Exchange
from
being treated as offered under “conditions of confidentiality” within the
meaning the Treasury Regulations promulgated under Internal Revenue Code
Sections 6011 and 6111(d)(2).
8.7 Press
Releases.
Prior
to the Effective Time, Chickamauga and SouthCrest shall consult with each other
as to the form and substance of any press release or other public disclosure
materially related to this Agreement or any other transaction contemplated
hereby; provided,
however,
that
nothing in this Section 8.7 shall be deemed to prohibit any Party from making
any disclosure which its counsel deems necessary or advisable in order to
satisfy such Party’s disclosure obligations imposed by Law.
8.8 Certain
Actions.
Except
with respect to this Agreement and the transactions contemplated hereby, neither
Party nor any Affiliate thereof nor any investment banker, attorney, accountant
or other representative (collectively, the “Representatives”) retained by such
Party shall directly or indirectly solicit or engage in negotiations concerning
any Acquisition Proposal by any Person, or provide any Confidential Information
or assistance to, or have any discussions with, any Person with respect to
an
Acquisition Proposal. Except to the extent necessary to comply with the
fiduciary duties of such Party’s Board of Directors as determined by such
Party’s Board of Directors after consulting with and considering the advice of
counsel, neither Party nor any Affiliate or Representative thereof shall furnish
any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but any Party may communicate information about such
an
Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised
by
counsel; provided
that
such
Party shall promptly advise the other Party verbally and in writing following
the receipt of any Acquisition Proposal and the Material details thereof. Each
Party shall (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing and (ii) direct and use its reasonable
efforts to cause all of its Representatives not to engage in any of the
foregoing.
8.9 Access;
Information.
Upon
reasonable notice and subject to applicable laws relating to the exchange of
information, Chickamauga shall afford SouthCrest and its officers, employees,
counsel, accountants and other authorized representatives, such access during
normal business hours throughout the period prior to the Effective Time to
the
books, records (including credit files, tax returns and work papers of
independent auditors), properties, personnel and to such other information
as it
may reasonably request and, during such period, Chickamauga shall furnish
promptly (i) a copy of each material report, schedule and other document filed
by it pursuant to the requirements of federal or state securities or banking
laws and (ii) all other information concerning its business, properties and
personnel as SouthCrest may reasonably request.
8.10 Employee
Benefits and Contracts.
Following the Effective Time, SouthCrest shall provide generally to officers
and
employees of Chickamauga, who at or after the Effective Time become employees
of
a SouthCrest Company (collectively, “New SouthCrest Employees”), employee
benefits under employee benefit plans on terms and conditions which when taken
as a whole are substantially similar to those provided by the SouthCrest
Companies to their similarly situated officers and employees. For purposes
of
benefit accrual under SouthCrest Benefit Plans (but only for purposes of
determining benefits accruing under payroll practices such as vacation policy
or
under fringe benefit programs that do not rise to the level of a “plan” within
the meaning of Section 3(3) of ERISA), eligibility to participate and vesting
determinations in connection with the provision of any such employee benefits,
service with Chickamauga prior to the Effective Time shall be counted. If,
during the annual period of coverage (the "Applicable Period of Coverage")
in
which falls the Effective Time, SouthCrest terminate any “group health plan,”
within the meaning of Section 4980B(g)(2) of the Internal Revenue Code, in
which
one or more Chickamauga employees participated immediately prior to the
Effective Time (a “Chickamauga Plan”), SouthCrest shall cause any successor
group health plan to waive any underwriting requirements; to give credit for
any
such Chickamauga employee’s participation in the Chickamauga Plan prior to the
Effective Time for purposes of applying any pre-existing condition limitations
set forth therein; and to give credit for covered expenses paid by any such
Chickamauga employee under a Chickamauga Plan during the Applicable Period
of
Coverage towards satisfaction of any annual deductible limitation, co-payment
and out-of pocket maximum applied under such successor group health plan.
8.11 D&O
Coverage. At
the
Effective Time and subject to applicable Law, SouthCrest will provide directors
and officers insurance coverage for Chickamauga’s directors and officers either,
at SouthCrest’s election, (i) by purchasing continuation coverage under
Chickamauga’s current policy for directors and officers for a period not less
than three years after the Effective Time, or (ii) if SouthCrest’s current
directors’ and officers’ policy provides substantially similar coverage as
Chickamauga’s current policy, obtain coverage under SouthCrest’s current policy
to provide coverage for Chickamauga’s directors and officers on a prior acts
basis for a period not less than three years prior to the Effective
Time.
8.12 Indemnification.
(a) SouthCrest
or a SouthCrest Subsidiary shall, in accordance with the Chickamauga articles
of
incorporation and bylaws as of the date hereof, indemnify, defend and hold
harmless all individuals who are directors, officers and employees of
Chickamauga as of the date hereof (each, an “Indemnified Party”) after the
Effective Time against all costs, fees or expenses (including reasonable
attorneys’ fees), judgments, fines, penalties, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any Litigation
as
incurred, in connection with any claim, action or proceeding arising out of
actions or omissions occurring at or prior to the Effective Time (including
the
transactions contemplated by this Agreement) to the maximum extent allowable
under the Georgia Code. Without limiting the foregoing, in any case in which
approval of SouthCrest or a SouthCrest Subsidiary is required to effectuate
any
indemnification, SouthCrest shall direct or cause a SouthCrest Subsidiary to
direct, at the election of the Indemnified Party, that the determination of
any
such approval shall be made by independent counsel mutually agreed upon between
SouthCrest and the Indemnified Party. SouthCrest shall, and shall cause all
other relevant SouthCrest Subsidiaries, to apply such rights of indemnification
in good faith and to the fullest extent possible by applicable law.
(b) If
SouthCrest or any of its successors or assigns shall consolidate with or merge
into any other Person and shall not be the continuing or surviving Person of
such consolidation or merger or shall transfer all or substantially all of
its
assets to any Person, then and in each case, proper provision shall be made
so
that the successors and assigns of SouthCrest shall assume the obligations
set
forth in this Section 8.12.
(c) The
provisions of this Section 8.12 are intended to be for the benefit of and shall
be enforceable by each Indemnified Party, his or her heirs and
representatives.
8.13 Shareholder
Support Agreements.
Upon the
execution of this Agreement, each of Chickamauga’s directors, executive officers
and 5% shareholders shall execute and deliver support agreements with
Chickamauga and SouthCrest whereby each director, executive officer and 5%
shareholder agrees to vote shares of Chickamauga Stock held by such director,
executive officer or 5% shareholder in favor of the Share Exchange. Such support
agreements shall be upon the terms and conditions in the form and substance
set
forth in Exhibit B
hereto.
ARTICLE
9
CONDITIONS
PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions
to Obligations of Each Party.
The
respective obligations of each Party to perform this Agreement and to consummate
the Share Exchange are subject to the satisfaction of the following conditions,
unless waived by both Parties pursuant to Section 11.6 of this
Agreement:
(a) Shareholder
Approvals.
The
shareholders of Chickamauga shall have approved this Agreement and the
consummation of the Share Exchange as and to the extent required by Law and
by
the provisions of any of its governing instruments.
(b) Regulatory
Approvals.
All
Consents of, filings and registrations with, and notifications to, all
Regulatory Authorities required for consummation of the Share Exchange shall
have been obtained or made and shall be in full force and effect and all waiting
periods required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner (including,
without limitation, requirements relating to the raising of additional capital
or the disposition of Assets or deposits) which in the reasonable judgment
of
the Board of Directors of either of the Parties would so materially adversely
impact the economic or business benefits of the transactions contemplated by
this Agreement so as to render inadvisable the consummation of the Share
Exchange.
(c) Consents
and Approvals.
Each
Party shall have obtained any and all Consents required for consummation of
the
Share Exchange (other than those referred to in Section 9.1(b) of this
Agreement) or for the preventing of any Default under any Contract or Permit
of
such Party which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on such Party.
No
Consent obtained which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner which in the reasonable
judgment of the Board of Directors of either of the Parties would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement so as to render inadvisable the consummation
of
the Share Exchange.
(d) Legal
Proceedings.
No
court or governmental or Regulatory Authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated by
this
Agreement.
(e) Agreement
as to Holdback Amount.
The
Parties shall have mutually agreed to a reasonable Holdback Amount under Section
3.1 of this Agreement. However, if the Parties do not mutually agree to a
reasonable Holdback Amount under Section 3.1 of this Agreement and the Parties
do not breach this Agreement in any other manner that causes payment under
Section 11.2(b) to be owed to either Party, then the termination fee as
described and listed in Section 11.2(b) of this Agreement shall not be paid
to
either Party.
9.2 Conditions
to Obligations of SouthCrest.
The
obligations of SouthCrest to perform this Agreement and to consummate the Share
Exchange and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by SouthCrest pursuant
to Section 11.6(a) of this Agreement:
(a) Representations
and Warranties.
For
purposes of this Section 9.2(a), the accuracy of the representations and
warranties of Chickamauga as set forth or referred to in this Agreement shall
be
assessed as of the date of this Agreement and as of the Effective Time with
the
same effect as though all such representations and warranties had been made
on
and as of the Effective Time (provided that representations and warranties
which
are confined to a specified date shall speak only as of such date). The
representations and warranties of Chickamauga set forth in Section 5.3 of
this Agreement shall be true and correct (except for inaccuracies which are
de
minimus in amount or effect). There shall not exist inaccuracies in the
representations and warranties of Chickamauga set forth in this Agreement
(excluding the representations and warranties set forth in Section 5.3)
such that the aggregate effect of such inaccuracies would have, or is reasonably
likely to have, a Material Adverse Effect on Chickamauga or would reasonably
likely result in SouthCrest’s inability to comply with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2005; provided that, for purposes of this sentence only, those representations
and warranties which are qualified by referenced to “Material” or “Material
Adverse Effect” shall be deemed not to include such qualifications.
(b) Performance
of Agreements and Covenants.
Each
and all of the agreements and covenants of Chickamauga to be performed and
complied with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and complied
with in all Material respects.
(c) Certificates.
Chickamauga shall have delivered to SouthCrest (i) a certificate, dated as
of
the Effective Time and signed on its behalf by its Chief Executive Officer
and
Chief Financial Officer, to the effect that the conditions of its obligations
set forth in Section 9.2 of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by the Chickamauga Board of
Directors and shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all
in
such reasonable detail as SouthCrest and its counsel shall request.
(d) Opinion
of Counsel.
SouthCrest shall have received a written opinion from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, LLP, counsel to Chickamauga, dated as of the Closing, in substantially
the form of Exhibit C.
(e) Claims/Indemnification
Letters.
Each of
the directors and officers of Chickamauga shall have executed and delivered
to
SouthCrest letters in substantially the form of Exhibit D.
(f) Audited
Financial Statements.
Chickamauga shall obtain an audit from ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, PLLC for
the financial statements as of and for the year ended December 31, 2006.
Chickamauga shall also, at SouthCrest's request, engage a public accounting
firm
approved by SouthCrest to provide internal audit services.
(g) [Reserved.]
(h) Minimum
Shareholders’ Equity.
Adjusted Shareholders’ Equity shall equal (i) the shareholders’ equity
calculated in accordance with the books and records of Chickamauga, consistent
with past practice, GAAP and all requirements of applicable Regulatory
Authorities, plus (ii) an amount equal to the amounts that have been, or would
be, deducted for any items of “Other Comprehensive Income” on a balance sheet
prepared as of Closing and in accordance with GAAP, less (iii) an amount equal
to the amounts of “Other Comprehensive Income” that have been, or would be,
added to shareholders’ equity on a balance sheet prepared as of Closing and in
accordance with GAAP, and plus (iv) any costs, fees and charges of Seller’s
accountants, counsel and financial advisors that are directly related to the
transactions contemplated by this Agreement (but the costs associated with
the
audit required by Section 9.2(f) of this Agreement shall not be excluded).
The
adjustments described above are designed, in part, to back-out Chickamauga’s
deal-related expenses as well as any expenses, fees or costs, including any
supplemental contributions, annuity costs, actuarial fees and legal fees,
related to the termination of the Defined Benefit Plan. Adjusted Shareholders’
Equity of Chickamauga shall not be less than $13,900,000 as of the Closing;
provided, however, in the event the Adjusted Shareholders’ Equity of Chickamauga
is less than $14,150,000 as of Closing, the Share Exchange Consideration shall
be reduced by an amount equal to $14,150,000 minus the Adjusted Shareholders’
Equity of Chickamauga as of Closing.
(i) Minimum
Allowance for Loan Losses.
To
conform with the accounting policies and allowance for loan loss methodologies
of SouthCrest, the Allowance of Chickamauga as of the date of Closing shall
not
be less than the greater of (i) 1.25% of Chickamauga’s total loans outstanding,
or (ii) $328,000.
(j) Maximum
Number of Dissenters.
The
number of shares of Chickamauga Stock who dissent from the Share Exchange shall
not exceed 10% of Chickamauga’s outstanding shares.
(k) Restrictive
Covenant Agreements.
Chickamauga shall have entered into restrictive covenant agreements,
substantially in the form of Exhibit E,
with
the individuals named on Schedule
9.2(k).
9.3 Conditions
to Obligations of Chickamauga.
The
obligations of Chickamauga to perform this Agreement and consummate the Share
Exchange and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Chickamauga pursuant
to Section 11.6(b) of this Agreement:
(a) Representations
and Warranties.
For
purposes of this Section 9.3(a), the accuracy of the representations and
warranties of SouthCrest as set forth or referred to in this Agreement shall
be
assessed as of the date of this Agreement and as of the Effective Time with
the
same effect as though all such representations and warranties had been made
on
and as of the Effective Time (provided that representations and warranties
which
are confined to a specified date shall speak only as of such date). The
representations and warranties of SouthCrest set forth in Section 6.3 of
this Agreement shall be true and correct (except for inaccuracies which are
de
minimus in amount or effect). There shall not exist inaccuracies in the
representations and warranties of SouthCrest set forth in this Agreement
(excluding the representations and warranties set forth in Section 6.3)
such that the aggregate effect of such inaccuracies would have, or is reasonably
likely to have, a Material Adverse Effect on SouthCrest; provided that, for
purposes of this sentence only, those representations and warranties which
are
qualified by references to “Material” or “Material Adverse Effect” shall be
deemed not to include such qualifications.
(b) Performance
of Agreements and Covenants.
Each
and all of the agreements and covenants of SouthCrest to be performed and
complied with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and complied
with in all Material respects.
(c) Certificates.
SouthCrest shall have delivered to Chickamauga (i) a certificate, dated as
of
the Effective Time and signed on its behalf by its Chief Executive Officer
and
its Chief Financial Officer, to the effect that the conditions of its
obligations set forth in Section 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
SouthCrest’s Board of Directors evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all
in
such reasonable detail as Chickamauga and its counsel shall
request.
ARTICLE
10
TERMINATION
10.1 Termination.
Notwithstanding any other provision of this Agreement, and notwithstanding
the
approval of this Agreement by the shareholders of Chickamauga and SouthCrest
respectively, this Agreement may be terminated and the Share Exchange abandoned
at any time prior to the Effective Time:
(a) By
mutual
consent of the respective Boards of Directors of SouthCrest and Chickamauga;
or
(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 breach by the other
Parties of any representation or warranty contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach and which breach would provide
the
non-breaching party the ability to refuse to consummate the Share Exchange
under
the standard set forth in Section 9.2(a) of this Agreement in the case of
SouthCrest and Section 9.3(a) of this Agreement in the case of Chickamauga;
or
(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 (i) any Consent of any
Regulatory Authority required for consummation of the Share Exchange shall
have
been denied by final nonappealable action of such authority or if any action
taken by such authority is not appealed within the time limit for appeal, or
(ii) the shareholders of Chickamauga fail to vote their approval of this
Agreement and the transaction contemplated hereby at the Chickamauga Meeting
where the transaction was presented to such shareholders for approval and voted
upon; or
(d) By
the
Board of Directors of either Party in the event that the Share Exchange shall
not have been consummated within one hundred eighty (180) days following the
date of this Agreement, but only if the failure to consummate the transactions
contemplated hereby within such timeframe is not caused by any breach of this
Agreement by the Party electing to terminate pursuant to this Section 10.1(d);
or
(e) By
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 that any of the conditions
precedent to the obligations of such Party to consummate the Share Exchange
cannot be satisfied or fulfilled by the date specified in Section 10.1(d)
of this Agreement; or
(f) By
the
Board of Directors of either Party in the event that the Board of Directors
of
the other Party shall have failed to reaffirm, following a written request
by
such Party for such reaffirmation after the other Party shall have received
any
inquiry or proposal with respect to an Acquisition Proposal, its approval of
the
Share Exchange (to the exclusion of any other Acquisition Proposal), or shall
have resolved not to reaffirm the Share Exchange.
10.2 Effect
of Termination.
In the
event of the termination and abandonment of this Agreement pursuant to Section
10.1 of this Agreement, this Agreement shall become void and have no effect,
except that (i) the provisions of this Section 10.2 and Article 11 and
Section 8.6(b) of this Agreement shall survive any such termination and
abandonment, (ii) a termination pursuant to Sections 10.1(b) or 10.1(e) of
this Agreement shall not relieve the breaching Party from Liability for an
uncured willful breach of a representation, warranty, covenant or agreement
giving rise to such termination provided that such Liability shall be determined
solely in accordance with the effect of Section 11.2(b) of this Agreement;
and
(iii) a termination pursuant to Section 10.1(f) shall not relieve the Party
whose Board of Directors does not reaffirm its approval of the Share Exchange
Agreement from Liability for any loss incurred by the other Party as a result
of
such termination provided that such Liability shall be determined solely in
accordance with the effect of Section 11.2(b) of this Agreement.
10.3 Non-Survival
of Representations and Covenants.
The
respective representations, warranties, obligations, covenants and agreements
of
the Parties shall not survive the Effective Time except for this Section 10.3
and Articles 2, 3, 4, and 11 and Sections 8.6(b), 8.10 and 8.11 of this
Agreement.
ARTICLE
11
MISCELLANEOUS
11.1 Definitions.
Except
as otherwise provided herein, the capitalized terms set forth below (in their
singular and plural forms as applicable) shall have the following
meanings:
“Acquisition
Proposal”
with
respect to a Party shall mean any tender offer or exchange offer or any proposal
for a Share Exchange, acquisition of all of the stock or Assets of, or other
business combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial portion of
the
Assets of, such Party or any of its Subsidiaries.
“Affiliate”
of
a
Person shall mean: (i) any other Person directly, or indirectly through one
or
more intermediaries, controlling, controlled by or under common control with
such Person, (ii) any officer, director, partner, employer or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of such Person
or (iii) any other Person for which a Person described in clause (ii) acts
in
any such capacity.
“Agreement”
shall
mean this Agreement and Plan of Share Exchange, including the Exhibits delivered
pursuant hereto and incorporated herein by reference.
“Allowance”
shall
mean the allowance for loan or credit losses for the periods set forth in
Section 5.9 of this Agreement.
“Assets”
of
a
Person shall mean all of the assets, properties, businesses and rights of such
Person of every kind, nature, character and description, whether real, personal
or mixed, tangible or intangible, accrued or contingent, or otherwise relating
to or utilized in such Person’s business, directly or indirectly, in whole or in
part, whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such Person
and wherever located.
“BHC
Act”
shall
mean the federal Bank Holding Company Act of 1956, as amended.
“Chickamauga
Benefit Plans”
shall
have the meaning set forth in Section 5.14 of this Agreement.
“Chickamauga
Financial Statements”
shall
mean (i) the consolidated balance sheets (including related notes and schedules,
if any) of Chickamauga as of September 30, 2006 and as of December 31,
2005, 2004 and 2003, and the related statements of income, changes in
shareholders’ equity and cash flows (including related notes and schedules, if
any) for the nine months ended September 30, 2006 and 2005 and each of the
three fiscal years ended December 31, 2005, as prepared by Chickamauga, and
(ii) the consolidated statements of condition of Chickamauga (including
related notes and schedules if any) and related statements of income, changes
in
shareholders’ equity and cash flows (including related notes and schedules, if
any) filed with respect to periods ended subsequent to September 30,
2006.
“Chickamauga
Meeting”
shall
mean the special meeting of the shareholders of Chickamauga or any adjournment
thereof to vote on the matters set forth in the Proxy Statement.
“Chickamauga
Regulatory Report”
shall
mean any form, report, or document either (i) filed or required to be filed
by
Chickamauga with any Regulatory Authority, or (ii) received by Chickamauga
from
any Regulatory Authority.
“Closing”
shall
mean the closing of the transaction contemplated hereby, as described in Section
1.2 of this Agreement.
“Confidential
Information” shall
mean any data or information, which is material to a Party and not generally
known by the public. Confidential Information shall include, but not be limited
to, business opportunities of a Party, the details of this Agreement, the
identity and addresses of customers of such Party, the whole or any portion
or
phase of any scientific or technical information, design process, procedure,
formula or improvement that is valuable and secret and which is defined as
a
“trade secret” under Georgia law pursuant to the Georgia Trade Secrets
Act.
“Consent”
shall
mean any consent, approval, authorization, clearance, exemption, waiver or
similar affirmation by any Person pursuant to any Contract, Law, Order or
Permit.
“Contract”
shall
mean any written or oral agreement, arrangement, authorization, commitment,
contract, indenture, instrument, lease, obligation, plan, practice, restriction,
understanding or undertaking of any kind or character or other document to
which
any Person is a party or that is binding on any Person or its capital stock,
Assets or business.
“Default”
shall
mean (i) any breach or violation of or default under any Contract, Order or
Permit, (ii) any occurrence of any event that with the passage of time or the
giving of control or both would constitute 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.
“Defined
Benefit Plan”
shall
mean the Bank of Chickamauga Defined Benefit Pension Plan.
“Effective
Time”
shall
mean the date and time at which the Articles of Share Exchange reflecting the
Share Exchange shall become effective with the Secretary of State of the State
of Georgia.
“Environmental
Laws”
shall
mean all federal, state, municipal and local laws, statutes, orders,
regulations, decrees, resolutions, proclamations, permits, licenses, approvals,
authorizations, consents, judgments, judicial decisions and other governmental
requirements, limitations and standards relating to the environment, health
and
safety issues, including, without limitation, the manufacture, generation,
use,
processing, treatment, recycling, storage, handling, “Release” (as hereinafter
defined), investigation, removal, remediation and cleanup of or other corrective
action for “Hazardous Materials” (as hereinafter defined), exposure to Hazardous
Materials and personal injury, natural resource damage, property damage and
interference with the use of property caused by or resulting from Hazardous
Materials.
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA
Affiliate”
shall
have the meaning provided in Sections 5.14 and 6.21 of this
Agreement.
“ERISA
Plan”
shall
have the meaning provided in Sections 5.14 and 6.21 of this
Agreement.
“Exhibits”
A
through E, inclusive, shall mean the Exhibits so marked, copies of which are
attached to this Agreement. Such Exhibits are hereby incorporated by reference
herein and made a part hereof, and may be referred to in this Agreement and
any
other related instrument or document without being attached hereto.
“GAAP”
shall
mean generally accepted accounting principles, consistently applied during
the
periods involved.
“Georgia
Code”
shall
mean the Georgia Business Corporation Code and the Financial Institutions Code
of Georgia.
“Hazardous
Materials”
shall
mean all hazardous, toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic and volatile substances, materials,
compounds, chemicals and waste, and all other industrial waste, sanitary waste,
pollutants and contaminants, and all constituents thereof, including, without
limitation, petroleum hydrocarbons, asbestos-containing materials, lead-based
paints and all substances, materials, wastes, chemicals, compounds, contaminants
and pollutants regulated or addressed by Environmental Laws.
“IRS”
shall
mean the Internal Revenue Service.
“Internal
Revenue Code”
shall
mean the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
“Knowledge”
as
used
with respect to a Person shall mean the knowledge, after all appropriate
inquiry, of the President, Chief Financial Officer, Chief Accounting Officer,
Chief Credit Officer, General Counsel, or any Executive Vice President of such
Person.
“Law”
shall
mean any code, law, ordinance, regulation, reporting or licensing requirement,
rule or statute and all Environmental Laws applicable to a Person or its Assets,
Liabilities or business, including, without limitation, those promulgated,
interpreted or enforced by any of the Regulatory Authorities.
“Liability”
shall
mean any direct or indirect, primary or secondary, liability, indebtedness,
obligation, penalty, cost or expense (including, without limitation, 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.
“LIBOR”
shall
mean the three month London Interbank Offered Rate quoted or published from
time
to time in the Money Rates section of the Wall
Street Journal,
or if
no such rate is published in the Wall
Street Journal,
then
the nearest comparable published rate based on the Reuters screen, or if no
such
rate is published on the Reuters screen, then the nearest comparable published
rate based on Telerate, or if no such rate is published on Telerate, then the
nearest comparable rate, as reasonably determined by SouthCrest.
“Lien”
shall
mean any conditional sale agreement, default of title, easement, encroachment,
encumbrance, hypothecation, infringement, lien, mortgage, pledge, reservation,
restriction, security interest, title retention or other security arrangement,
or any adverse right or interest, charge or claim of any nature whatsoever
of,
on or with respect to any property or property interest, other than (i) Liens
for current property Taxes not yet due and payable, (ii) for depository
institution Subsidiaries of a Party, pledges to secure deposits and other Liens
incurred in the ordinary course of the banking business, (iii) Liens which
are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on a Party; and (iv) Liens which have been Previously
Disclosed.
“Litigation”
shall
mean any action, arbitration, cause of action, claim, complaint, criminal
prosecution, demand letter, governmental or other examination or investigation,
request for information, hearing, inquiry, administrative or other proceeding,
or notice (written or oral) by any Person alleging potential Liability or
requesting information relating to or affecting a Party, its business, its
Assets (including, without limitation, Contracts related to it) or the
transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.
“Loan
Property”
shall
mean any property owned, leased or operated by the Party in question or by
any
of its Subsidiaries or in which such Party or Subsidiary holds a security or
other interest (including an interest in a fiduciary capacity), and, where
required by the context, includes the owner or operator of such property, but
only with respect to such property.
“Material”
for
purposes of this Agreement shall be determined in light of the facts and
circumstances of the matter in question; provided that any specific monetary
amount stated in this Agreement shall determine materiality in that
instance.
“Material
Adverse Effect”
on
a
Party shall mean an event, change, condition or occurrence which has a Material
adverse impact on (i) the financial position, business or results of operations
of such Party and its Subsidiaries, taken as a whole, or (ii) the ability of
such Party to perform its obligations under this Agreement or to consummate
the
Share Exchange 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
GAAP or regulatory accounting principles generally applicable to banks and
their
holding companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, (d) the transactions,
expenses and fees contemplated hereby and compliance with the provisions of
this
Agreement on the operating performance of the Parties, or (e) changes in
economic or other conditions, including the interest rate environment, affecting
the banking industry in general.
“1933
Act”
shall
mean the Securities Act of 1933, as amended.
“Order”
shall
mean any administrative decision or award, decree, injunction, judgment, order,
quasi-judicial decision or award, ruling or writ of any federal, state, local
or
foreign or other court, arbitrator, mediator, tribunal, administrative agency
or
Regulatory Authority.
“Participation
Facility”
shall
mean any facility or property in which the Party in question or any of its
Subsidiaries participates in the management (including, but not limited to,
any
property or facility held in a joint venture) 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.
“Party”
shall
mean either Chickamauga or SouthCrest, and “Parties”
shall
mean Chickamauga and SouthCrest.
“Permit”
shall
mean any federal, state, local and foreign governmental approval, authorization,
certificate, easement, filing, franchise, license, notice, permit or right
to
which any Person is a party or that is or may be binding upon or inure to the
benefit of any Person or its capital stock, Assets, Liabilities or
business.
“Person” shall
mean a natural person or any legal, commercial or governmental entity, such
as,
but not limited to, a corporation, general partnership, joint venture, limited
partnership, limited liability company, trust, business association, group
acting in concert or any person acting in a representative
capacity.
“Previously
Disclosed” shall
mean information delivered in writing prior to the date of this Agreement in
the
manner and to the Party or counsel described in Section 11.8 of this Agreement
or to the Party’s Investment Advisor in response to its due diligence request
describing in reasonable detail the matters contained therein or identifying
the
information disclosed; provided
that
in the
case of Subsidiaries acquired after the date of this Agreement, such information
may be so delivered by the acquiring Party to the other Party prior to the
date
of such acquisition.
“Proxy
Statement” shall
mean the Proxy Statement used by Chickamauga to solicit the approval of its
shareholders of the transactions contemplated by this Agreement.
“Regulatory
Authorities”
shall
mean, collectively, the Federal Trade Commission, the United States Department
of Justice, the Board of the Governors of the Federal Reserve System, the
Georgia Department of Banking and Finance, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, all state regulatory
agencies having jurisdiction over the Parties and their respective Subsidiaries,
NASD and the SEC.
“Release”
shall
mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, abandonment or disposing into or
migration within the environment.
“Representatives” shall
have the meaning set forth in Section 8.8.
“SEC” shall
mean the Securities and Exchange Commission.
“SEC
Documents”
shall
mean all forms, proxy statements, reports, registration statements, schedules
and other documents filed, or required to be filed, by a Party or any of its
Subsidiaries with any Regulatory Authority pursuant to the Securities Laws
or
similar requirement of any Regulatory Authority.
“Securities
Laws”
shall
mean the 1933 Act, the Securities Exchange Act of 1934, the Investment Company
Act of 1940, as amended, the Investment Advisors Act of 1940, as amended, the
Trust Indenture Act of 1939, as amended, and the rules and regulations of any
Regulatory Authority promulgated thereunder.
“Share
Exchange”
shall
mean the Share Exchange of Chickamauga with and into SouthCrest referred to
in
the Preamble of this Agreement.
“Share
Exchange Consideration”
shall
mean the aggregate consideration to be received for all of the shares of
Chickamauga Stock.
“SouthCrest
Common Stock”
shall
mean the no par value common stock of SouthCrest.
“SouthCrest
Companies”
shall
mean, collectively, SouthCrest and all SouthCrest Subsidiaries.
“SouthCrest
Financial Statements”
shall
mean (i) the consolidated balance sheets (including related notes and schedules,
if any) of SouthCrest as of September 30, 2006 and as of December 31,
2005, 2004 and 2003, and the related statements of income, changes in
shareholders’ equity and cash flows (including related notes and schedules, if
any) for the nine months ended September 30, 2006 and 2005 and each of the
three fiscal years ended December 31, 2005, as prepared by SouthCrest, and
(ii) the consolidated statements of condition of SouthCrest (including
related notes and schedules if any) and related statements of income, changes
in
shareholders’ equity and cash flows (including related notes and schedules, if
any) filed with respect to periods ended subsequent to September 30,
2006.
“SouthCrest
Subsidiaries”
shall
mean the subsidiaries of SouthCrest.
“Subsidiaries”
shall
mean all those corporations, banks, association, or other entities of which
the
entity in question owns or controls 5% or more of the outstanding equity
securities either directly or through an unbroken chain of entities as to each
of which 5% or more of the outstanding equity securities is owned directly
or
indirectly by its parent; provided,
however,
there
shall not be included any such entity acquired through foreclosure or any such
entity the equity securities of which are owned or controlled in a fiduciary
capacity.
“Tax”
or“Taxes”
shall
mean all federal, state, county, local and foreign taxes, charges, fees, levies,
imposts, duties or other assessments, including income, gross receipts, excise,
employment, sales, use, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal highway use, commercial
rent, customs duties, capital stock, paid-up capital, profits, withholding,
Social Security, single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added, alternative or add-on
minimum, estimated or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state, local,
or
foreign government or subdivision or agency thereof, including interest and
penalties thereon or additions with respect thereto.
“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 required to be filed or Tax is required to be
paid.
“Tax
Return” shall
mean any report, return or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an affiliated or
combined or unitary group that includes a Party or its
Subsidiaries.
11.2 Expenses.
(a) General.
Except
as otherwise provided in this Section 11.2, each of the Parties shall bear
and
pay all direct costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including filing, registration
and
application fees, printing fees and fees and expenses of its own financial
advisors or other consultants, investment bankers, accountants, and
counsel.
(b) Breach
by Either Party or Fiduciary Duty Termination.
In
addition to the foregoing, if prior to the Effective Time, this Agreement is
terminated by either Party as a result of (i) the other Party’s willful breach
of such Party’s representations, warranties or agreements set forth herein of
this Agreement (except as provided for in Section 9.1(e) of this Agreement)
or
(ii) the failure of the other Party’s Board of Directors to reaffirm its
approval of the Share Exchange pursuant to Section 10.1(f), such Party
shall pay to the non-breaching Party or Party requesting the reaffirmation
as
its sole and exclusive remedy resulting from such termination, an amount in
cash
equal to $360,000, which sum represents compensation for the loss incurred
by
the Party requesting the reaffirmation as the result of the transactions
contemplated by this Agreement not being consummated.
11.3 Brokers
and Finders.
Each
Party represents and warrants to the other Party that neither it nor any of
its
officers, directors, employees or Affiliates has employed any broker or finder
or incurred any Liability for any financial advisory fees, investment bankers’
fees, brokerage fees, commissions or finders’ fees in connection with this
Agreement or the transactions contemplated hereby, except for Chickamauga’s
Investment Advisor which has been retained by Chickamauga pursuant to the
agreement previously disclosed to SouthCrest. In the event of a claim by any
other broker or finder based upon his or its representing or being retained
by
or allegedly representing or being retained by any Party, such Party shall
indemnify and hold the other Party harmless of and from any Liability in respect
of any such claim and increase or decrease the Share Exchange Consideration,
as
the case may be, by an amount equal to such claim as determined by the
non-breaching Party.
11.4 Entire
Agreement.
Except
as otherwise expressly provided herein, this Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement between
the
Parties with respect to the transaction contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral.
Nothing in this Agreement expressed or implied, is intended to confer upon
any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
11.5 Amendments.
To the
extent permitted by Law, this Agreement may be amended by a subsequent writing
signed by each of the Parties upon the approval of the Boards of Directors
of
each of the Parties; whether before or after shareholder approval of the Share
Exchange has been obtained; provided,
however,
that
after any such approval by the holders of Chickamauga Stock, there shall be
made
no amendment decreasing the consideration to be received by Chickamauga
shareholders without the further approval of such shareholders.
11.6 Waivers.
(a) Prior
to
or at the Effective Time, SouthCrest, acting through its Board of Directors,
Chief Executive Officer or other authorized officer, shall have the right to
waive any Default in the performance of any term of this Agreement by
Chickamauga, to waive or extend the time for the compliance or fulfillment
by
Chickamauga of any and all of its obligations under this Agreement and to waive
any or all of the conditions precedent to the obligations of SouthCrest under
this Agreement, except any condition which, if not satisfied, would result
in
the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of SouthCrest.
(b) Prior
to
or at the Effective Time, Chickamauga, acting through its Board of Directors,
Chief Executive Officer or other authorized officer, shall have the right to
waive any Default in the performance of any term of this Agreement by
SouthCrest, to waive or extend the time for the compliance or fulfillment by
SouthCrest of any and all of its obligations under this Agreement and to waive
any or all of the conditions precedent to the obligations of Chickamauga under
this Agreement, except any condition which, if not satisfied, would result
in
the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Chickamauga.
(c) The
failure of any Party at any time or times to require performance of any
provision hereof shall in no manner affect the right of such Party at a later
time to enforce the same or any other provision of this Agreement. No waiver
of
any condition or of the breach of any term contained in this Agreement in one
or
more instances shall be deemed to be or construed as a further or continuing
waiver of such condition or breach or a waiver of any other condition or of
the
breach of any other term of this Agreement.
11.7 Assignment.
Except
as expressly contemplated hereby, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any Party hereto
(whether by operation of Law or otherwise) without the prior written consent
of
the other Party. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and assigns.
11.8 Notices.
All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered by hand, by facsimile transmission,
by
registered or certified mail, postage pre-paid, or by courier or overnight
carrier, to the persons at the addresses set forth below (or at such other
address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered or refused:
|
SouthCrest:
|
SouthCrest
Financial Group, Inc.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
(▇▇▇)
▇▇▇-▇▇▇▇ - FAX
Attn:
▇▇▇▇▇▇▇ ▇. Hertha
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Copy
to Counsel:
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▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP
One
Atlantic Center
Fourteenth
Floor
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇)
▇▇▇-▇▇▇▇ - FAX
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Chickamauga:
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Bank
of Chickamauga
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
(706)
375-3112
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Copy
to Counsel:
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▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
1600
Atlanta Financial Center
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇)
▇▇▇-▇▇▇▇ - FAX
Attn:
T. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
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11.9 Governing
Law.
Regardless of any conflict of law or choice of law principles that might
otherwise apply, the Parties agree that this Agreement shall be governed by
and
construed in all respects in accordance with the laws of the State of Georgia.
The Parties all expressly agree and acknowledge that the State of Georgia has
a
reasonable relationship to the Parties and/or this Agreement. Each Party hereby
irrevocably waives, to the fullest extent permitted by Law, (a) any objection
that it may now or hereafter have to laying venue of any suit, action or
proceeding brought in such court, (b) and claim that any suit, action or
proceeding brought in such court has been brought in an inconvenient forum,
and
(c) and defense that it may now or hereafter have based on lack of personal
jurisdiction in such forum.
11.10 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one and
the
same instrument.
11.11 Captions;
Articles and Sections.
The
captions contained in this Agreement are for reference purposes only and are
not
part of this Agreement. Unless otherwise indicated, all references to particular
Articles or Sections shall mean and refer to the referenced Articles and
Sections of this Agreement.
11.12 Enforcement
of Agreement.
The
Parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions hereof
in
any court of the United States or any state having jurisdiction, this being
in
addition to any other remedy to which they are entitled at law or in equity
other than for willful breach of a Party’s representations, warranties or
agreements as provided for in Section 11.2(b) of this Agreement.
11.13 Severability.
Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
11.14 Interpretation
of Agreement.
The
Parties hereto acknowledge and agree that each Party has participated in the
drafting of this Agreement and that this document has been reviewed, negotiated
and accepted by all parties and their respective counsel, and the normal rule
of
construction to the effect that any ambiguities are to be resolved against
the
drafting party shall not be applied to the interpretation of this Agreement.
No
inference in favor, or against, any party shall be drawn from the fact that
one
party has drafted any portion hereof.
IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
on
its behalf and its corporate seal to be hereunto affixed and attested by
officers thereunto as of the day and year first above written.
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“CHICKAMAUGA”
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ATTEST:
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BANK
OF CHICKAMAUGA
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇, Secretary
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, President & CEO
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(CORPORATE
SEAL)
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“SOUTHCREST”
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ATTEST:
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SOUTHCREST
FINANCIAL GROUP, INC.
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/s/
▇▇▇▇▇▇▇ ▇. Hertha
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇
▇. Hertha, Secretary
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Chairman
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(CORPORATE
SEAL)
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇, President
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Schedule
Index
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Schedule
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Description
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3.1(iv)
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Known
Contractual Obligations of Chickamauga
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9.2(k)
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Individuals
to Sign Restricted Covenant
Agreements
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Exhibit
Index
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Exhibit
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Description
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A
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List
of Chickamauga Shareholders
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B
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Form
of Shareholder Support Agreement
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C
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Form
of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP Opinion
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D
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Form
of Claims/Indemnification Letter
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E
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Form
of Restrictive Covenant Agreement
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