AGREEMENT AND PLAN OF MERGER By and Between SCBT FINANCIAL CORPORATION and TSB FINANCIAL CORPORATION August 29, 2007
Exhibit
2.1
AGREEMENT
AND PLAN OF MERGER
By
and Between
SCBT
FINANCIAL CORPORATION
and
TSB
FINANCIAL CORPORATION
August
29, 2007
TABLE
OF CONTENTS
Page
| Exhibit | Description |
| A | Form of Support Agreement |
| B | Form of Affiliate’s Agreement |
| C | Form of Claims Letter |
| D | Form of Director Agreement |
-iv-
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as of
August 29, 2007 is by and between SCBT Financial Corporation, a South Carolina
corporation (“Buyer”), and TSB Financial Corporation, a North Carolina
corporation (“Seller”).
This
Agreement provides for the merger of Seller with and into Buyer (the
“Merger”). At the effective time of the Merger, the
outstanding shares of the capital stock of Seller shall be converted into the
right to receive shares of the common stock of Buyer and/or cash (as provided
herein and subject to the terms and conditions set forth
herein). This Agreement has been approved and adopted by the
respective boards of directors of Seller and Buyer. The transaction
described in this Agreement is subject to the approvals of the shareholders
of
Seller and regulatory agencies and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to
this Agreement that the Merger for federal income tax purposes shall qualify
as
a “reorganization” within the meaning of Section 368(a) of the
Code.
Certain
terms used in this Agreement are defined in Section 10.1 of this
Agreement.
NOW,
THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, and other good
and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the Parties, intending to be legally bound, agree as follows:
TRANSACTIONS
AND TERMS OF MERGER
1.1 Merger.
Subject
to
the terms and conditions of this Agreement, at the Effective Time, Seller shall
be merged with and into Buyer pursuant to Section ▇▇-▇▇-▇▇▇ of the SCBCA and
Section 55-11-07 of the NCBCA, and Buyer shall be the Surviving Corporation
resulting from the Merger and shall continue to be governed by the Laws of
the
State of South Carolina.
1.2 Time
and Place of Closing.
The
closing of the transactions contemplated hereby (the “Closing”) will take
place at 11:00 A.M. Eastern Time on the date that the Effective Time
occurs (or the immediately preceding day if the Effective Time is earlier than
11:00 A.M. Eastern Time), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The
Closing shall be held at the offices of the ▇▇▇▇▇▇ Law Firm, P.A., 1301 Gervais
Street, Columbia, South Carolina or such other location as may be mutually
agreed upon by the Parties and may be effected by electronic or other
transmission of signature pages, as mutually agreed upon.
1.3 Effective
Time.
The
Merger
and other transactions contemplated by this Agreement shall become effective
on
the date and time that articles of merger reflecting the Merger shall be filed
and become effective with the South Carolina Secretary of State and the North
Carolina Secretary of State (the “Effective Time”). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur within five business
days of the last of the following dates to occur: (i) the effective date
(including expiration of any applicable waiting period) of the last required
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger, and (ii) the date on which the shareholders of Seller
approve this Agreement.
-1-
1.4 Restructure
of Transaction.
At
any
time prior to the mailing of the Proxy Statement/Prospectus to the Seller’s
shareholders, Buyer shall have the right, with the prior written consent of
Seller, which consent shall not be unreasonably withheld, to revise the
structure of the Merger contemplated by this Agreement by merging Seller with
and into a wholly-owned subsidiary of Buyer; provided, that no such
revision to the structure of the Merger (i) shall result in any changes in
the
amount or type of the consideration which the holders of shares of Seller Common
Stock or Seller Options are entitled to receive under this Agreement, including
the right of Seller’s shareholders to elect the type of consideration subject to
the limit set forth herein, (ii) shall unreasonably impede or delay
consummation of the Merger, or (iii) shall impose any less favorable terms
or
conditions on Seller. Buyer may effect such revision by giving
written notice to Seller in the manner provided in Section
10.8, 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 Merger, and which
shall be accompanied by such other exhibits hereto as are reasonably necessary
or appropriate to effect such change, and, provided that the conditions set
forth in the preceding sentence are satisfied, Seller shall take such actions
as
are reasonably necessary to effect such amendment or enter into such Amended
and
Restated Agreement and Plan of Merger, as applicable.
TERMS
OF MERGER
2.1 Articles
of Incorporation.
The
Articles of Incorporation of Buyer in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation until
otherwise duly amended or repealed.
2.2 Bylaws.
The
Bylaws
of Buyer in effect immediately prior to the Effective Time shall be the Bylaws
of the Surviving Corporation until otherwise duly amended or
repealed.
2.3 Directors
and Officers.
The
directors of Buyer in office immediately prior to the Effective Time, together
with such additional persons as may thereafter be elected, shall serve as the
directors of the Surviving Corporation from and after the Effective Time in
accordance with the Surviving Corporation’s Bylaws, until the earlier of their
resignation or removal or otherwise ceasing to be a director. The
officers of Buyer in office immediately prior to the Effective Time, together
with such additional persons as may thereafter be elected, shall serve as the
officers of the Surviving Corporation from and after the Effective Time in
accordance with the Surviving Corporation’s Bylaws, until the earlier of their
resignation or removal or otherwise ceasing to be an officer.
-2-
MANNER
OF CONVERTING SHARES
3.1 Effect
on Seller Common Stock.
(a) At
the
Effective Time, in each case subject to Section 3.1(d), by virtue of the Merger
and without any action on the part of the Parties, each share of Seller Common
Stock that is issued and outstanding immediately prior to the Effective Time
(other than shares of Seller Common Stock held by either Party or any Subsidiary
of either Party (in each case other than shares of Seller Common Stock held
on
behalf of third parties or held by any Buyer Entity or Seller Entity as a result
of debts previously contracted) or shares of the Seller Common Stock that are
owned by shareholders properly exercising their dissenters’ rights pursuant to
Article 13 of the NCBCA (the “Dissenter Shares”) shall be converted into
the right to receive either (i) $35.00 in cash (the “Cash Consideration”)
or (ii) 0.993 of a share of Buyer Common Stock (the “Stock
Consideration,” and separately or together with the Cash Consideration, the
“Per-Share Consideration”), subject to any applicable withholding for
Taxes. Each shareholder of Seller will be entitled to elect the Stock
Consideration or the Cash Consideration for each of his or her shares of Seller
Common Stock, subject to an overall limitation that the aggregate Stock
Consideration shall equal 939,372 shares of Buyer Common Stock. The
total merger consideration into which the outstanding shares of Seller Common
Stock are convertible in the Merger is referred to in this Agreement as the
“Merger Consideration.”
(b) At
the
Effective Time, all shares of Seller Common Stock shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease to exist as
of
the Effective Time, and each certificate previously representing any such shares
of Seller Common Stock (the “Certificates”) shall thereafter represent
with respect to each share of Seller Common Stock formerly represented thereby
only the right to receive the Per-Share Consideration, or to the
extent the Certificates evidence Dissenter Shares shall thereafter represent
only the right to receive applicable payments as set forth in Section
3.9.
(c) If,
prior
to the Effective Time, the outstanding shares of Seller Common Stock, Seller
Options or Buyer Common Stock shall have been increased, decreased, changed
into
or exchanged for a different number or kind of shares or securities as a result
of a recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other similar change in capitalization, then an appropriate
and
proportionate adjustment shall be made to the Per-Share
Consideration.
(d) Each
share
of Seller Common Stock issued and outstanding immediately prior to the Effective
Time and owned by any of the Parties or their respective Subsidiaries (in each
case other than shares of Seller Common Stock held on behalf of third parties
or
as a result of debts previously contracted) shall, by virtue of the Merger
and
without any action on the part of the holder thereof, cease to be outstanding,
shall be cancelled and retired without payment of any consideration therefore,
and shall cease to exist (the “Excluded Shares”).
3.2 Election
Procedures.
-3-
(a) An
election form and other appropriate and customary transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to
Certificates shall pass, only upon the later to occur of the proper delivery
of
such Certificates to a bank or trust company designated by Buyer and reasonably
satisfactory to Seller (the “Exchange Agent”) and the Effective Time) in
such form as Seller and Buyer shall mutually agree (the “Election Form”),
shall be mailed on a date (the “Mailing Date”) no more than 40 and no
fewer than 20 business days prior to the anticipated Election Deadline to each
holder of record of Seller Common Stock. Each Election Form shall permit the
holder of record of Seller Common Stock (or in the case of nominee record
holders, the beneficial owner through proper instructions and documentation)
to
(i) elect to receive the Cash Consideration for all or a specified portion
of such holder’s shares (a “Cash Election”), (ii) elect to receive
the Stock Consideration for all or a specified portion of such holder’s shares
(a “Stock Election”), or (iii) make no election with respect to the
receipt of the Cash Consideration or the Stock Consideration (a
“Nonelection”); provided, that, notwithstanding any other
provision of this Agreement, the aggregate Stock Consideration shall equal
939,372 shares of Buyer Common Stock (the “Stock Conversion
Number”). A record holder acting in different capacities or
acting on behalf of other persons in any way will be entitled to submit an
Election Form for each capacity in which such record holder so acts with respect
to each Person for which it so acts. Shares of Seller Common Stock as to which
a
Cash Election has been made are referred to herein as “Cash Election
Shares.” Shares of Seller Common Stock as to which a Stock Election has been
made are referred to herein as “Stock Election Shares.” Shares of Seller
Common Stock as to which no election has been made (or as to which an Election
Form is not properly completed and returned in a timely fashion) are referred
to
herein as “Nonelection Shares.” The aggregate number of shares of Seller
Common Stock with respect to which a Stock Election has been made is referred
to
herein as the “Stock Election Number.”
(b) To
be
effective, a properly completed Election Form shall be submitted to the Exchange
Agent on or before 5:00 p.m., New York City local time, on a date no later
than
the fifth business day after the Closing Date (which date shall be publicly
announced by Buyer as early as practicable prior to such date) (the “Election
Deadline”), accompanied by the Certificates as to which such Election Form
is being made, by customary affidavits and indemnification regarding the loss
or
destruction of such Certificates or by an appropriate guarantee of delivery
of
such Certificates, as set forth in the Election Form, from a member of any
registered national securities exchange or a commercial bank or trust company
in
the United States (provided, that such Certificates are in fact
delivered to the Exchange Agent by the time required in such guarantee of
delivery; failure to deliver shares of Seller Common Stock covered by such
guarantee of delivery within the time set forth on such guarantee shall be
deemed to invalidate any otherwise properly made election, unless otherwise
determined by Buyer, in its sole discretion). For shares of Seller Common Stock
held in book-entry form, Buyer shall establish procedures for delivery of such
shares, which procedures shall be reasonably acceptable to Seller. If a holder
of Seller Common Stock either (i) does not submit a properly completed
Election Form in a timely fashion with respect to any of such holder’s shares of
Seller Common Stock or (ii) revokes the holder’s Election Form with respect
to any of such holder’s shares of Seller Common Stock prior to the Election
Deadline (without later submitting a properly completed Election Form prior
to
the Election Deadline with respect to such shares), such shares of Seller Common
Stock held by such holder shall be designated Nonelection Shares. In addition,
all Election Forms shall automatically be revoked, and all Certificates promptly
returned by the Exchange Agent, if the Exchange Agent is notified in writing
by
Buyer and Seller that this Agreement has been terminated. Subject to the terms
of this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial defects in any
Election Form, and any good faith decisions of the Exchange Agent regarding
such
matters shall be binding and conclusive. Neither Buyer nor the Exchange Agent
shall be under any obligation to notify any Person of any defect in an Election
Form.
-4-
(c) The
allocation among the holders of shares of Seller Common Stock of rights to
receive the Cash Consideration and the Stock Consideration will be made as
follows:
(i) If
the Stock Election Number exceeds the Stock Conversion Number, then all Cash
Election Shares and all Nonelection Shares shall be converted into the right
to
receive the Cash Consideration, and each holder of Stock Election Shares will
be
entitled to receive the Stock Consideration in respect of that number of Stock
Election Shares held by such holder equal to the product obtained by multiplying
(x) the number of Stock Election Shares held by such holder by (y) a
fraction, the numerator of which is the Stock Conversion Number and the
denominator of which is the Stock Election Number, with the remaining number
of
such holder’s Stock Election Shares being converted into the right to receive
the Cash Consideration;
(ii) If
the Stock Election Number is less than the Stock Conversion Number (the amount
by which the Stock Conversion Number exceeds the Stock Election Number being
referred to herein as the “Shortfall Number”), then all Stock Election
Shares shall be converted into the right to receive the Stock Consideration
and
the Nonelection Shares and the Cash Election Shares shall be treated in the
following manner:
(A) if
the Shortfall Number is less than or equal to the number of Nonelection Shares,
then all Cash Election Shares shall be converted into the right to receive
the
Cash Consideration and each holder of Nonelection Shares shall receive the
Stock
Consideration in respect of that number of Nonelection Shares held by such
holder equal to the product obtained by multiplying (x) the number of
Nonelection Shares held by such holder by (y) a fraction, the numerator of
which is the Shortfall Number and the denominator of which is the total number
of Nonelection Shares, with the remaining number of such holder’s Nonelection
Shares being converted into the right to receive the Cash Consideration;
or
(B) if
the Shortfall Number exceeds the number of Nonelection Shares, then all
Nonelection Shares shall be converted into the right to receive the Stock
Consideration, and each holder of Cash Election Shares shall receive the Stock
Consideration in respect of that number of Cash Election Shares equal to the
product obtained by multiplying (x) the number of Cash Election Shares held
by such holder by (y) a fraction, the numerator of which is the amount by
which (1) the Shortfall Number exceeds (2) the total number of
Nonelection Shares and the denominator of which is the total number of Cash
Election Shares, with the remaining number of such holder’s Cash Election Shares
being converted into the right to receive the Cash Consideration.
3.3 Closing
Payment. At or prior to the Effective Time, Buyer shall
deposit with the Exchange Agent, for the benefit of the holders of Seller Common
Stock, the Merger Consideration in accordance with the provisions of this
Agreement. The Exchange Agent shall deliver the Merger Consideration
in accordance with the procedures set forth in Section 3.4 below.
-5-
3.4 Exchange
Procedures.
(a) As
soon as
reasonably practicable after the Election Deadline and in no event later than
five business days after the Election Deadline, Buyer shall cause the Exchange
Agent to mail to the former shareholders of Seller, who have not previously
surrendered such Certificate or Certificates of Seller Common Stock, appropriate
transmittal materials (which shall specify that delivery shall be effected,
and
risk of loss and title to the certificates or other instruments theretofore
representing shares of Seller Common Stock shall pass, only upon proper delivery
of such certificates or other instruments to the Exchange Agent). The
Certificate or Certificates of Seller Common Stock so surrendered shall be
duly
endorsed as the Exchange Agent may reasonably require. In the event
of a transfer of ownership of shares of Seller Common Stock represented by
Certificates that is not registered in the transfer records of Seller, the
portion of the Merger Consideration payable for such shares as provided in
Sections 3.1 and 3.2 may be issued to a transferee if the Certificates
representing such shares are delivered to the Exchange Agent, properly endorsed
or otherwise in proper form for transfer, and accompanied by all documents
required to evidence such transfer and by evidence reasonably satisfactory
to
the Exchange Agent that such transfer is proper and that any applicable stock
transfer taxes have been paid. In the event any certificate
representing Seller Common Stock certificate shall have been lost, stolen,
or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen, or destroyed and the posting by such person
of a bond in such amount as Buyer may reasonably direct as indemnity against
any
claim that may be made against it with respect to such certificate, the Exchange
Agent shall issue in exchange for such lost, stolen, or destroyed certificate
the Per-Share Consideration as provided for in Sections 3.1 and
3.2. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it may deem
appropriate. Buyer shall pay all charges and expenses, including
those of the Exchange Agent in connection with the distribution of the Per-Share
Consideration as provided in Sections 3.1 and 3.2.
(b) After
the
Effective Time, each holder of shares of Seller Common Stock (other than
Excluded Shares and Dissenter Shares) issued and outstanding at the Effective
Time shall surrender the Certificate or Certificates representing such shares
to
the Exchange Agent and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided for in Sections 3.1 and 3.2, without
interest, pursuant to this Section 3.4. Any shares of Seller Common
Stock delivered to the Exchange Agent pursuant to the procedure set forth in
Section 3.2(b) and not withdrawn prior to the Effective Time shall be deemed
to
be surrendered to the Exchange Agent immediately after the Effective
Time. Neither Buyer nor the Exchange Agent shall be obligated to
deliver the consideration to which any former holder of Seller Common Stock
is
entitled as a result of the Merger until such holder surrenders such holder’s
Certificate or Certificates for exchange as provided in this Section
3.4. Any other provision of this Agreement notwithstanding, neither
any Buyer Entity, nor any Seller Entity, nor the Exchange Agent shall be liable
to any holder of Seller Common Stock for any amounts paid or properly delivered
in good faith to a public official pursuant to any applicable abandoned
property, escheat, or similar Law.
(c) Each
of
Buyer and the Exchange Agent shall be entitled to deduct and withhold from
the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Seller Common Stock and Seller Options such amounts, if any, as it
is
required to deduct and withhold with respect to the making of such payment
under
the Code or any provision of state, local, or foreign Tax Law or by any Taxing
Authority or Governmental Authority. To the extent that any amounts
are so withheld by Buyer, the Surviving Corporation, or the Exchange Agent,
as
the case may be, such withheld amounts shall be treated for all purposes of
this
Agreement as having been paid to the holder of the shares of Seller Common
Stock, as applicable in respect of which such deduction and withholding was
made
by Buyer, the Surviving Corporation, or the Exchange Agent, as the case may
be.
-6-
3.5 Effect
on Buyer Common Stock.
At
and
immediately after the Effective Time, each share of Buyer Common Stock issued
and outstanding immediately prior to the Effective Time shall remain an issued
and outstanding share of common stock of the Surviving Corporation and shall
not
be affected by the Merger.
3.6 Seller
Options.
(a) At
the
Effective Time, all rights with respect to Seller Common Stock pursuant to
stock
options or warrants granted by Seller (the “Seller Options”) which are
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights to receive, with respect to each share of
Seller Common Stock purchasable thereunder, an amount in cash (the “Option
Spread”) equal to (i) $35.00, minus (ii) the exercise price per share of
Seller Common Stock applicable to such Seller Option.
(b) Seller’s
board of directors or its compensation committee shall make any adjustments
and
amendments to or make such determinations with respect to the Seller Options
necessary to effect the foregoing provisions of this Section 3.6.
(c) At
or
promptly after the Effective Time, the Surviving Corporation shall pay to each
holder of Seller Options the Option Spread for each share of Seller Common
Stock
purchasable thereunder immediately prior to the Effective Time, whether or
not
such Seller Options were then exercisable, less applicable withholding for
Taxes.
3.7 Rights
of Former Seller Shareholders.
At
the
Effective Time, the stock transfer books of Seller shall be closed as to holders
of Seller Common Stock and no transfer of Seller Common Stock by any holder
of
such shares shall thereafter be made or recognized. Until surrendered
for exchange in accordance with the provisions of Section 3.3, each Certificate
theretofore representing shares of Seller Common Stock (other than certificates
representing Excluded Shares and Dissenter Shares), shall from and after the
Effective Time represent for all purposes only the right to receive the
Per-Share Consideration, without interest, as provided in Article
3.
3.8 Fractional
Shares.
Notwithstanding
any other provision of this Agreement, each holder of shares of Seller Common
Stock exchanged pursuant to the Merger, who would otherwise have been entitled
to receive a fraction of a share of Buyer Common Stock (after taking into
account all certificates delivered by such holder), shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part
of a
share of Buyer Common Stock multiplied by the average of the closing sale prices
of Buyer Common Stock as reported on the NASDAQ Global Select Market during
the
20 consecutive full trading days ending at the closing of trading on the Closing
Date; provided, however, that in the event Buyer Common Stock does not trade
on
any one or more of the trading days during the 20 consecutive full trading
days
ending at the closing of trading on the Closing Date, any such date shall be
disregarded in computing the average closing sales price and the average shall
be based upon the closing sales prices and number of days on which Buyer Common
Stock actually traded during the 20 consecutive full trading days ending at
the
closing of trading on the Closing Date. No such holder will be
entitled to dividends, voting rights, or any other rights as a shareholder
in
respect of any fractional shares.
-7-
3.9 Dissenting
Shareholders.
Any
holder
of shares of Seller Common Stock who perfects such holder’s dissenters’ rights
in accordance with and as contemplated by Article 13 of the NCBCA shall be
entitled to receive from the Surviving Corporation, in lieu of the Per-Share
Consideration, the value of such shares as to which dissenters rights have
been
perfected in cash as determined pursuant to such provision of Law; provided,
that no such payment shall be made to any dissenting shareholder unless and
until such dissenting shareholder has complied with all applicable provisions
of
such Law. In the event that after the Effective Time a dissenting
shareholder of Seller fails to perfect, or effectively withdraws or loses,
such
holder’s right to payment pursuant to Article 13 of the NCBCA for such holder’s
Dissenter Shares, the Surviving Corporation shall deliver the Cash Consideration
(without interest) to which such holder of shares of Seller Common Stock would
have been entitled under this Article 3, as if such holder had elected Cash
Consideration for each such share and without regard to the allocation pursuant
to Section 3.2(b), promptly upon the later of such failure to perfect or
withdrawal or loss of such holder’s right to payment pursuant to Article 13 of
the NCBCA for such Dissenter Shares and the surrender by such holder of the
Certificates evidencing such shares.
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
represents and warrants to Buyer, except as set forth on the Seller Disclosure
Memorandum, as follows:
4.1 Organization,
Standing, and Power.
Each
of
Seller and the Bank is a corporation duly organized, validly existing, and
in
good standing under the Laws of the State of North Carolina, and Seller is
a
bank holding company within the meaning of the Bank Holding Company Act of
1956
(the “BHCA”). Each of Seller and the Bank has the corporate
power and authority to carry on its business as now conducted and to own, lease,
and operate its Assets. Each of Seller and the Bank is duly qualified
or licensed to transact business as a foreign corporation in good standing
in
the states of the United States and foreign jurisdictions where the character
of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions where the failure to be
so
qualified or licensed is not reasonably likely to have, individually or in
the
aggregate, a Seller Material Adverse Effect. The minute book and
other organizational documents for each of Seller and the Bank have been made
available to Buyer for its review and are true and complete in all material
respects as in effect as of the date of this Agreement and accurately reflect
in
all material respects all amendments thereto and all proceedings of the
respective board of directors (including any committees of the board of
directors) and shareholders thereof. The Bank is an “insured
institution” as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, and the deposits held by Bank are insured by the FDIC’s
Deposit Insurance Fund to the extent permitted by Law.
-8-
4.2 Authority
of Seller; No Breach By Agreement.
(a) Seller
has
the corporate power and authority necessary to execute, deliver, and, other
than
with respect to the Merger, perform this Agreement, and with respect to the
Merger, upon the approval of the Merger, as required by Sections 8.1(b) and
8.1(c) and by Seller’s shareholders in accordance with this Agreement and the
NCBCA, to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Seller,
subject to the approval of this Agreement by the holders of a majority of the
outstanding shares of Seller Common Stock, which is the only shareholder vote
of
Seller required for approval of this Agreement and consummation of the
Merger. Subject to any necessary approvals referred to in Sections
8.1(b) and 8.1(c) and by such requisite shareholder approval, this Agreement
represents a legal, valid, and binding obligation of Seller, enforceable against
Seller 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
applicable equitable principles (whether considered in a proceeding in law
or in
equity).
(b) Neither
the execution and delivery of this Agreement by Seller, nor the consummation
by
Seller of the transactions contemplated hereby, nor compliance by Seller with
any of the provisions hereof, will (i) conflict with or result in a breach
of any provision of Seller’s articles of incorporation or bylaws or
the articles of incorporation or bylaws of the Bank or any
resolution adopted by the board of directors or the shareholders of any Seller
Entity, 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 Seller
Entity under, any Contract or Permit of any Seller Entity or, (iii) subject
to receipt of the requisite Consents referred to in Section 8.1(c), constitute
or result in a Default under, or require any Consent pursuant to, any Law or
Order applicable to any Seller Entity or any of their respective material
Assets, except, with respect to clauses (ii) and (iii), where such Defaults,
failure to obtain Consents or Liens would not, individually or in the aggregate,
have a Seller Material Adverse Effect.
(c) Other
than
in connection or compliance with the provisions of the Securities Laws and
applicable state corporate and securities Laws, and other than Consents required
from Regulatory Authorities, and other than notices to or filings with the
IRS
or the Pension Benefit Guaranty Corporation with respect to any employee benefit
plans and other than Consents, filings or notifications which, if not obtained
or made, are not reasonably likely to have, individually or in the aggregate,
a
Seller Material Adverse Effect, no notice to, filing with, or Consent of, any
Governmental Authority is necessary for the consummation by Seller of the Merger
and the other transactions contemplated in this Agreement.
4.3 Capital
Stock.
(a) The
authorized capital stock of Seller consists of 20,000,000 shares of Seller
Common Stock, of which 1,113,037 shares are issued and outstanding, as of the
date of this Agreement, and, assuming that all of the Seller Options outstanding
on the date of this Agreement are exercised prior to the Effective Time, not
more than an additional 163,738 shares, with a per-share weighted average
exercise price of $13.43, would be issued and outstanding at the Effective
Time. All of the issued and outstanding shares of capital stock of
Seller are duly and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of capital stock of
Seller has been issued in violation of any preemptive rights of the current
or
past shareholders of Seller.
-9-
(b) Other
than
with respect to the Seller Options outstanding on the date of this Agreement,
there are no shares of capital stock or other equity securities of Seller
reserved for issuance. Other than the Seller Options outstanding on
the date of this Agreement, there are no outstanding Rights issued by Seller
or
any Seller Entity relating to the capital stock of Seller.
4.4 Seller
Subsidiaries.
Seller
has
no Subsidiaries except the Bank and the Trust, and Seller owns all of the equity
interests in the Bank and all of the common equity interests of the
Trust. No capital stock (or other equity interest) of the Bank is or
may become required to be issued (other than to another Seller Entity that
is
directly or indirectly wholly owned by Seller) by reason of any Rights, and
there are no Contracts by which the Bank is bound to issue (other than to
another Seller Entity that is directly or indirectly wholly owned by Seller)
additional shares of its capital stock (or other equity interests) or Rights
or
by which any Seller Entity is or may be bound to transfer any shares of the
capital stock (or other equity interests) of the Bank (other than to another
Seller Entity that is directly or indirectly wholly owned by
Seller). There are no Contracts relating to the rights of any Seller
Entity to vote or to dispose of any shares of the capital stock (or other equity
interests) of the Bank. All of the shares of capital stock (or other
equity interests) of the Bank are fully paid and nonassessable (except pursuant
to Section 53-42 of the North Carolina General Statutes) and are owned directly
or indirectly by Seller free and clear of any Lien. The Bank has the
corporate power and authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. The Bank is
duly qualified or licensed to transact business as a foreign entity in good
standing in the States of the United States and foreign jurisdictions where
the
character of its Assets or the nature or conduct of its business requires it
to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually
or
in the aggregate, a Seller Material Adverse
Effect.
4.5 Exchange
Act Filings; Securities Offerings; Financial Statements.
(a) Seller
has
timely filed and made available to Buyer all Exchange Act Documents required
to
be filed by Seller since July 1, 2004 (the “Seller
Exchange Act Reports”). The Seller Exchange Act Reports
(i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Laws and (ii) did not, at the
time they were filed (or, if amended or superseded by a filing prior to the
date
of this Agreement, then on the date of such filing or, in the case of
registration statements, at the effective date thereof) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Seller Exchange Act Reports or necessary in order to make the
statements in such Seller Exchange Act Reports, in light of the circumstances
under which they were made, not misleading. Each offering or sale of
securities by Seller (i) was either registered under the Securities Act or
made
pursuant to a valid exemption from registration, (ii) complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable Laws, except for immaterial late “blue sky” filings, including
disclosure and broker/dealer registration requirements, and (iii) was made
pursuant to offering documents which did not, at the time of the offering (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 the offering documents or necessary in order to make
the statements in such documents not misleading. Seller has delivered
or made available to Buyer all comment letters received by Seller from the
staff
of the SEC and all responses to such comment letters by or on behalf of Seller
with respect to all filings under the Securities Laws. Seller’s
principal executive officer and principal financial officer (and Seller’s former
principal executive officers and principal financial officers, as applicable)
have made the certifications required by Sections 302 and 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations of the Exchange Act thereunder
with respect to the Seller Exchange Act Reports to the extent such rules or
regulations applied at the time of the filing. For purposes of the
preceding sentence, “principal executive officer” and “principal financial
officer” have the meanings given to such terms in the Sarbanes–Oxley
Act. Such certifications are included as exhibits to the applicable
Seller Exchange Act Reports and have not been modified or withdrawn; and neither
Seller nor any of its officers has received notice from any Regulatory Authority
questioning or challenging the accuracy, completeness, content, form, or manner
of filing or submission of such certifications.
-10-
(b) Each
of
the Seller Financial Statements (including, in each case, any related notes)
that are contained in the Seller Exchange Act Reports, including any Seller
Exchange Act Reports filed after the date of this Agreement until the Effective
Time, complied, or will comply, as to form in all material respects with the
Exchange Act, was, 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 Exchange Act), fairly presented
in
all material respects the consolidated financial position of Seller and its
subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
(c) Seller’s
independent public accountants, which have expressed their opinion with respect
to audited, annual Seller Financial Statements included in the Seller Exchange
Act Reports (including the related notes), to Seller’s Knowledge, are and have
been throughout the periods covered by such Seller Financial Statements (x)
a
registered public accounting firm (as defined in Section 2(a)(12) of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act) (to the extent applicable during such period), (y)
“independent” with respect to Seller within the meaning of Regulation S-X of the
SEC, and (z) with respect to Seller, in compliance with subsections (g) through
(l) of Section 10A of the Exchange Act and related Securities
Laws. .
(d) Seller
maintains disclosure controls and procedures as required by Rule 13a-15 or
15d-15 under the Exchange Act, and such controls and procedures are effective
to
ensure that all material information relating to Seller and its Subsidiaries
is
made known on a timely basis to Seller’s principal executive officer and
Seller’s principal financial officer.
4.6 Absence
of Undisclosed Liabilities.
-11-
As
of the
date of this Agreement, no Seller Entity has any Liabilities required under
GAAP
to be set forth on a consolidated balance sheet or in the notes thereto that
are
reasonably likely to have, individually or in the aggregate, a Seller Material
Adverse Effect, except Liabilities which are (i) accrued or reserved against
in
the consolidated balance sheet of Seller as of June 30, 2007, included in the
Seller Financial Statements delivered prior to the date of this Agreement or
reflected in the notes thereto, (ii) incurred after June 30, 2007 in the
ordinary course of business consistent with past practices, or (iii) incurred
after June 30, 2007 in connection with the transactions contemplated by this
Agreement. Section 4.6 of the Seller Disclosure Memorandum lists, and
Seller has delivered to Buyer copies of the documentation creating or governing,
all securitization transactions and “off-balance sheet arrangements” (as
defined in Item 303(a)(4) of Regulation S-K of the Exchange Act) effected by
Seller or its Subsidiaries other than letters of credit and unfunded loan
commitments or credit lines. Except as reflected on Seller’s balance
sheet at June 30, 2007, no Seller Entity is directly or indirectly liable,
by
guarantee, indemnity, or otherwise, upon or with respect to, or obligated,
by
discount or repurchase agreement or in any other way, to provide funds in
respect to, or obligated to guarantee or assume any Liability of any Person
for
any amount in excess of $50,000 or any amounts, whether or not in excess of
$50,000 that, in the aggregate, exceed $100,000.
4.7 Absence
of Certain Changes or Events.
Except
as
disclosed in the Seller Financial Statements delivered prior to the date of
this
Agreement and except as may be affected by acts or events after the
date hereof permitted under this Agreement, since December 31, 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 Seller
Material Adverse Effect, and (ii) the Seller Entities have conducted their
respective businesses in the ordinary course of business consistent with past
practice.
4.8 Tax
Matters.
(a) All
Seller
Entities have timely filed with the appropriate Taxing Authorities, all material
Tax Returns in all jurisdictions in which Tax Returns are required to be filed
for periods ending on or before December 31, 2006, and such Tax Returns are
correct and complete in all material respects. None of the Seller
Entities is the beneficiary of any extension of time within which to file any
Tax Return. All Taxes of Seller Entities (whether or not shown on any
Tax Returns) have been fully and timely paid. There are no Liens for
any Taxes (other than a Lien for current real property or ad valorem
Taxes not yet due and payable) on any of the Assets of any of the
Seller
Entities. No claim has ever been made by an authority in a
jurisdiction where any Seller Entity does not file a Tax Return that such Seller
Entity may be subject to Taxes by that jurisdiction.
(b) None
of
the Seller Entities has received any notice of any material assessment or
proposed assessment in connection with any Taxes, and there are no pending,
or,
to Seller’s Knowledge, threatened disputes, claims, audits, or examinations
regarding any Taxes of any Seller Entity or the assets of any Seller
Entity. Seller does not expect any Taxing Authority to assess any
additional material Taxes for any period for which Tax Returns have been
filed. No issue has been raised by a Taxing Authority in any prior
examination of Seller which could reasonably be expected to result in a proposed
deficiency for any subsequent taxable period. None of the Seller
Entities has waived any statute of limitations in respect of any Taxes or agreed
to a Tax assessment or deficiency.
(c) Each
Seller Entity has complied in all material respects with all applicable Laws
relating to the withholding of Taxes and the payment thereof to appropriate
authorities, including Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee or independent contractor,
and Taxes required to be withheld and paid pursuant to Sections 1441 and 1442
of
the Code or similar provisions under foreign Law.
-12-
(d) Adequate
provision for any Taxes due or to become due for any of the Seller Entities
for
the period or periods through and including the date of the Seller Financial
Statements has been made in accordance with GAAP and is reflected on the Seller
Financial Statements.
(e) None
of
the Seller Entities is a party to any Tax allocation or sharing agreement and
none of the Seller Entities has been a member of an affiliated group filing
a
consolidated federal income Tax Return other than such an agreement among,
or
such a Tax Return consisting of, the group of which Seller is the common parent
or has any Tax Liability of any Person under Treasury Regulation Section
1.1502-6 or any similar provision of state, local or foreign Law, or as a
transferee or successor, by contract or otherwise.
(f) During
the
five-year period ending on the date hereof, none of the Seller Entities was
a
“distributing corporation” or a “controlled corporation” as defined in, and in a
transaction intended to be governed by Section 355 of the Code.
(g) None
of
the Seller Entities has made any payments, is obligated to make any payments,
or
is a party to any contract that could obligate it to make any payments that
could be disallowed as a deduction under Section 280G or 162(m) of the Code,
or
which would be subject to withholding under Section 4999 of the
Code. None of the Seller Entities has been or will be required to
include any adjustment in taxable income for any Tax period (or portion thereof)
pursuant to Section 481 of the Code or any comparable provision under state
or
foreign Tax Laws as a result of transactions or events occurring prior to the
Closing. Any net operating losses of the Seller Entities are not
subject to any limitation on their use under the provisions of Sections 382
or
269 of the Code or any other provisions of the Code or the Treasury Regulations
dealing with the utilization of net operating losses other than any such
limitations as may arise as a result of the consummation of the transactions
contemplated by this Agreement.
(h) Each
of
the Seller Entities is in compliance in all material respects with, and its
records contain all information and documents (including properly completed
IRS
Forms W-9) necessary to comply in all material respects with, all applicable
information reporting and Tax withholding requirements under federal, state,
and
local Tax Laws, and such records identify with specificity all accounts subject
to backup withholding under Section 3406 of the Code.
(i) No
Seller
Entity is subject to any private letter ruling of the IRS or comparable rulings
of any Taxing Authority.
(j) No
property owned by any Seller Entity is (i) “tax-exempt use property” within the
meaning of Section 168(h)(1) of the Code, or (ii) “tax-exempt bond financed
property” within the meaning of Section 168(g) of the Code.
(k) No
Seller
Entity has any “corporate acquisition indebtedness” within the meaning of
Section 279 of the Code.
-13-
(l) Seller
has
disclosed on its federal income Tax Returns all positions taken therein that
are
reasonably believed to give rise to substantial understatement of federal income
tax within the meaning of Section 6662 of the Code.
(m) No
Seller
Entity has participated in any reportable transaction, as defined in Treasury
Regulation Section 1.6011-4(b)(1), or a transaction substantially similar to
a
reportable transaction.
(n) Seller
has
made available to Buyer complete copies of (i) all federal, state, local and
foreign income or franchise Tax Returns of the Seller Entities relating to
the
taxable periods ended December 31, 2004 and 2005 and (ii) any audit report
issued within such period relating to any Taxes due from or with respect to
the
Seller Entities.
(o) No
Seller
Entity nor any other Person on its behalf has (i) filed a consent pursuant
to
Section 341(f) of the Code (as in effect prior to the repeal under the Jobs
and
Growth Tax Reconciliation Act of 2003) or agreed to have Section 341(f)(2)
of
the Code (as in effect prior to the repeal under the Jobs and Growth Tax
Reconciliation Act of 2003) apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by any Seller
Entities, (ii) executed or entered into a closing agreement pursuant to Section
7121 of the Code or any similar provision of Law with respect to the Seller
Entities, or (iii) granted to any Person any power of attorney that is currently
in force with respect to any Tax matter.
(p) No
Seller
Entity has, or ever had, a permanent establishment in any country other than
the
United States, or has engaged in a trade or business in any country other than
the United States that subjected it to tax in such country.
For
purposes of this Section 4.8, any reference to Seller or any Seller Entity
shall
be deemed to include any Person which merged with or was liquidated into or
otherwise combined with Seller or a Seller Entity.
4.9 Allowance
for Loan Losses; Loan and Investment Portfolio, etc.
(a) Seller’s
allowance for loan, lease, securities, or credit losses (the “Allowance”)
shown on the balance sheets of Seller included in the most recent Seller
Financial Statements dated prior to the date of this Agreement was, and the
Allowance shown on the balance sheets of Seller included in the Seller Financial
Statements as of dates subsequent to the execution of this Agreement will be,
as
of the dates thereof, adequate (within the meaning of GAAP and applicable
regulatory requirements or guidelines) to provide for all known or reasonably
anticipated losses relating to or inherent in the loan, lease and securities
portfolios (including accrued interest receivables, letters of credit, and
commitments to make loans or extend credit), by the Seller Entities as of the
dates thereof. The Seller Financial Statements fairly present in all
material respects the values of all loans, leases, securities, tangible and
intangible assets and liabilities, and any impairments thereof on the bases
set
forth therein.
(b) As
of the
date hereof, all loans, discounts and leases (in which any Seller Entity is
lessor) reflected on Seller’s Financial Statements were, and with respect to the
consolidated balance sheets delivered as of the dates subsequent to the
execution of this Agreement will be as of the dates thereof, (a) at the time
and
under the circumstances in which made, made for good, valuable and adequate
consideration in the ordinary course of business and are the legal and binding
obligations of the obligors thereof, (b) evidenced by genuine notes, agreements,
or other evidences of indebtedness and (c) to the extent secured, have been
secured, to the Knowledge of Seller, by valid liens and security interests
which
have been perfected. Accurate lists of all loans, discounts and
financing leases as of July 31, 2007 and on a monthly basis thereafter, and
of
the investment portfolios of each Seller Entity as of such date, have been
and
will be made available to Buyer concurrently with the Seller Disclosure
Memorandum.
-14-
4.10 Assets.
(a) To
Seller’s Knowledge, except as disclosed or reserved against in the Seller
Financial Statements delivered prior to the date of this Agreement, the Seller
Entities have good and marketable title, free and clear of all Liens, to all
of
their respective Assets that they own, other than such defects or Liens that
are
not reasonably likely to have a Seller Material Adverse Effect. In
addition, to Seller’s Knowledge, all tangible properties used in the businesses
of the Seller Entities are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with Seller’s past
practices, except as would not reasonably be likely to have a Seller Material
Adverse Effect.
(b) All
Assets
which are material to Seller’s business, held under leases or subleases by any
of the Seller Entities, are held under valid Contracts enforceable in accordance
with their respective terms, 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
applicable equitable principles (whether considered in a proceeding in law
or in
equity), and each such Contract is in full force and effect.
(c) The
Seller
Entities currently maintain insurance, including bankers’ blanket bonds, with
insurers of recognized financial responsibility, in amounts, scope, and coverage
reasonably necessary for their operations. Since January 1, 2004,
none of the Seller Entities has received notice from any insurance carrier
that
(i) any policy of insurance will be canceled or that coverage thereunder
will be reduced or eliminated, (ii) premium costs with respect
to such policies of insurance will be substantially increased, or (iii) similar
coverage will be denied or limited or not extended or renewed with respect
to
any Seller Entity, any act or occurrence, or that any Asset, officer, director,
employee or agent of any Seller Entity will not be covered by such insurance
or
bond. There are presently no claims for amounts exceeding $25,000
individually or in the aggregate pending under such policies of insurance or
bonds, and no notices of claims in excess of such amounts have been given by
any
Seller Entity under such policies. Seller has no pending claims, and,
no claims are contemplated to be made by Seller, under its directors’ and
officers’ errors and omissions or other insurance or bankers’ blanket
bond.
(d) The
Assets
of the Seller Entities include all Assets required by Seller Entities to operate
in all material respects the business of the Seller Entities as presently
conducted.
4.11 Intellectual
Property.
Each
Seller Entity owns or has a license to use the Intellectual Property used by
such Seller Entity in the course of its business, including sufficient rights
in
each copy possessed by each Seller Entity, except as would not reasonably be
likely to have a Seller Material Adverse Effect. To Seller’s
Knowledge, no Seller Entity is in Default in any material respect under any
of
its Intellectual Property licenses. To Seller’s Knowledge, no
proceedings have been instituted, or are pending or to the Knowledge of Seller
threatened, which challenge the rights of any Seller Entity with respect to
Intellectual Property used or licensed by such Seller Entity in the course
of
its business, nor has any person claimed or alleged any rights to such
Intellectual Property. To Seller’s Knowledge, the conduct of the
business of the Seller Entities does not infringe any Intellectual Property
of
any other person, except as would not reasonably be likely to have a Seller
Material Adverse Effect.
-15-
4.12 Environmental
Matters.
(a) Seller
has
delivered, or caused to be delivered or made available to Buyer, true and
complete copies of, all environmental site assessments, test results, analytical
data, boring logs, permits for storm water, wetlands fill, or other
environmental permits for construction of any building, parking lot or other
improvement, and other environmental reports and studies in the possession
of
any Seller Entity relating to its Participation Facilities. To
Seller’s Knowledge, there are no material violations of Environmental Laws on
properties that secure loans made by Seller or Bank.
(b) To
Seller’s Knowledge, each Seller Entity, its Participation Facilities, and its
Operating Properties are, and have been, in compliance with all Environmental
Laws, except for violations which are not reasonably likely to have,
individually or in the aggregate, a Seller Material Adverse Effect.
(c) There
is
no Litigation pending, and to Seller’s Knowledge, there is no environmental
enforcement action, investigation, or litigation threatened, before any
Governmental Authority or other forum in which any Seller Entity or any of
its
Participation Facilities has been or, with respect to threatened Litigation,
may
reasonably be expected to be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with or Liability under any
Environmental Law or (ii) relating to the release, discharge, spillage, or
disposal into the environment of any Hazardous Material, whether or not
occurring at, on, under, adjacent to, or affecting (or potentially affecting)
a
site currently or formerly owned, leased, or operated by any Seller Entity
or
any of its Participation Facilities, except for such Litigation, pending or
threatened, that is not reasonably likely to have, individually or in the
aggregate, a Seller Material Adverse Effect.
(d) To
Seller’s Knowledge, during the period of (i) any Seller Entity’s ownership
or operation of any of its Participation Facilities, (ii) any Seller
Entity’s participation in the management of any Participation Facility, or
(iii) any Seller Entity’s holding of a security interest in any Operating
Property, there have been no releases, discharges, spillages, or disposals
of
Hazardous Material in, on, under, adjacent to, or affecting (or potentially
affecting) such properties, except such as would not reasonably be expected
to
have a Seller Material Adverse Effect. To Seller’s Knowledge, prior
to the period of (i) any Seller Entity’s ownership or operation of any of
their respective current properties, (ii) any Seller Entity’s participation
in the management of any Participation Facility, or (iii) any Seller
Entity’s holding of a security interest in any Operating Property, to Seller’s
Knowledge, there were no releases, discharges, spillages, or disposals of
Hazardous Material in, on, under, or affecting any such property, Participation
Facility, except such as would not reasonably be expected to have a Seller
Material Adverse Effect. To Seller’s Knowledge, during and prior to
the period of (i) Seller Entity’s ownership or operation of any of their
respective current properties, (ii) any Seller Entity’s participation in the
management of any Participation Facility, or (iii) any Seller Entity’s holding
of a security interest in any Operating Property, there have been no violations
of any Environmental Laws, including but not limited to unauthorized alterations
of wetlands, except such as would not reasonably be expected to have a Seller
Material Adverse Effect.
-16-
4.13 Compliance
with Laws.
(a) Seller
is
a bank holding company duly registered as such with the Federal
Reserve. The Bank is duly authorized by the North Carolina
Commissioner of Banks to conduct its business as it is currently conducted
and
the deposit accounts maintained by the Bank are insured by the FDIC to the
extent permitted by Law.
(b) Except
such as would not cause a Seller Material Adverse Effect, (i) each of the Seller
Entities has in effect all Permits and has made all filings, applications,
and
registrations with Governmental Authorities that are required for it to own,
lease, or operate its assets and to carry on its business as now conducted,
and
(ii) there has occurred no Default under any such Permit applicable to their
respective businesses or employees conducting their respective businesses,
except, in each case, such as would not reasonably be expected to have a Seller
Material Adverse Effect.
(c) Except
such as would not cause a Seller Material Adverse Effect, none of the Seller
Entities is in Default under any Laws or Orders applicable to its business
or
employees conducting its business.
(d) None
of
the Seller Entities has received a pending notification or communication from
any Governmental Authority (A) asserting that Seller or any of its
Subsidiaries is in Default under any of the Permits, Laws, or Orders which
such
Governmental Authority enforces where such Default would reasonably be expected
to have a Seller Material Adverse Effect, (B) threatening to revoke any
Permits where failure to maintain such Permit would reasonably be expected
to
have a Seller Material Adverse Effect, or (C) requiring Seller or any of
its Subsidiaries (x) to enter into or consent to the issuance of a cease
and desist order, formal agreement, directive, commitment, or memorandum of
understanding, or (y) to adopt any resolution of its board of directors or
similar undertaking that materially restricts or would be reasonably likely
to
materially restrict the conduct of its business.
(e) There
(A) is no unresolved violation, criticism, or exception by any Governmental
Authority with respect to any report or statement relating to any examinations
or inspections of Seller or any of its Subsidiaries, except as such would not
be
reasonably likely to have a Seller Material Adverse Effect, (B) are no notices
or correspondence received by Seller with respect to pending disagreements
or
disputes with any Governmental Authority with respect to Seller’s or any of
Seller’s Subsidiaries’ business, operations, policies, or procedures since its
inception, and (C) is not any pending or, to Seller’s Knowledge, threatened, nor
has any Governmental Authority indicated an intention to conduct any, inquiry,
investigation, or review of it or any of its Subsidiaries other than
examinations by Regulatory Authorities in the ordinary course of
business.
-17-
(f) None
of
the Seller Entities nor, to Seller’s Knowledge, any of Seller’s directors,
officers, employees, or Representatives acting on its behalf has offered, paid,
or agreed to pay any Person, including any Government Authority, directly or
indirectly, any thing of value for the purpose of, or with the intent of
obtaining or retaining any business in violation of applicable Laws, including
(1) using any corporate funds for any unlawful contribution, gift,
entertainment, or other unlawful expense relating to political activity,
(2) making any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds,
(3) violating any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or (4) making any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment.
(g) Each
Seller Entity has complied in all material respects with all requirements of
Law
under the Bank Secrecy Act and the USA Patriot Act, and each Seller Entity
has
timely filed all reports of suspicious activity required by Law, including
those
required under 12 C.F.R. § 353.3.
4.14 Labor
Relations.
(a) No
Seller
Entity is the subject of any Litigation asserting that it or any other Seller
Entity has committed an unfair labor practice (within the meaning of the
National Labor Relations Act or comparable state Law) or other violation of
state or federal labor Law or seeking to compel it or any other Seller Entity
to
bargain with any labor organization or other employee representative as to
wages
or conditions of employment, nor is any Seller Entity party to any collective
bargaining agreement or subject to any bargaining order, injunction, or other
Order relating to Seller’s relationship or dealings with its employees, any
labor organization or any other employee representative. There is no
strike, slowdown, lockout, or other job action or labor dispute involving any
Seller Entity pending or, to Seller’s Knowledge, threatened and there have been
no such actions or disputes in the past five years. To Seller’s
Knowledge, there has not been any attempt by any Seller Entity employees or
any
labor organization or other employee representative to organize or certify
a
collective bargaining unit or to engage in any other union organization activity
with respect to the workforce of any Seller Entity. Employment of
each employee and the engagement of each independent contractor of each Seller
Entity is terminable at will by the relevant Seller Entity without (i) any
penalty, liability, or severance obligation incurred by any Seller Entity or
(ii) prior consent by any Governmental Authority.
(b) To
Seller’s Knowledge, all of the employees employed in the United States are
either United States citizens or are legally entitled to work in the United
States under the Immigration Reform and Control Act of 1986, as amended, other
United States immigration Laws and the Laws related to the employment of
non-United States citizens applicable in the state in which the employees are
employed.
(c) No
Seller
Entity has effectuated (i) a “plant closing” (as defined in the Worker
Adjustment and Retraining Notification Act (the “WARN Act”)) affecting
any site of employment or one or more facilities or operating units within
any
site of employment or facility of any Seller Entity; or (ii) a “mass
layoff” (as defined in the WARN Act) affecting any site of employment or
facility of any Seller Entity; and no Seller Entity has been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local Law. None
of any Seller Entity’s employees has suffered an “employment loss” (as defined
in the WARN Act) since six months prior to the Closing Date.
-18-
4.15 Employee
Benefit Plans.
(a) Seller
has
disclosed in Section 4.15 of the Seller Disclosure Memorandum, and has delivered
or made available to Buyer prior to the execution of this Agreement, (i) copies
of each Employee Benefit Plan currently adopted, maintained by, sponsored in
whole or in part by, or contributed or required to be contributed to by any
Seller Entity or ERISA Affiliate thereof for the benefit of employees, former
employees, retirees, dependents, spouses, directors, independent contractors,
or
other beneficiaries or under which employees, retirees, former employees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate (each, a “Seller Benefit Plan,” and
collectively, the “Seller Benefit Plans”) and (ii) a list of each
Employee Benefit Plan that is not identified in (i) above (e.g., former Employee
Benefit Plans) but for which any Seller Entity or ERISA Affiliate has or
reasonably could have any obligation or Liability. Any of the Seller
Benefit Plans which is an “employee pension benefit plan,” as that term is
defined in ERISA Section 3(2), is referred to herein as a “Seller ERISA
Plan.” Each Seller ERISA Plan which is also a “defined benefit
plan” (as defined in Code Section 414(j)) is referred to herein as a “Seller
Pension Plan,” and is identified as such in Section 4.15 of the Seller
Disclosure Memorandum.
(b) Each
Seller Benefit Plan is in material compliance with the terms of such Seller
Benefit Plan, in material compliance with the applicable requirements of the
Code, in material compliance with the applicable requirements of ERISA, and
in
material compliance with any other applicable Laws. Each Seller ERISA
Plan which is intended to be qualified under Section 401(a) of the Code has
received a favorable determination advisory or opinion letter or opinion from
the IRS that is still in effect and applies to the Seller ERISA Plan as amended
and as administered or, within the time permitted under Code Section 401(b),
has
timely applied for a favorable determination advisory or opinion letter which
when issued will apply retroactively to the Seller ERISA Plan as amended and
as
administered. Seller is not aware of any circumstances likely to
result in revocation of any such favorable determination letter or denial of
any
such application for a favorable determination letter. Seller has not
received any communication (written or unwritten) from any Governmental
Authority questioning or challenging the compliance of any Seller Benefit Plan
with applicable Laws. No Seller Benefit Plan is currently being
audited by any Governmental Authority for compliance with applicable Laws or
has
been audited with a determination by any Governmental Authority that the
Employee Benefit Plan failed to comply with applicable Laws.
(c) There
has
been no material oral or written representation or communication with respect
to
any aspect of the Employee Benefit Plans made to employees of any Seller Entity
which is not in accordance with the written or otherwise preexisting terms
and
provisions of such plans. To Seller’s Knowledge, neither any Seller
Entity nor any administrator or fiduciary of any Seller Benefit Plan (or any
agent of any of the foregoing) has engaged in any transaction, or acted or
failed to act in any manner, which could subject any Seller Entity or Buyer
to
any direct or indirect Liability (by indemnity or otherwise) for breach of
any
fiduciary, co-fiduciary, or other duty under ERISA. To Seller’s
Knowledge, there are no unresolved claims or disputes under the terms of, or
in
connection with, the Seller Benefit Plans other than claims for benefits which
are payable in the ordinary course of business and no action, proceeding,
prosecution, inquiry, hearing, or investigation has been commenced with respect
to any Seller Benefit Plan.
-19-
(d) All
Seller
Benefit Plan documents and annual reports or returns, audited or unaudited
financial statements, actuarial valuations, summary annual reports, and summary
plan descriptions issued with respect to the Seller Benefit Plans are correct
and complete in all material respects, and to the extent required by law have
been timely filed with the IRS or the DOL, and distributed to participants
of
the Seller Benefit Plans (as required by Law), and there have been no changes
in
the information set forth therein.
(e) To
the
Seller’s Knowledge, no “party in interest” (as defined in ERISA Section
3(14)) or “disqualified person” (as defined in Code Section 4975(e)(2))
of any Seller Benefit Plan has engaged in any nonexempt “prohibited
transaction” (described in Code Section 4975(c) or ERISA Section
406).
(f) No
Seller
Entity has, or ever has had, a Seller Pension Plan, or any plan that is or
was
subject to Code Section 412 or ERISA Section 302 or Title IV of
ERISA. There is no Lien nor is there expected to be a Lien under Code
Section 412(n) or ERISA Section 302(f) or Tax under Code Section 4971 applicable
to any Seller Entity or any Seller Entity’s Assets. Neither Seller
nor any of its ERISA Affiliates is subject to or can reasonably be expected
to
become subject to a Lien under Code Section 401(a)(29). All premiums
required to be paid under ERISA Section 4006, if any, have been timely paid
by
Seller and by its ERISA Affiliates.
(g) No
Liability under Title IV of ERISA has been or is expected to be incurred by
Seller or its ERISA Affiliates and no event has occurred that could reasonably
result in Liability under Title IV of ERISA being incurred by Seller or its
ERISA Affiliates with respect to any ongoing, frozen, terminated, or other
single-employer plan of Seller or the single-employer plan of any ERISA
Affiliate. There has been no “reportable event,” within the
meaning of ERISA Section 4043, for which the 30-day reporting requirement has
not been waived by any ongoing, frozen, terminated or other single employer
plan
of Seller or of an ERISA Affiliate.
(h) No
Seller
Entity has any Liability for retiree health or life benefits under any of the
Seller Benefit Plans, or other plan or arrangement, and there are no
restrictions on the rights of such Seller Entity to amend or terminate any
such
retiree health or benefit Plan without incurring any Liability thereunder except
to the extent required under Part 6 of Title I of ERISA or Code Section
4980B. No Tax under Code Sections 4980B or 5000 has been incurred
with respect to any Seller Benefit Plan, or other plan or arrangement, and
to
Seller’s Knowledge, no circumstance exists which could give rise to such
Taxes.
(i) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation, golden parachute, or otherwise) becoming
due to any director or any employee of any Seller Entity from any Seller Entity
under any Seller Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Seller Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit, or any
benefit under any life insurance owned by any Seller Entity or the rights of
any
Seller Entity in, to or under any insurance on the life of any
current or former officer, director, or employee of any Seller Entity, or change
any rights or obligations of any Seller Entity with respect to such
insurance.
-20-
(j) The
actuarial present values of all accrued deferred compensation entitlements
(including entitlements under any executive compensation, supplemental
retirement, or employment agreement) of employees and former employees of any
Seller Entity and their respective beneficiaries, other than entitlements
accrued pursuant to funded retirement plans, whether or not subject to the
provisions of Code Section 412 or ERISA Section 302, have been fully reflected
on the Seller Financial Statements to the extent required by and in accordance
with GAAP.
(k) All
individuals who render services to any Seller Entity and who are authorized
to
participate in a Seller Benefit Plan pursuant to the terms of such Seller
Benefit Plan are in fact eligible to and authorized to participate in such
Seller Benefit Plan.
(l) Neither
the Seller nor any of its ERISA Affiliates has had an “obligation to contribute”
(as defined in ERISA Section 4212) to, or other obligations or Liability in
connection with, a “multiemployer plan” (as defined in ERISA Sections 4001(a)(3)
or 3(37)(A)).
(m) There
are
no payments or changes in terms due to any insured person as a result of this
Agreement, the Merger, or the transactions contemplated herein, under any
bank-owned or corporate-owned split dollar life insurance, other life insurance,
or similar arrangement or Contract, and the Successor Corporation shall, upon
and after the Effective Time, succeed to and have all the rights in, to and
under such life insurance Contracts as Seller presently holds. Each
Seller Entity will, upon the execution and delivery of this Agreement, and
will
continue to have, notwithstanding this Agreement or the consummation of the
transaction contemplated hereby, all ownership rights and interest in all
corporate or bank-owned life insurance.
4.16 Material
Contracts.
(a) Except
for
Contracts filed as exhibits to the Seller Exchange Act Reports and listed in
the
exhibit index to Seller’s most recent annual report of Form ▇▇-▇▇▇, ▇▇▇▇ of the
Seller Entities, nor any of their respective Assets, businesses, or operations,
is a party to, or is bound or affected by, or receives benefits under,
(i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any calendar year
in
excess of $75,000, (ii) any Contract relating to the borrowing of money by
any Seller Entity or the guarantee by any Seller Entity of any such obligation
(other than Contracts evidencing the creation of deposit liabilities, purchases
of federal funds, advances from the Federal Reserve Bank or Federal Home Loan
Bank, entry into repurchase agreements fully secured by U.S. government
securities or U.S. government agency securities, advances of
depository institution Subsidiaries incurred in the ordinary course of Seller’s
business, and trade payables and Contracts relating to borrowings or guarantees
made in the ordinary course of Seller’s business), (iii) any Contract which
prohibits or restricts any Seller Entity from engaging in any business
activities in any geographic area, line of business or otherwise in competition
with any other Person, and (iv) any other Contract that would be required
to be filed as an exhibit to a Form 10-K filed by Seller as of the date of
this
Agreement pursuant to the reporting requirements of the Exchange Act (together
with all Contracts referred to in Section 4.15(a), the “Seller
Contracts”).
-21-
(b) With
respect to each Seller Contract: (i) the Contract is in full force and
effect; (ii) no Seller Entity is in Default thereunder, except where such
Default would not reasonably be expected to have a Seller Material Adverse
Effect; (iii) no Seller Entity has repudiated or waived any material
provision of any such Contract, except where such repudiation or waivers would
not be reasonably likely to have a Seller Material Adverse Effect; (iv) no
other party to any such Contract is, to Seller’s Knowledge, in Default in any
respect or has repudiated or waived any material provision thereunder, except
where such Default, waivers or repudiations would not reasonably be expected
to
have a Seller Material Adverse Effect. Except for Federal Reserve
Bank or Federal Home Loan Bank advances, all of the indebtedness of any Seller
Entity for money borrowed (not including deposit Liabilities) is prepayable
at
any time by such Seller Entity without penalty or premium.
4.17 Legal
Proceedings.
There
is
no Litigation instituted or pending, or, to the Knowledge of Seller, threatened
(or unasserted but considered probable of assertion) against any Seller Entity,
or to Seller’s Knowledge, against any director, officer, employee, or agent of
any Seller Entity in their capacities as such or with respect to any service
to
or on behalf of any Employee Benefit Plan or any other Person at the request
of
the Seller Entity or Employee Benefit Plan of any Seller Entity, or against
any
Asset, interest, or right of any of them, nor are there any Orders or judgments
outstanding against any Seller Entity. No claim for indemnity has
been made or, to Seller’s Knowledge, threatened by any director, officer,
employee, independent contractor, or agent to any Seller Entity and to Seller’s
knowledge, no basis for any such claim exists.
4.18 Reports.
Since
July
1, 2004, each Seller Entity has filed all reports and statements, together
with
any amendments required to be made with respect thereto, that it was required
to
file with Regulatory Authorities. As of their respective dates, each
of such reports and documents, including the financial statements, exhibits,
and
schedules thereto, complied in all material respects with all applicable
Laws. As of their respective dates, such reports and documents did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
4.19 Books
and Records.
Seller
and
each Seller Entity maintains accurate books and records reflecting its Assets
and Liabilities in reasonable detail and maintains proper and adequate internal
accounting controls (a) which provide reasonable assurance that receipts and
expenditures are executed in accordance with authorization of management; (b)
which provide reasonable assurance that transactions are recorded as necessary
to permit preparation of the Seller Financial Statements in accordance with
GAAP
and (c) regarding prevention or timely detection of unauthorized acquisition,
use or disposition of its Assets that could have a material effect on the Seller
Financial Statements.
-22-
4.20 Loans
to Executive Officers and Directors.
The
Bank
has not, since its inception, 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 Person then a director or executive officer (or
equivalent thereof) of any Seller Entity, except as permitted by Federal Reserve
Regulation O. No other Seller Entity has, since its inception,
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 any Seller Entity.
4.21 State
Takeover Laws.
Each
Seller Entity has taken all necessary action, if any, to exempt the transactions
contemplated by this Agreement from, or if necessary to challenge the validity
or applicability of, any applicable “moratorium,” “fair price,” “supermajority
shareholder approval,” “control share,” or other anti-takeover Laws,
(collectively, “Takeover Laws”), including Articles 9 and 9A of the
NCBCA.
4.22 Opinion
of Financial Advisor.
Seller
has
received the written opinion of the Seller Financial Advisor, dated the date
of
this Agreement, to the effect that, as of the date of this Agreement, the Merger
Consideration is fair to Seller’s shareholders, from a financial point of view,
a signed copy of which has been or will be delivered to Buyer.
4.23 Board
Recommendation.
The
board
of directors of Seller, at a meeting duly called and held on August 29, 2007,
has by unanimous vote of the directors present (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger and
the
transactions contemplated hereby and thereby, taken together, are in the best
interests of Seller’s shareholders and (ii) resolved, subject to the terms
of this Agreement, to recommend that the holders of the shares of Seller Common
Stock approve this Agreement, the Merger, and the related transactions and
to
call and hold a meeting of Seller’s shareholders to consider this Agreement, the
Merger, and the related transactions.
4.24 Statements
True and Correct.
(a) None
of
the information supplied or to be supplied by any Seller Entity or any Affiliate
thereof for inclusion in the Registration Statement to be filed by Buyer with
the SEC will, when the Registration Statement becomes effective, 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. None of the information
supplied or to be supplied by any Seller Entity or any Affiliate thereof for
inclusion in any Proxy Statement/Prospectus to be mailed to Seller’s
shareholders in connection with the Seller Shareholders’ Meeting, and any other
documents to be filed by any Seller Entity or any Affiliate thereof with the
SEC
or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed,
and
with respect to the Proxy Statement/Prospectus, when first mailed to the
shareholders of Seller, 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/Prospectus, and after giving
effect to any amendment thereof or supplement thereto, at the time of the Seller
Shareholders’ Meeting 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.
-23-
(b) All
documents that any Seller Entity or any Affiliate thereof is responsible for
filing with any Governmental Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
4.25 Delivery
of Seller Disclosure Memorandum.
Seller
has
delivered to Buyer a complete Seller Disclosure Memorandum.
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
hereby represents and warrants to Seller as follows, except as set forth on
the
Buyer Disclosure Memorandum, as follows:
5.1 Organization,
Standing, and Power.
Buyer
is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of South Carolina, and has the corporate power and authority
to carry on its business as now conducted and to own, lease, and operate its
Assets. Buyer is duly qualified or licensed to transact business as a
foreign corporation in good standing in the states of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect.
5.2 Authority
of Buyer; No Breach By Agreement.
(a) Buyer
has
the corporate power and authority necessary to execute, deliver, and perform
this Agreement, to perform its obligations under this Agreement, and to
consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on
the
part of Buyer. This Agreement represents a legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
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 applicable equitable
principles (whether considered in a proceeding in law or in
equity).
(b) Neither
the execution and delivery of this Agreement by Buyer, nor the consummation
by
Buyer of the transactions contemplated hereby, nor compliance by Buyer with
any
of the provisions hereof, will (i) conflict with or result in a breach of
any provision of Buyer’s articles of incorporation or bylaws or any resolution
adopted by the board of directors or shareholders of Buyer, 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 Buyer
Entity under, any Contract or Permit of any Buyer Entity, or, (iii) subject
to receipt of the requisite Consents referred to in Section 8.1(b), constitute
or result in a Default under, or require any Consent pursuant to, any Law or
Order applicable to any Buyer Entity or any of their respective material Assets,
except with respect to clauses (ii) and (iii), where such Defaults, failure
to
obtain Consents or Liens would not, individually or in the aggregate, have
a
Seller Material Adverse Effect.
-24-
(c) Other
than
in connection or compliance with the provisions of the Securities Laws,
applicable state corporate and securities Laws and other than Consents required
from Regulatory Authorities, and other than notices to or filings with the
IRS
or the Pension Benefit Guaranty Corporation with respect to any employee benefit
plans, and other than Consents, filings, or notifications which, if not obtained
or made, are not reasonably likely to have, individually or in the aggregate,
a
Buyer Material Adverse Effect, no notice to, filing with, or Consent of, any
Governmental Authority is necessary for the consummation by Buyer of the Merger
and the other transactions contemplated in this Agreement.
5.3 Exchange
Act Filings; Financial Statements.
(a) Buyer
has
timely filed and made available to Seller all Exchange Act Documents required
to
be filed by Buyer since July 1, 2004 (together with all such Exchange Act
Documents filed, whether or not required to be filed, the “Buyer Exchange Act
Reports”). The Buyer Exchange Act Reports (i) at the time
filed, complied in all material respects with the applicable requirements of
the
Securities Laws and other applicable Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing prior to the date
of
this Agreement, then on the date of such amended or subsequent filing or, in
the
case of registration statements, at the effective date thereof) contain any
untrue statement of a material fact or omit to state a material fact required
to
be stated in such Buyer Exchange Act Reports or necessary in order to make
the
statements in such Buyer Exchange Act Reports, in light of the circumstances
under which they were made, not misleading. Except as would not be
reasonably likely to have a Buyer Material Adverse Effect, each offering or
sale
of securities by Buyer (i) was either registered under the Securities Act or
made pursuant to a valid exemption from registration, (ii) complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable Laws, except for immaterial late “blue sky” filings, including
disclosure and broker/dealer registration requirements, and (iii) was made
pursuant to offering documents that did not, at the time of the offering (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 the offering documents or necessary in order to make the statements
in such documents not misleading. Buyer’s principal executive officer and
principal financial officer (and Buyer’s former principal executive officers and
principal financial officers, as applicable) have made the certifications
required by Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and
regulations of the Exchange Act thereunder with respect to the Buyer Exchange
Act Reports to the extent such rules or regulations applied at the time of
the
filing. For purposes of the preceding sentence, “principal executive
officer” and “principal financial officer” have the meanings given to such terms
in the Sarbanes–Oxley Act. Such certifications are included as
exhibits to the applicable Buyer Exchange Act Reports and have not been modified
or withdrawn; and neither Buyer nor any of its officers has received notice
from
any Regulatory Authority questioning or challenging the accuracy, completeness,
content, form, or manner of filing or submission of such
certifications.
-25-
(b) Each
of
the Buyer Financial Statements (including, in each case, any related notes)
contained in the Buyer Exchange Act Reports, including any Buyer Exchange Act
Reports filed after the date of this Agreement until the Effective Time,
complied, or will comply, as to form in all material respects with the
applicable published rules and regulations of the Exchange Act with respect
thereto, was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such
financial statements or, in the case of unaudited interim statements, as
permitted by Form 10-Q of the Exchange Act), and fairly presented in all
material respects the consolidated financial position of Buyer and its
Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
(c) Buyer’s
independent public accountants, which have expressed their opinion with respect
to audited, annual Buyer Financial Statements included in the Buyer Exchange
Act
Reports, to Buyer’s Knowledge, are and have been throughout the periods covered
by such Financial Statements, and Buyer’s current independent public accountants
are: (x) a registered public accounting firm (as defined in Section 2(a)(12)
of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act) (to the extent applicable during such period), (y)
“independent” with respect to Buyer within the meaning of Regulation S-X of the
SEC and, (z) with respect to Buyer, in compliance with subsections (g) through
(l) of Section 10A of the Exchange Act and related Securities Laws.
(d) Buyer
maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15
under the Exchange Act, and such controls and procedures are effective to ensure
that all material information relating to Buyer is made known on a timely basis
to the individuals responsible for the preparation of Buyer’s Exchange Act
Documents.
(e) Buyer
and
each Buyer Entity maintains accurate books and records reflecting its Assets
and
Liabilities in reasonable detail and maintains proper and adequate internal
accounting controls (a) which provide reasonable assurance that receipts and
expenditures are executed in accordance with authorization of management; (b)
which provide reasonable assurance that transactions are recorded as necessary
to permit preparation of the Buyer Financial Statements in accordance with
GAAP
and (c) regarding prevention or timely detection of unauthorized acquisition,
use or disposition of its Assets that could have a material effect on the Buyer
Financial Statements.
5.4 Reports.
Since
January 1, 2002, each Buyer Entity has filed all reports and statements,
together with any amendments required to be made with respect thereto, that
it
was required to file with Governmental Authorities. As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of their respective dates, such reports
and documents did not contain any untrue statement of a material fact or omit
to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
-26-
5.5 Available
Consideration.
Buyer
has
available to it, or as of the Effective Time will have available to it,
sufficient shares of authorized and unissued Buyer Common Stock and all funds
necessary for the issuance and payment of the Merger Consideration and has
funds
available to it to satisfy its payment obligations under this
Agreement.
5.6 Statements
True and Correct.
(a) None
of
the information supplied or to be supplied by any Buyer Entity or any Affiliate
thereof for inclusion in the Registration Statement to be filed by Buyer with
the SEC will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or omit to state any material
fact
necessary to make the statements therein not misleading. None of the
information supplied by any Buyer Entity or any Affiliate thereof for inclusion
in the Proxy Statement/Prospectus to be mailed to Seller’s shareholders in
connection with the Seller Shareholders’ Meeting, and any other documents to be
filed by any Buyer Entity or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to
the
Proxy Statement/Prospectus, when first mailed to the shareholders of Seller,
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/Prospectus, and after giving effect to any amendment thereof
or
supplement thereto, at the time of the Seller Shareholders’ Meeting 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.
(b) All
documents that any Buyer Entity or any Affiliate thereof is responsible for
filing with any Governmental Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
5.7 Absence
of Certain Changes or Events.
Except
as
disclosed in the Buyer Financial Statements delivered prior to the date of
this
Agreement, and except as may be affected by acts or events after the date hereof
permitted under this Agreement, since December 31, 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 Buyer Material Adverse Effect, and
(ii) the Buyer Entities have conducted their respective businesses in the
ordinary course of business consistent with past practice.
5.8 Delivery
of Buyer Disclosure Memorandum.
Buyer
has
delivered to Seller a complete Buyer Disclosure Memorandum.
-27-
CONDUCT
OF BUSINESS PENDING CONSUMMATION
6.1 Affirmative
Covenants.
(a) From
the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, unless the prior written consent of Buyer shall
have been obtained, and except as otherwise expressly contemplated herein,
Seller shall, and shall cause each of its Subsidiaries to, (i) operate its
business only in the usual, regular, and ordinary course, (ii) use commercially
reasonable efforts to preserve intact its business organization and
Assets and maintain its rights and franchises, (iii) consult with Buyer prior
to
entering into or making any loans or other transactions with a value equal
to or
exceeding $1,000,000 and (iv) except as required by Law, take no action which
would reasonably be expected to (A) adversely affect the ability of either
of
the Parties or their respective Subsidiaries to obtain any Consents required
for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Sections 8.1(b),
8.2(e), or 8.3(f), or (B) materially adversely affect the ability of either
Party to perform its covenants and agreements under this Agreement.
(b) From
the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, unless the prior written consent of Seller shall
have been obtained, and except as otherwise expressly contemplated herein,
Buyer
shall, and shall cause each of its Subsidiaries to, (i) operate its business
only in the usual, regular, and ordinary course, (ii) use commercially
reasonable efforts to preserve intact its business organization and
Assets and maintain its rights and franchises, and (iv) except as required
by
Law, take no action which would reasonably be expected to (A) adversely affect
the ability of either of the Parties or their respective Subsidiaries to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentences of Sections 8.1(b), 8.2(e), or 8.3(f), or (B) materially adversely
affect the ability of either Party to perform its covenants and agreements
under
this Agreement.
6.2 Negative
Covenants of Seller.
From
the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, unless the prior written consent of Buyer shall
have been obtained, and except as otherwise expressly contemplated herein,
Seller covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend
the
articles of incorporation, bylaws, or other governing instruments of any Seller
Entity;
(b) incur
any
additional debt obligation or other obligation for borrowed money in excess
of
an aggregate of $100,000 except in the ordinary course of the business of any
Seller Entity consistent with past practices and that are
prepayable without penalty or other premium (which exception shall include,
for
Seller Entities that are depository institutions, creation of deposit
liabilities, purchases of federal funds, advances from a Federal Reserve Bank
or
a Federal Home Loan Bank, and entry into repurchase agreements fully secured
by
U.S. government securities or U.S. government agency
securities), or impose, or suffer the imposition, on any Asset of any Seller
Entity of any Lien or permit any such Lien to exist (other than in connection
with public deposits, repurchase agreements, bankers’
acceptances, “treasury tax and loan” accounts established in the ordinary course
of business of Subsidiaries that are depository institutions, the satisfaction
of legal requirements in the exercise of trust powers, and Liens in effect
as of
the date hereof that are disclosed in the Seller Disclosure
Memorandum);
-28-
(c) repurchase,
redeem, or otherwise acquire or exchange (other than exchanges in the ordinary
course under employee benefit plans), directly or indirectly, any shares, or
any
securities convertible into any shares, of the capital stock of any Seller
Entity, or declare or pay any dividend or make any other distribution in respect
of Seller’s capital stock;
(d) issue,
sell, pledge, encumber, authorize the issuance of, enter into any Contract
to
issue, sell, pledge, encumber, or authorize the issuance of, or otherwise permit
to become outstanding, any additional shares of Seller Common Stock, any other
capital stock of any Seller Entity, or any Right, except pursuant to the
exercise of Seller Options outstanding on the date of this Agreement in
accordance with their current terms;
(e) adjust,
split, combine, or reclassify any capital stock of any Seller Entity or issue
or
authorize the issuance of any other securities in respect of or in substitution
for shares of Seller Common Stock, or sell, lease, mortgage, or otherwise
dispose of (i) any shares of capital stock of any Seller Subsidiary
or (ii) any Asset other than in the ordinary course of business for reasonable
and adequate consideration;
(f) except
for
purchases of U.S. Government securities or U.S. Government agency securities,
which in either case have maturities of two years or less, purchase any
securities or make any material investment except in the ordinary course of
business consistent with past practice, either by purchase of stock or
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Seller Subsidiary, or otherwise
acquire direct or indirect control over any Person, other than in connection
with foreclosures of loans in the ordinary course of business;
(g) except
as
contemplated by this Agreement or Section 6.2(g) of the Seller Disclosure
Memorandum or as may be required by existing Contract, (i) grant any bonus
or
increase in compensation or benefits to the employees, officers or directors
of
any Seller Entity (except in accordance with past practice), (ii) commit or
agree to pay any severance or termination pay, or any stay or other bonus to
any
Seller director, officer or employee, (iii) enter into or amend any severance
agreements with officers, employees, directors, independent contractors, or
agents of any Seller Entity, (iv) change any fees or other compensation or
other
benefits to directors of any Seller Entity, or (v) waive any stock repurchase
rights, accelerate, amend, or change the period of exercisability of any Rights
or restricted stock, or reprice Rights granted under Seller stock plans or
authorize cash payments in exchange for any Rights; or (vi) accelerate or vest
or commit or agree to accelerate or vest any amounts, benefits or rights payable
by any Seller Entity provided, however, that Seller may (y) continue to make
annual merit salary increases consistent with past practices and (z) pay all
earned bonuses and incentive compensation;
(h) except
as
contemplated by this Agreement or Section 6.2(h) of the Seller Disclosure
Memorandum, enter into or amend any employment Contract between any Seller
Entity and any Person (unless such amendment is required by Law) that the Seller
Entity does not have the unconditional right to terminate without Liability
(other than Liability for services already rendered), at any time on or after
the Effective Time, except in the case of amendments, an amendment which does
not increase the cost to the Seller Entity or its successor;
-29-
(i) (A)
adopt
any new employee benefit plan of any Seller Entity or terminate or withdraw
from, or make any material change in or to, any existing employee benefit plans,
welfare plans, insurance, stock or other plans of any Seller Entity other than
any such change that is required by Law, including any change to achieve
compliance with Section 409A of the Code, or to maintain continuous benefits
at
current levels or that, in the written opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan, or (B) make
any
distributions from such employee benefit or welfare plans except as required
by
Law or the terms of such plans consistent with past practice;
(j) make
any
change in any Tax or accounting methods or systems of internal accounting
controls, except as may be appropriate and necessary to conform to changes
in
Tax Laws, regulatory accounting requirements, or GAAP;
(k) commence
any Litigation other than in accordance with past practice or settle any
Litigation involving any Liability of any Seller Entity for money damages in
excess of $50,000 or restrictions upon the operations of any Seller
Entity;
(l) except
as
contemplated by Section 6.2(l) of the Seller Disclosure Memorandum or in the
ordinary course of business, enter into, modify, amend, or terminate any
material Contract other than with respect to those involving aggregate payments
of less than, or the provision of goods or services with a market value of
less
than, $50,000 per annum and other than Contracts covered by Sections 6.2(b),
(m), (n),(o) and (q) or as otherwise permitted by Section
6.1(a)(v);
(m) except
in
the ordinary course of business consistent with past practice, make,
renegotiate, renew, increase, extend, modify or purchase any loan, lease (credit
equivalent), advance, credit enhancement or other extension of credit, or make
any commitment in respect of any of the foregoing;
(n) except
in
conformity with existing policies and practices, waive, release, compromise,
or
assign any material rights or claims;
(o) except
for
loans or extensions of credit made on terms generally available to the public,
make or increase any loan or other extension of credit, or commit to make or
increase any such loan or extension of credit, to any director or executive
officer of Seller or the Bank, or any entity controlled, directly or indirectly,
by any of the foregoing, other than renewals of existing loans or commitments
to
loan;
(p) restructure
or materially change its investment securities portfolio or its interest rate
risk position, through purchases, sales or otherwise, or the manner in which
the
portfolio is classified or reported;
(q) make
any
capital expenditures in excess of $100,000 above the capital expenditures budget
provided by Seller to Buyer prior to the date of this Agreement, other than
pursuant to binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good repair or to make
payment of necessary taxes;
-30-
(r) except
for
completion of branches or offices in process, establish or commit to the
establishment of any new branch or other office facilities or file any
application to relocate or terminate the operation of any banking
office;
(s) knowingly
take any action that would prevent or impede the Merger, if completed, from
qualifying as a reorganization within the meaning of Section 368(a) of the
IRC;
or
(t) agree
to
take, make any commitment to take, or adopt any resolutions of its board of
directors in support of, any of the actions prohibited by this Section
6.2.
6.3 Adverse
Changes in Condition.
Each
Party
agrees to give written notice promptly to the other Party upon becoming aware
of
the occurrence or impending occurrence of any event or circumstance relating
to
it or any of its Subsidiaries which (i) has had or is reasonably likely to
have,
individually or in the aggregate, a Seller Material Adverse Effect or a Buyer
Material Adverse Effect, as applicable, or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly
to
remedy the same.
6.4 Reports.
Each
of
Buyer and its Subsidiaries and Seller and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the
date
of this Agreement and the Effective Time and shall make available to the other
Party copies of all such reports promptly after the same are
filed. Seller and its Subsidiaries shall also make available to Buyer
quarterly call reports. The financial statements of Buyer and Seller,
whether or not contained in any such reports filed under the Exchange Act or
with any other Regulatory Authority, will fairly present in all material
respects the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders’ equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of
their respective dates, such reports of Buyer and Seller filed under the
Exchange Act or with any other Regulatory Authority will comply in all material
respects with the Securities Laws and will not contain any untrue statement
of a
material fact or omit to state a material fact required to be stated therein
or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements
contained in any other reports to another Regulatory Authority shall be prepared
in accordance with the Laws applicable to such reports.
7.1 Registration
of Buyer Common
Stock.
-31-
(a) As
promptly as reasonably practicable following the date hereof, Buyer shall
prepare and file with the SEC a registration statement on Form S-4 with respect
to the issuance of Buyer Common Stock in the Merger (such Form S-4, and any
amendments or supplements thereto, the “Registration
Statement”). The Registration Statement shall contain proxy
materials relating to the matters to be submitted to the Seller shareholders
at
the Seller Shareholders’ Meeting. Such proxy materials shall also
constitute the prospectus relating to the shares of Buyer Common Stock to be
issued in the Merger (such proxy statement-prospectus, and any amendments or
supplements thereto, the “Proxy Statement/Prospectus”). Seller
will furnish to Buyer the information required to be included in the
Registration Statement with respect to its business and affairs and shall have
the right to review and consult with Buyer on the form of, and any
characterizations of such information included in, the Registration Statement
prior to its being filed with the SEC. Buyer shall include in the
Proxy Statement/Prospectus included in the Registration Statement such
information regarding Buyer as Seller may reasonably request in connection
with
Seller’s use of the Proxy Statement/Prospectus to solicit votes of Seller’s
shareholders at the Seller Shareholders’ Meeting. Buyer shall use its
reasonable best efforts to have the Registration Statement declared effective
by
the SEC and to keep the Registration Statement effective as long as is necessary
to consummate the Merger and the transactions contemplated
hereby. Seller will use its reasonable best efforts to cause the
Proxy Statement/Prospectus to be mailed to its shareholders as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. Buyer will advise Seller, promptly after it receives
notice thereof, of the time when the Registration Statement has become
effective, the issuance of any stop order, the suspension of the qualification
of the Buyer Common Stock issuable in connection with the Merger for offering
or
sale in any jurisdiction, or any comments of the staff of the SEC with respect
to the Proxy Statement/Prospectus or the Registration Statement and shall permit
Seller and its counsel to participate in the drafting of any response to such
SEC comments. If at any time prior to the Effective Time any
information relating to Buyer or Seller, or any of their respective affiliates,
officers or directors, should be discovered by Buyer or Seller which should
be
set forth in an amendment or supplement to any of the Registration Statement
or
the Proxy Statement/Prospectus so that any of such documents would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the Party that discovers such information shall
promptly notify the other Party and, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such information
shall be promptly filed by Buyer with the SEC and disseminated by Seller to
its
shareholders.
(b) Prior
to
the Effective Time, Buyer shall take such action as shall be necessary to permit
the additional shares of Buyer Common Stock to be issued by Buyer in exchange
for the shares of Seller Common Stock to be traded on the exchange on which
the
Buyer Common Stock is listed.
(c) Prior
to
the Effective Time, Buyer shall not declare or pay a dividend on shares of
Buyer
Common Stock other than cash dividends in amounts per share and at times
substantially consistent with Buyer’s past practice.
7.2 Shareholder
Approvals. Seller shall call the Seller Shareholders’
Meeting to be held as soon as reasonably practicable after the Registration
Statement is declared effective by the SEC, for the purpose of voting upon
approval of this Agreement and such other related matters as it deems
appropriate. In connection with the Seller Shareholders’ Meeting, (i)
Seller shall mail the Proxy Statement/Prospectus to its shareholders, (ii)
the
board of directors of Seller shall recommend to its shareholders the approval
of
this Agreement and the Merger, and (iii) the board of directors of Seller shall
use its reasonable efforts to obtain its shareholders’ approval of this
Agreement and the Merger; provided that Seller may withdraw, modify, or
change in an adverse manner to Buyer its recommendations if the board of
directors of Seller determines in good faith, after having consulted with
outside legal counsel, that such withdrawal, modification or change of its
recommendation is necessary for the board of directors of Seller to comply
with
its fiduciary duties under applicable Law.
-32-
7.3 No
Solicitation
(a) From
and
after the date of this Agreement until the earlier of the Effective Time and
the
termination of this Agreement pursuant to Article 9 hereof, the Seller Entities
shall not, and shall cause their respective Representatives not to, directly
or
indirectly:
(i)
solicit, initiate or take any other action to knowingly facilitate any inquiry
in connection with or the making of any proposal from any Person (other than
Buyer or any of its Representatives) that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal (it being understood that actions
taken pursuant to the requirements of this Agreement shall not be deemed a
knowing facilitation of such an inquiry for purposes of the foregoing covenant
and that the Seller Entities may make disclosures of non-public information
to
the extent they are required to make such disclosures pursuant to applicable
law;
(ii)
enter
into, explore, maintain, participate in or continue any discussion or
negotiation with any Person (other than Buyer or any of its Representatives)
regarding an Acquisition Proposal, or otherwise knowingly cooperate in any
way
with any effort or attempt by any other Person (other than Buyer or any of
its
Representatives) to make or effect an Acquisition Proposal;
(iii)
enter into any agreement, arrangement or understanding with respect to, or
otherwise endorse, any Acquisition Proposal; or
(iv)
authorize or permit any Representative of a Seller Entity to take any such
action;
provided,
however, that nothing contained in this Agreement shall prohibit the board
of
directors of Seller, prior to approval of this Agreement by the Seller’s
shareholders at the Seller Shareholders’ Meeting, from, subject to compliance
with Section 7.3(c), furnishing information to, or engaging in discussions
or
negotiations with, any Person that makes an unsolicited bona fide written
Acquisition Proposal (which did not result from a breach of this Section 7.3)
if
(A) the board of directors of Seller determines in good faith, after
consultation with outside legal counsel, that such action is necessary for
the
board of directors of Seller to comply with its fiduciary duties under
applicable Law, (B) the board of directors of Seller determines in good faith,
after consultation with its financial advisor, that the Acquisition Proposal
constitutes or would reasonably be expected to lead to a Superior Proposal,
and
(C) prior to furnishing such information to, or engaging in discussions or
negotiations with, such Person, Seller receives from such Person an executed
confidentiality agreement (which agreement shall be provided to Buyer for
information purposes) with terms no less favorable to Seller than those
contained in the Non-Disclosure Agreement.
-33-
(b) From
and
after the date of this Agreement until the earlier of the Effective Time or
the
termination of this Agreement pursuant to Article 9, if the board of directors
of Seller is entitled to furnish information to, or engage in discussions or
negotiations with, any Person on the terms contemplated in Section 7.3(a) above,
the board of directors of Seller may, prior to the approval of this Agreement
by
Seller’s shareholders at the Seller Shareholders’ Meeting, subject to compliance
with Section 7.3(c), terminate this Agreement in respect of any Acquisition
Proposal pursuant to the termination provisions set forth in Article 9 hereof
if
(A) the board of directors of Seller shall have determined in good faith, after
consultation with its financial advisor, that the Acquisition Proposal
constitutes a Superior Proposal and (B) the board of directors of Seller shall
have determined in good faith, after consultation with outside legal counsel,
that such action is necessary for the board of directors of Seller to comply
with its fiduciary duties under applicable Law.
(c) Seller
(i)
will promptly (but in any event within two business days) notify Buyer orally
and in writing of the receipt of any Acquisition Proposal or any inquiry
regarding the making of an Acquisition Proposal including any request for
non-public information, the terms and conditions of such request, Acquisition
Proposal or inquiry and the identity of the Person making such request,
Acquisition Proposal or inquiry and (ii) will keep Buyer informed of the status
and details (including amendments and proposed amendments) of any such request,
Acquisition Proposal or inquiry. Prior to taking any of the actions
referred to in Section 7.3(a), Seller shall promptly (but in any event within
one day) notify Buyer orally and in writing of any action it proposes to take
with respect to such Acquisition Proposal. After taking any such
action, Seller shall promptly advise Buyer of the status of such action as
developments arise or as requested by Buyer. Without limiting the
foregoing, at least three business days (the “Three-Day Period”)
prior to taking any of the actions referred to in Section 7.3(b), Seller shall
notify Buyer of any such action it proposes to take and, during the Three-Day
Period, Seller shall negotiate in good faith with Buyer with respect to any
revised proposal to acquire the Seller that Buyer may make prior to or during
the Three-Day Period.
(d) Nothing
contained in this Agreement shall prevent Seller from (i) complying with Rules
14e-2 and 14d-9 under the Exchange Act with regard to a tender or exchange
offer, (ii) making a “stop-look-and-listen” communication to its shareholders of
the nature contemplated by Rule 14d-9 under the Exchange Act and (iii) making
such other disclosures to Seller’s shareholders, and taking such other actions,
as are required by Law (provided however, with respect to each of the foregoing
clauses (i), (ii) and (iii), that Seller shall not, except as permitted by
Section 7.3(b) hereof, propose to approve or recommend any Acquisition
Proposal).
(e) The
Seller
Entities shall immediately cease and cause their respective Representatives
to
cease any and all existing activities, discussions or negotiations with any
parties (other than Buyer and its Representatives) conducted heretofore with
respect to any Acquisition Proposal, and shall use their reasonable best efforts
to cause any such parties in possession of confidential information about the
Seller Entities that was furnished by or on behalf of Seller to return or
destroy all such information in the possession of any such party or its
representatives.
-34-
7.4 Consents
of Regulatory Authorities.
The
Parties hereto shall cooperate with each other and use their reasonable efforts
to promptly prepare and file all necessary documentation and applications,
to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all Consents of all Regulatory Authorities and other
Persons which are necessary or advisable to consummate the transactions
contemplated by this Agreement (including the Merger). The Parties
agree that they will consult with each other with respect to the obtaining
of
all Consents of all Regulatory Authorities and other Persons necessary or
advisable to consummate the transactions contemplated by this Agreement and
each
Party will keep the other apprised of the status of matters relating to
consummation of the transactions contemplated herein. Each Party also
shall promptly advise the other upon its or its Subsidiary’s receiving any
communication from any Regulatory Authority or other Person whose Consent is
required for consummation of the transactions contemplated by this Agreement
which causes such Party to believe that there is a reasonable likelihood that
any requisite Consent will not be obtained or that the receipt of any such
Consent will be materially delayed.
7.5 Agreement
as to Efforts to Consummate.
Subject
to
the terms and conditions of this Agreement, each Party agrees to use, and to
cause its Subsidiaries to use, its reasonable efforts to take, or cause to
be
taken, all actions, and to do, or cause to be done, all things necessary,
proper, or advisable under applicable Laws to consummate and make effective,
as
soon as reasonably practicable after the date of this Agreement, the
transactions contemplated by this Agreement, including using its reasonable
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause to be satisfied
the
conditions referred to in Article 8; provided, that nothing herein
shall preclude either Party from exercising its rights under this
Agreement.
7.6 Investigation
and Confidentiality.
(a) Prior
to
the Effective Time, each Party shall keep the other Party advised of all
material developments relevant to its business and the consummation of the
Merger and shall permit the other Party to make or cause to be made such
reasonable investigation of its business and properties (including that of
its
Subsidiaries) and of their respective financial and legal conditions as the
other Party reasonably requests, provided, that such investigation
shall be reasonably related to the transactions contemplated hereby and shall
not interfere unnecessarily with normal operations. No investigation
by a Party shall affect the ability of such Party to rely on the representations
and warranties of the other Party. Without limiting the generality of
the foregoing, between the date hereof and the Effective Time, Seller shall
permit Buyer’s senior officers and independent auditors to meet with the senior
officers of Seller, including officers responsible for the Seller Financial
Statements, the internal controls of Seller, and the disclosure controls and
procedures of Seller and Seller’s independent public accountants, to discuss
such matters as Buyer may deem reasonably necessary or appropriate for Buyer
to
satisfy its obligations under Sections 302, 404 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
-35-
(b) In
addition to each Party’s obligations pursuant to Section 7.6(a), each Party
shall, and shall cause its Representatives to, maintain the confidentiality
of
all Confidential Information furnished to it by or on behalf of the other Party
concerning its and its Subsidiaries’ businesses, operations, and financial
positions and shall not disclose or use such information for any purpose except
as permitted hereby. The term “Confidential Information” means all
oral and written information disclosed by or on behalf of one Party (the
“Disclosing Party”) to the other (the “Receiving Party”) regarding
its and its Subsidiaries’ business, assets, financial condition, operations, and
prospects, and shall be deemed to include, without limitation, all notes,
analyses, compilations, studies, interpretations, or other documents prepared
by
or on behalf of a Party or its that contain, reflect, or are based upon or
derived from, in whole or in part, information furnished by or on behalf of
the
other Party, but does not include information that (i) is or becomes generally
available to the public other than as a result of a disclosure by the Receiving
Party or its Representatives, (ii) is or becomes available to the Receiving
Party on a nonconfidential basis from a source other than the Disclosing Party
or any of its Representatives or affiliates, provided that the source of such
information was not known by the Receiving Party to be bound by a
confidentiality agreement with, or other contractual, legal, equitable, or
fiduciary obligation of confidentiality to, the Disclosing Party or any other
party with respect to such information, or (iii) can be reasonably demonstrated
by the Receiving Party to have been in its possession prior to its being
furnished to it or its Representatives by or on behalf of the Disclosing Party,
provided that the source of such information was not known by the Receiving
Party to be bound by a confidentiality agreement with, or other contractual,
legal, equitable, or fiduciary obligation of confidentiality to, the Disclosing
Party or any other party with respect to such information. Except as
required by law or the rules of any national securities exchange or automated
trading system, a Party shall not, and shall not permit its Subsidiaries to,
disclose any Confidential Information of the other Party to any person or entity
other than its Representatives who need to know such information in connection
with the transactions contemplated by this Agreement (and in those instances
only to the extent justifiable by that need), who are informed by the Party
of
the confidential nature of the Confidential Information, and who agree to be
bound by this Section 7.6(b), and shall not use such Confidential Information
other than in connection with the transactions contemplated by this
Agreement. A Party shall be responsible for any breach of this
Section 7.6(b) by any of its Representatives. If a Party or any of
its Representatives is required by law or the rules of any national securities
exchange or automated trading system to disclose any Confidential Information
of
the other Party, it shall provide the other Party with prior written notice
thereof, unless prohibited by law, so that the other Party may seek a protective
order, confidential treatment, or another appropriate remedy and shall cooperate
in all reasonable respects with the other Party in obtaining the same and,
in
any event, shall furnish only that portion of the Confidential Information
as,
in the written opinion of counsel, is legally required. If this
Agreement is terminated prior to the Effective Time, each Party shall upon
request from the other Party promptly return or certify the destruction of
all
documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Seller
shall use its reasonable efforts to exercise, and shall not waive any of, its
rights under confidentiality agreements entered into with Persons which were
considering an Acquisition Proposal with respect to Seller to preserve the
confidentiality of the information relating to the Seller Entities provided
to
such Persons and their Affiliates and Representatives.
7.7 Press
Releases.
-36-
Prior
to
the Effective Time, Seller and Buyer shall consult with each other as to the
form and substance of any press release, communication with Seller Shareholders,
or other public disclosure materially related to this Agreement, or any other
transaction contemplated hereby; provided, that nothing in this Section
7.7 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, but in each case the disclosing party shall provide
the other party hereto with reasonable advance notice of the timing and
substance of any such disclosure.
7.8 Charter
Provisions.
Each
Seller Entity shall take all necessary action to ensure that the entering into
of this Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any rights to
any
Person under the articles of incorporation, bylaws, or other governing
instruments of any Seller Entity or restrict or impair the ability of Buyer
or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any Seller Entity that may be directly
or
indirectly acquired or controlled by them.
7.9 Employee
Benefits and Contracts.
(a) All
persons who are employees of Seller or the Bank immediately prior to the
Effective Time and whose employment is not specifically terminated at or prior
to the Effective Time (collectively, the “Continuing Employees”) shall,
at the Effective Time, become employees of Buyer or one of its subsidiaries;
provided, however, that in no event shall any of the employees of
Seller become officers of Buyer, or acquire any power or duty conferred upon
such an officer, in connection with the Merger until duly elected or appointed
to such position by the board of directors of Buyer and in accordance with
the
bylaws of Buyer following the Effective Time. The Continuing Employees shall
be
employed at the will of Buyer or one of its subsidiaries, and no contractual
right to employment shall inure to such employees because of this Agreement
except as otherwise expressly set forth in this Agreement.
(b) As
of the
Effective Time, each Continuing Employee shall be eligible to participate in
Buyer’s employee benefit plans with full credit for prior service with Seller or
the Bank for purposes of eligibility, benefit levels and vesting.
(c) As
of the
Effective Time, Buyer shall make available employer-provided health and other
employee welfare benefit plans to each Continuing Employee and their covered
dependents on the same basis as it provides such coverage to Buyer employees
and
their covered dependents except that any pre-existing condition, eligibility
waiting period, or other limitations or exclusions otherwise applicable under
such plans to new employees shall not apply to a Continuing Employee or their
covered dependents who were covered under a similar plan of Seller or the Bank
at the Effective Time; provided, that any pre-existing condition,
eligibility waiting period, or other limitation or exclusion applicable to
a
Continuing Employee and their covered dependents prior to the Effective Time
may
continue to apply to such Continuing Employee and their covered dependents
following the Effective Time. All Continuing Employees who become
participants in Buyer’s health plan shall receive credit for any co-payment and
deductibles paid under Seller’s or the Bank’s health plan for purposes of
satisfying any applicable deductible or out-of-pocket requirements under Buyer’s
health plan.
-37-
(d) Buyer
or
one of its subsidiaries shall honor any and all vacation or sick leave accrued
by employees of Seller and the Bank. Following the Effective Time,
Buyer shall or shall cause Bank to honor the Seller Entities’ incentive
compensation plans for Continuing Employees for the year ending December 31,
2007. Thereafter, Continuing Employees shall be eligible to
participate in incentive compensation plans of Buyer Entities on the same basis
as similarly situated employees of Buyer Entities.
(e) Buyer
shall provide severance and outplacement services to any employees of Seller
or
the Bank that are terminated in connection with the Merger (prior to or within
a
year of the Effective Time), in accordance with Buyer’s policies and
practices. If any employee of Seller or Bank is terminated in
connection with the Merger prior to the close of business on December 31, 2007,
Buyer shall provide to such employee, in addition to such severance, an amount
equal to the matching contribution (determined at the 2006 matching rate) with
respect to Seller’s defined contribution plan and 2007 incentive compensation
payment that such employee would otherwise have been entitled to receive had
such employee remained employed through December 31, 2007.
(f) In
order
to induce certain employees to remain as employees of Seller or the Bank through
the Effective Time or for specified periods after the Effective Time, with
the
consent of Buyer not to be unreasonably withheld, Seller shall have the right
to
pay retention bonuses to employees of Seller in amounts not to exceed in the
aggregate the amount set forth on Section 7.9(f) of the Seller Disclosure
Memorandum.
(g) Simultaneously
herewith, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. shall have entered into an employment agreement
with Buyer (the “Employment Agreement”). The Employment
Agreement shall become effective only upon the consummation of the Merger at
the
Effective Time.
(h) Seller
shall use its reasonable best efforts to cause each of Seller’s directors to
execute and deliver an agreement dated as of the date hereof in the form of
Exhibit A pursuant to which he or she will vote his or her shares of
Seller Common Stock in favor of this Agreement and the transactions contemplated
hereby and a director agreement in the form of Exhibit D.
(i) No
officer, employee, or other Person (other than the corporate Parties to this
Agreement) shall be deemed a third party or other beneficiary of this Agreement,
and no such Person shall have any right or other entitlement to enforce any
provision of this Agreement or seek any remedy in connection with this
Agreement, except as set forth in Section 7.12.
7.10 Section
16 Matters.
Prior
to
the Effective Time, Seller and Buyer shall take all such steps as may reasonably
be required to cause any dispositions of Seller Common Stock (including
derivative securities with respect to Seller Common Stock) or acquisitions
of
Buyer Common Stock resulting from the transactions contemplated by this
Agreement by each individual who is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to Seller to be exempt under
Rule
16b-3 promulgated under the Exchange Act. Seller agrees to promptly
furnish Buyer with all requisite information necessary for Buyer to take the
actions contemplated by this Section 7.10.
-38-
7.11 Affiliate
and Claims Letters.
Seller
shall use its best efforts to cause (a) each director, executive officer, and
other person who is an “affiliate” of Seller under Rule 145 of the Securities
Act to deliver to Buyer as soon as practicable, and prior to the mailing of
the
Proxy Statement/Prospectus, an executed letter agreement in the form attached
hereto as Exhibit B, providing that such person will comply with Rule
145, as well as a claims letter in the form attached hereto as Exhibit
C and (b) each director and executive officer of the Bank to
execute
a claims letter in the form attached hereto as Exhibit C.
7.12 Indemnification.
(a) From
and
after the Effective Time, Buyer shall indemnify, defend, and hold harmless
the
present and former directors, officers, employees, and agents of the Seller
Entities (each, an “Indemnified Party”) against all Liabilities arising
out of actions or omissions arising out of the Indemnified Party’s service or
services as directors, officers, employees, or agents of Seller Entities or,
at
Seller’s request, of another corporation, partnership, joint venture, trust, or
other enterprise, occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the fullest extent permitted
under by the SCBCA and other applicable Law, and by Seller’s articles of
incorporation and bylaws as in effect on the date hereof, including provisions
relating to advances of expenses incurred in the defense of any Litigation
and
whether or not any Buyer Entity is insured against any such matter.
(b) Prior
to
the Effective Time, Buyer shall purchase, or shall direct Seller to purchase,
an
extended reporting period endorsement under Seller Entities’ existing directors’
and officers’ liability insurance coverage (“Seller D&O Policy”) for
acts or omissions occurring prior to the Effective Time by such directors and
officers currently covered by Seller Entities’ D&O Policy. The
directors and officers of Seller Entities shall take all reasonable actions
required by the insurance carrier necessary to procure such
endorsement. Such endorsement shall provide such directors and
officers with coverage following the Effective Time for six years or such lesser
period of time as can be purchased for an aggregate amount equal to three times
the current annual premium for Seller Entities’ D&O Policy (the “Premium
Multiple”). If Buyer is unable to obtain or maintain the
insurance coverage called for in this Section 7.12(b), then Buyer shall obtain
the most advantageous coverage that can be purchased for the Premium
Multiple.
(c) Any
Indemnified Party wishing to claim indemnification under paragraph (a) of this
Section 7.12, upon learning of any such Liability or Litigation, or the threat
thereof, shall promptly notify Buyer thereof in writing. In the event
of any such Litigation (whether arising before or after the Effective Time),
(i)
Buyer shall have the right to assume the defense thereof and Buyer shall not
be
liable to such Indemnified Parties for any legal expenses of other counsel
or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Buyer elects not to assume
such defense or counsel for the Indemnified Parties and advises that there
are
substantive issues which raise conflicts of interest between Buyer and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory
to
them, and Buyer shall pay all reasonable fees and expenses of such counsel
for
the Indemnified Parties promptly as statements therefor are received;
provided, that Buyer shall be obligated pursuant to this paragraph (c)
to pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction; (ii) the Indemnified Parties will cooperate in good faith in
the
defense of any such Litigation; and (iii) Buyer shall not be liable for any
settlement effected without its prior written consent and which does not provide
for a complete and irrevocable release of all Buyer Entities and their
respective directors, officers, and controlling persons, employees, agents,
and
Representatives; provided, however, that Buyer shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
-39-
(d) If
Buyer
or any successors or assigns shall consolidate with or merge into any other
Person and shall not be the continuing or surviving Person of such consolidation
or merger or shall transfer all or substantially all of its assets to any
Person, then and in each case, proper provision shall be made so that the
successors and assigns of Buyer shall assume the obligations set forth in this
Section 7.12.
(e) The
provisions of this Section 7.12 are intended to be for the benefit of and shall
be enforceable by, each Indemnified Party and their respective heirs and legal
and personal representatives.
CONDITIONS
PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 Conditions
to Obligations of Each Party.
The
respective obligations of each Party to perform this Agreement and consummate
the Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by both Parties pursuant
to Section 10.6:
(a) Shareholder
Approval. The shareholders of Seller shall have approved this
Agreement, as and to the extent required by Law and by the provisions of
Seller’s articles of incorporation and bylaws.
(b) Regulatory
Approvals. All Consents of, filings and registrations with, and
notifications to, all Regulatory Authorities required for consummation of the
Merger shall have been obtained or made and shall be in full force and effect
and all waiting periods required by Law shall have expired. No
Consent obtained from any Regulatory Authority which is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted in
a
manner (including requirements relating to the raising of additional capital
or
the disposition of Assets) which in the reasonable judgment of the board of
directors of Buyer would so materially adversely affect the economic or business
benefits of the transactions contemplated by this Agreement that, had such
condition or requirement been known, Buyer would not, in its reasonable
judgment, have entered into this Agreement.
(c) Registration
Statement. The Registration Statement shall have been declared
effective by the SEC and no proceedings shall be pending or threatened by the
SEC to suspend the effectiveness of the Registration Statement.
(d) Tax
Opinion. Buyer and Seller shall have received the opinion of
▇▇▇▇▇▇ Law Firm, P.A. dated as of the Closing, in form and substance customary
in transactions of the type contemplated hereby, and reasonably satisfactory
to
Buyer and Seller, as the case may be, substantially to the effect that on the
basis of the facts, representations, and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective Time,
(i)
the Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the IRC, (ii) Buyer and Seller will
each
be a party to that reorganization within the meaning of Section 368(b) of the
IRC, and (iii) except to the extent of Cash Consideration or any cash received
in lieu of a fractional share interest in Buyer Common Stock, the shareholders
of Seller will not recognize any gain or loss by exchanging their shares of
Seller Common Stock for shares of Buyer Common Stock pursuant to the
Merger. Such opinion may be based on, in addition to the review of
such matters of fact and law as the opinion giver considers appropriate,
representations contained in certificates of officers of Buyer, Seller, and
others.
-40-
(e) Legal
Proceedings. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced, or entered any Law or Order
(whether temporary, preliminary or permanent) or taken any other action which
prohibits, restricts, or makes illegal consummation of the transactions
contemplated by this Agreement.
(f) NASDAQ
Listing. As of the Effective Time, Buyer shall have satisfied all
requirements in order for the Buyer Common Stock to be issued to shareholders
of
Seller in connection with the Merger to be listed on the NASDAQ Global Select
Market.
8.2 Conditions
to Obligations of Buyer.
The
obligations of Buyer to perform this Agreement and consummate the Merger and
the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Buyer pursuant to Section
10.6(a):
(a) Representations
and Warranties. For purposes of this Section 8.2(a), the accuracy
of the representations and warranties of Seller set forth in this Agreement
shall be assessed as of the date of this Agreement and as of the Effective
Time
with the same effect as though all such representations and warranties had
been
made on and as of the Effective Time (provided, that representations
and warranties which are confined to a specified date shall speak only as of
such date). The representations and warranties set forth in Section
4.3 shall be true and correct (except for inaccuracies which are de
minimis in amount). There shall not exist inaccuracies in the
representations and warranties of Seller set forth in this Agreement (including
the representations and warranties set forth in Section 4.3) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have,
a
Seller Material Adverse Effect; provided, that for purposes of this
sentence only, those representations and warranties which are qualified by
references to “material” or “Material Adverse Effect” or to the “Knowledge” of
any Person shall be deemed not to include such qualifications.
(b) Performance
of Agreements and Covenants. Each and all of the agreements and
covenants of Seller to be performed and complied with pursuant to this Agreement
and the other agreements contemplated hereby prior to the Effective Time shall
have been duly performed and complied with in all material
respects.
(c) Officers’
Certificate. Seller shall have delivered to Buyer a certificate,
dated as of the Closing Date and signed on its behalf by its chief executive
officer and its chief financial officer, to the effect that the conditions
set
forth in Section 8.1 as it relates to Seller and in Sections 8.2(a), 8.2(b),
8.2(e), 8.2(g), and 8.2(h) have been satisfied.
-41-
(d) Secretary’s
Certificate. Seller Entities shall have delivered a certificate
of the secretary of the Seller Entities, dated as of the Closing Date,
certifying as to (i) the incumbency of officers of the Seller Entities executing
documents executed and delivered in connection herewith, (ii) a copy of the
articles of incorporation of the Seller as in effect from the date of this
Agreement until the Closing Date, along with a certificate (dated not more
than
twenty days prior to the Closing Date) of the Secretary of State of the State
of
North Carolina as to the good standing of the Seller; (iii) a copy of the bylaws
of the Seller as in effect from the date of this Agreement until the Closing
Date, (iv) copies of the resolutions of Seller’s board of directors and
shareholders authorizing and approving the applicable matters contemplated
hereunder, (v) a copy of the articles of incorporation of the Bank as in effect
from the date of this Agreement until the Closing Date and (vi) a copy of the
bylaws of the Bank as in effect from the date of this Agreement until the
Closing Date.
(e) Consents
and Approvals. Each Seller Entity shall have obtained any and all
Consents required for consummation of the Merger (other than those referred
to
in Section 8.1(b)) or for the preventing of any Default under any Contract
or
Permit which, if not obtained or made, would be reasonably likely to have,
individually or in the aggregate, a Seller Material Adverse
Effect. Seller shall have obtained the Consents listed in Section 4.2
of the Seller Disclosure Memorandum, including Consents from the lessors of
each
office leased by Seller, if any. No Consent so obtained which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner which in the reasonable judgment of the
board of directors of Buyer would so materially adversely affect the economic
or
business benefits of the transactions contemplated by this Agreement that,
had
such condition or requirement been known, Buyer would not, in its reasonable
judgment, have entered into this Agreement.
(f) Support
Agreements, Affiliate Agreements; Claims Letters; Director
Agreements. Each of the directors of Seller shall have executed
and delivered to Buyer a Support Agreement in the form attached hereto as
Exhibit A and a Director Agreement in the form attached hereto as
Exhibit D. Each of the directors, executive officers, and
other persons who are “affiliates” under Rule 145 of the Securities
Act of Seller shall have executed and delivered to Buyer an Affiliate
Agreement in the form attached hereto as Exhibit B.
(g) Notices
of Dissent. Seller shall not have received timely notice from its
shareholders of their intent to exercise their statutory right to dissent with
respect to more than 10% of the outstanding shares of Seller Common
Stock.
(h) No
Material Adverse Effect. There shall not have occurred any Seller
Material Adverse Effect since the date of this Agreement.
(i) Bank
Director Resignations. Written resignations, effective as of the
Effective Time, from all of the directors of the Bank shall have been delivered
to Buyer.
8.3 Conditions
to Obligations of Seller.
-42-
The
obligations of Seller to perform this Agreement and consummate the Merger and
the other transactions contemplated hereby are subject to the satisfaction
of
the following conditions, unless waived by Seller pursuant to Section
10.6(b):
(a) Representations
and Warranties. For purposes of this Section 8.3(a), the accuracy
of the representations and warranties of Buyer set forth in this Agreement
shall
be assessed as of the date of this Agreement and as of the Effective Time with
the same effect as though all such representations and warranties had been
made
on and as of the Effective Time (provided that representations and
warranties which are confined to a specified date shall speak only as of such
date). There shall not exist inaccuracies in the representations and
warranties of Buyer set forth in this Agreement such that the aggregate effect
of such inaccuracies has, or is reasonably likely to have, a Buyer Material
Adverse Effect; provided that, for purposes of this sentence only,
those representations and warranties which are qualified by references to
“material” or “Material Adverse Effect” or to the “Knowledge” of any Person
shall be deemed not to include such qualifications.
(b) Performance
of Agreements and Covenants. Each and all of the agreements and
covenants of Buyer to be performed and complied with pursuant to this Agreement
and the other agreements contemplated hereby prior to the Effective Time shall
have been duly performed and complied with in all material
respects.
(c) Officers’
Certificate. Buyer shall have delivered to the Seller a
certificate, dated as of the Closing Date and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 8.1 as it relates to Buyer and in Sections
8.3(a), 8.3(b), 8.3(f), and 8.3(g) have been satisfied.
(d) Secretary’s
Certificate. Buyer Entities shall have delivered a certificate of
the secretary of the Buyer Entities, dated as of the Closing Date, certifying
as
to (i) the incumbency of officers of the Buyer Entities executing documents
executed and delivered in connection herewith, (ii) a copy of the articles
of
incorporation of Buyer as in effect from the date of this Agreement until the
Closing Date, along with a certificate (dated not more than twenty days prior
to
the Closing Date) of the Secretary of State of the State of South Carolina
as to
the good standing of the Buyer; (iii) a copy of the bylaws of Buyer as in effect
from the date of this Agreement until the Closing Date and (iv) a copy of the
consent of Buyer’s board of directors authorizing and approving the applicable
matters contemplated hereunder.
(e) Payment
of Merger Consideration. Buyer shall pay the Merger Consideration
as provided by this Agreement.
(f) Consents
and Approvals. Each Buyer Entity shall have obtained any and all
Consents required for consummation of the Merger (other than those referred
to
in Section 8.1(b)) or for the preventing of any Default under any Contract
or
Permit which, if not obtained or made, would be reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect. No
Consent so obtained which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner which in
the
reasonable judgment of the board of directors of Seller would so materially
adversely affect the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or requirement been
known, Seller would not, in its reasonable judgment, have entered into this
Agreement.
-43-
(g) No
Material Adverse Effect. There shall not have occurred any Buyer
Material Adverse Effect since the date of this Agreement.
TERMINATION
9.1 Termination.
Notwithstanding
any other provision of this Agreement, and notwithstanding the approval of
this
Agreement by the shareholders of Seller, this Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time:
(a) By
mutual
written agreement of Buyer and Seller; or
(b) By
either
Party (provided, that the terminating Party is not then in breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement, which breach would permit the other Party to refuse to consummate
the
transactions contemplated by this Agreement pursuant to the standard set forth
in Section 8.2(a), 8.2(b), 8.3(a), or 8.3(b), as applicable) in the event of
a
breach by the other Party of any representation, warranty, covenant or other
agreement contained in this Agreement which cannot be cured and which
breach is reasonably likely, in the opinion of the nonbreaching Party, to permit
such Party to refuse to consummate the transactions contemplated by this
Agreement pursuant to the standard set forth in Section 8.2(a), 8.2(b), 8.3(a),
or 8.3(b), as applicable; or
(c) By
either
Party in the event (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated hereby shall
have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for appeal,
(ii) any Law or Order permanently restraining, enjoining or otherwise
prohibiting the consummation of the Merger shall have become final and
nonappealable, or (iii) the shareholders of Seller fail to vote their approval
of this Agreement at the Seller Shareholders’
Meeting; or
(d) By
either
Party in the event that the Merger shall not have been consummated by June
30,
2008, if the failure to consummate the transactions contemplated hereby on
or
before such date is not caused by any breach of this Agreement by the Party
electing to terminate pursuant to this Section 9.1; or
(e) By
Buyer
(provided, that Buyer is not then in breach of any representation, warranty,
covenant, or other agreement contained in this Agreement, which breach would
permit Seller to refuse to consummate the transactions contemplated by this
Agreement pursuant to the standard set forth in Section 8.3(a) or 8.3(b), as
applicable) in the event that (i) the board of directors of Seller, shall have
failed to reaffirm its approval of this Agreement and the
Merger within five business days after Buyer’s written request for
such reaffirmation of the Merger and the transactions contemplated by this
Agreement (to the exclusion of any other Acquisition Proposal), or shall have
resolved not to reaffirm the Merger, or (ii) the board of directors of Seller
shall have failed to include in the Proxy Statement/Prospectus its
recommendation, without modification or qualification, that Seller shareholders
approve the Merger or shall have withdrawn, qualified or modified, or proposed
publicly to withdraw, qualify or modify, in a manner adverse to Buyer, the
recommendation of such board of directors to Seller’s shareholders that they
approve the Merger (it being understood and agree that any
“stop-look-and-listen” communication to Seller’s shareholders of the nature
contemplated by Rule 14d-9 under the Exchange Act shall not be deemed to
constitute a withdrawal or modification of such recommendation), or (iii) the
board of directors of Seller shall have affirmed, recommended, or authorized
entering into any Acquisition Transaction other than the Merger or, within
ten
business days after commencement of any tender or exchange offer for any shares
of Seller Common Stock, the board of directors of Seller shall have made any
recommendation other than against acceptance of such tender or exchange offer
by
its shareholders; provided, however, that this Agreement may not be terminated
by Buyer pursuant to this Section 9.1(e) if the Merger is approved by the
requisite vote of the shareholders of the Seller; or
-44-
(f) By
Seller pursuant to Section 7.3(b) prior to the approval of
this Agreement by the affirmative vote of the holders of the requisite number
of
the outstanding shares of Seller Common Stock entitled to vote thereon at the
Seller Shareholders’ Meeting; provided that Seller shall have complied with the
provisions of Section 7.3, including, without limitation, the notice provisions
thereof.
9.2 Effect
of Termination.
In
the
event of the termination of this Agreement by either Buyer or Seller pursuant
to
Section 9.1, this Agreement shall have no further effect, except that (i) the
provisions of Sections 7.6, 9.2, and 9.3 and ARTICLE 10 shall survive any such
termination, and (ii) no such termination shall relieve the breaching Party
from
Liability resulting from any breach by that Party of this
Agreement.
9.3 Termination
Fee.
(a) If
Seller
terminates this Agreement pursuant to Section 9.1(f) of this Agreement, then
upon such termination Seller shall pay to Buyer the sum of $1,750,000 (the
“Termination Fee”). The Termination Fee shall be paid to Buyer
in same-day funds.
(b) If
Buyer
terminates this Agreement pursuant to Section 9.1(e) of this Agreement and
within 12 months after such termination Seller enters into an Acquisition
Agreement, then upon the signing of such Acquisition Agreement, Seller shall
pay
to Buyer the Termination Fee in same-day funds; provided, however, that in
such
case the Termination Fee shall be reduced to $1,500,000.
(c) If
either
Party terminates this Agreement pursuant to Section 9.1(d) of this Agreement
and, after the date of this Agreement and prior to the time of such termination,
an Acquisition Proposal has been made, then, upon the signing of an Acquisition
Agreement with respect to such Acquisition Proposal, Seller shall pay to Buyer
the Termination Fee described in Section 9.3(a) in same-day funds.
-45-
(d) The
Parties acknowledge that the agreements contained in this ARTICLE 9 are an
integral part of the transactions contemplated by this Agreement, and that
without these agreements, they would not enter into this Agreement; accordingly,
if Seller fails to pay promptly any Termination Fee payable by it pursuant
to
this Section 9.3, then Seller shall pay to Buyer its reasonable costs and
expenses (including reasonable attorneys’ fees) in connection with collecting
such Termination Fee, together with interest on the amount of the fee at the
prime annual rate of interest (as published in The Wall Street Journal)
plus 2% as the same is in effect from time to time from the date such payment
was due under this Agreement until the date of payment.
9.4 Nonsurvival
of Representations and Covenants.
Except
for
ARTICLE 3, Sections 7.6(b), 7.9, and 7.12, this ARTICLE 9, and ARTICLE 10,
the
respective representations, warranties, obligations, covenants, and agreements
of the Parties shall not survive the Effective Time.
MISCELLANEOUS
10.1 Definitions.
(a) Except
as
otherwise provided herein, the capitalized terms set forth below shall have
the
following meanings:
“Acquisition
Agreement” means a definitive agreement to effect an Acquisition
Transaction.
“Acquisition
Proposal” means any proposal (whether communicated to Seller or
publicly announced to Seller’s shareholders) by any Person (other than Buyer or
any of its Affiliates) for an Acquisition Transaction involving Seller or any
of
its present or future consolidated Subsidiaries, or any combination of such
Subsidiaries, the assets of which constitute 5% or more of the consolidated
assets of Seller as reflected on Seller’s consolidated statement of condition
prepared in accordance with GAAP.
“Acquisition
Transaction” means any transaction or series of related transactions
(other than the transactions contemplated by this Agreement) involving:
(i) any acquisition or purchase from Seller by any Person or Group (other
than Buyer or any of its Affiliates) of 25% or more in interest of the total
outstanding voting securities of Seller or any of its Subsidiaries, or any
tender offer or exchange offer that if consummated would result in any Person
or
Group (other than Buyer or any of its Affiliates) beneficially owning 25% or
more in interest of the total outstanding voting securities of Seller or any
of
its Subsidiaries, or any merger, consolidation, business combination or similar
transaction involving Seller pursuant to which the shareholders of Seller
immediately preceding such transaction hold less than 75% of the equity
interests in the surviving or resulting entity (which includes the parent
corporation of any constituent corporation to any such transaction) of such
transaction; (ii) any sale or lease (other than in the ordinary course of
business), or exchange, transfer, license (other than in the ordinary course
of
business), acquisition or disposition of 25% or more of the Assets of Seller;
or
(iii) any liquidation or dissolution of Seller.
“Affiliate”
of a Person means: (i) any other Person directly, or indirectly
through one or more intermediaries, controlling, controlled by or under common
control with such Person; (ii) any officer, director, partner, employer, or
direct or indirect beneficial owner of any 10% or greater equity or voting
interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
-46-
“Agreement”
has the meaning as set forth in the introduction of the Agreement.
“Allowance”
has the meaning as set forth in Section 4.9(a) of the Agreement.
“Assets”
of a Person means all of the assets, properties, businesses and rights of such
Person of every kind, nature, character and description, whether real, personal
or mixed, tangible or intangible, accrued or contingent, or otherwise relating
to or utilized in such Person’s business, directly or indirectly, in whole or in
part, whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such Person
and wherever located.
“Bank”
means The Scottish Bank, a North Carolina banking corporation and a wholly
owned
Subsidiary of Seller.
“BHCA”
has the meaning as set forth in Section 4.1 of the Agreement.
“Buyer”
has the meaning as set forth in the introduction of the Agreement.
“Buyer
Common Stock” means the common stock, par value $2.50 per share, of
Buyer.
“Buyer
Disclosure Memorandum” means the written information entitled “Buyer
Disclosure Memorandum” delivered with this Agreement to Seller describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of
any
other Section not specifically referenced with respect thereto.
“Buyer
Entities” means, collectively, Buyer and all Buyer
Subsidiaries.
“Buyer
Exchange Act Reports” has the meaning as set forth in Section 5.3(a)of
the Agreement.
“Buyer
Financial Statements” means (i) the consolidated balance sheets of
Buyer as of June 30, 2007, and the related statements of income, changes in
shareholders’ equity, and cash flows (including related notes and schedules, if
any) for the period ended June 30, 2007, and for each of the three fiscal years
ended December 31, 2006, as filed by Buyer in Exchange Act Documents, and (ii)
the consolidated balance sheets of Buyer (including related notes and schedules,
if any) and related statements of income, changes in shareholders’ equity, and
cash flows (including related notes and schedules, if any) included in Exchange
Act Documents, as amended, filed with respect to periods ended subsequent to
June 30, 2007.
“Buyer
Material Adverse Effect” means an event, change or occurrence which,
individually or together with any other event, change or occurrence, has a
material adverse effect on (i)the financial position, business or results of
operations of Buyer and its Subsidiaries, taken as a whole, or (ii) the
ability of Buyer to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this Agreement,
provided, that with respect to the preceding clause (i), “Buyer
Material Adverse Effect” shall not be deemed (with respect to each of the
following clauses (A) through (D), only to the extent that the effect of a
change on Buyer and its Subsidiaries taken as a whole it is not materially
different than on comparable U.S. banking organizations) to include the effects
of (A) changes in banking and other Laws of general applicability or
interpretations thereof by Governmental Authorities, (B) changes in GAAP or
regulatory accounting principles generally applicable to banks and their holding
companies, (C) changes in prevailing interest rates or other general economic
conditions affecting U.S. banking organizations generally, (D) any effect,
change, event, occurrence or circumstance relating to acts of terrorism, war,
national or international calamity or any other similar event, (E) actions
and
omissions of Buyer (or any of its Subsidiaries) taken with the prior written
Consent of Seller in contemplation of the transactions contemplated hereby,
(F)
the direct effects of negotiating, entering into and compliance with this
Agreement on the operating performance of Buyer, or (G) the announcement or
pendency of the transactions contemplated by this
Agreement. Notwithstanding the foregoing, “Buyer Material Adverse
Effect” shall not be deemed to include any change in the per-share price of
Buyer’s Common Stock on or after the date of execution of this Agreement by
Seller.
-47-
“Buyer
Subsidiaries” means the Subsidiaries, if any, of Buyer.
“CERCLA”
has the meaning as set forth under the definition of “Environmental
Laws” in this Section 10.1(a) of the Agreement.
“Cash
Consideration” has the meaning as set forth in Section 3.1(a) of the
Agreement.
“Cash
Election” has the meaning as set forth in Section 3.2(a) of the
Agreement.
“Cash
Election Shares” has the meaning as set forth in Section 3.2(a) of the
Agreement.
“Certificates”
has the meaning as set forth in Section 3.1(b) of the Agreement.
“Closing”
has the meaning as set forth in Section 1.2 of the Agreement.
“Closing
Date” means the date on which the Closing occurs.
“Code”
means the Internal Revenue Code of 1986, and the rules and regulations
promulgated thereunder.
“Confidential
Information” has the meaning as set forth in Section 7.6(b) of the
Agreement.
“Consent”
means any consent, approval, authorization, clearance, exemption, waiver, or
similar affirmation by any Person pursuant to any Contract, Law, Order, or
Permit.
“Contract”
means any written or oral agreement, arrangement, authorization, commitment,
contract, indenture, instrument, lease, license, obligation, plan, practice,
restriction, understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any Person or
its
capital stock, Assets or business.
“Default”
means (i) any breach or violation of, default under, contravention of, or
conflict with, any Contract, Law, Order, or Permit, (ii) any occurrence of
any event that with the passage of time or the giving of notice or both would
constitute a breach or violation of, default under, contravention of, or
conflict with, any Contract, Law, Order, or Permit, or (iii) any occurrence
of any event that with or without the passage of time or the giving of notice
would give rise to a right of any Person to exercise any remedy or obtain any
relief under, terminate or revoke, suspend, cancel, or modify or change the
current terms of, or renegotiate, or to accelerate the maturity or performance
of, or to increase or impose any Liability under, any Contract, Law, Order,
or
Permit.
“Disclosing
Party” has the meaning as set forth in Section 7.6(b)of the
Agreement.
-48-
“Disqualified
Person” has the meaning as set forth in Section 4.15(e) of the
Agreement.
“Dissenter
Shares” has the meaning as set forth in Section 3.1(a) of the
Agreement.
“DOL”
means the United States Department of Labor.
“Effective
Time” has the meaning as set forth in Section 1.3 of the
Agreement.
“Election
Deadline” has the meaning as set forth in Section 3.2(b)of the
Agreement.
“Election
Form” has the meaning as set forth in Section 3.2(a)of the
Agreement.
“Employee
Benefit Plan” means each pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, share purchase, severance
pay, vacation, bonus, retention, change in control or other incentive plan,
medical, vision, dental or other health plan, any life insurance plan, flexible
spending account, cafeteria plan, vacation, holiday, disability or any other
employee benefit plan or fringe benefit plan, including any “employee benefit
plan,” as that term is defined in Section 3(3) of ERISA and any other plan,
fund, policy, program, practice, custom understanding or arrangement providing
compensation or other benefits, whether or not such Employee Benefit Plan is
or
is intended to be (i) covered or qualified under the Code, ERISA or any other
applicable Law, (ii) written or oral, (iii) funded or unfunded, (iv) actual
or
contingent or (v) arrived at through collective bargaining or
otherwise.
“Environmental
Laws” means all Laws relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata) and which are administered, interpreted
or
enforced by the United States Environmental Protection Agency and state and
local Governmental Authorities with jurisdiction over, and including common
law
in respect of, pollution or protection of the environment, including: (i) the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
§§9601 et seq. (“CERCLA”); (ii) the Solid Waste Disposal Act,
as amended by the Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et
seq. (“RCRA”); (iii) the Emergency Planning and Community
Right to Know Act (42 U.S.C. §§11001 et seq.); (iv) the Clean Air Act (42 U.S.C.
§§7401 et seq.); (v) the Clean Water Act (33 U.S.C. §§1251 et seq.); (vi) the
Toxic Substances Control Act (15 U.S.C. §§2601 et seq.); (vii) any state,
county, municipal or local statutes, laws or ordinances similar or analogous
to
the federal statutes listed in parts (i) - (vi) of this subparagraph; (viii)
any
amendments to the statutes, laws or ordinances listed in parts (i) - (vi) of
this subparagraph, regardless of whether in existence on the date hereof, (ix)
any rules, regulations, guidelines, directives, orders or the like adopted
pursuant to or implementing the statutes, laws, ordinances and amendments listed
in parts (i) - (vii) of this subparagraph; and (x) any other law, statute,
ordinance, amendment, rule, regulation, guideline, directive, order or the
like
in effect now or in the future relating to environmental, health or safety
matters and other Laws relating to emissions, discharges, releases, or
threatened releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Material.
“ERISA”
means the Employee Retirement Income Security Act of 1974.
“ERISA
Affiliate” means any trade or business, whether or not incorporated,
which together with a Seller Entity would be treated as a single employer under
Code Section 414 or would be deemed a single employer within the meaning of
ERISA.
“Exchange
Act” means the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder.
-49-
“Exchange
Act Documents” means all proxy statements, registration statements,
reports, schedules, and other documents, including all certifications and
statements required by the Exchange Act or Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act
with respect to any report that is an Exchange Act Document, filed, or required
to be filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
“Exchange
Agent” has the meaning as set forth in Section 3.2(a) of the
Agreement.
“Excluded
Shares” has the meaning as set forth in Section 3.1(d)of the
Agreement.
“Exhibits”
means the Exhibits so marked, copies of which are attached to this
Agreement. Such Exhibits are hereby incorporated by reference herein
and made a part hereof, and may be referred to in this Agreement and any other
related instrument or document without being attached hereto or
thereto.
“FDIC”
means the Federal Deposit Insurance Corporation.
“Federal
Reserve” means the Board of Governors of the Federal Reserve System and
the Federal Reserve Bank of Richmond.
“GAAP”
means generally accepted accounting principles in the United States,
consistently applied during the periods involved.
“Governmental
Authority” means any federal, state, local, or foreign court, board,
body, commission, agency, authority, instrumentality, tribunal, or industry
self-regulatory authority, including Regulatory Authorities and Taxing
Authorities.
“Group”
has the meaning given to that term in Section 13(d) of the Exchange
Act.
“Hazardous
Material” means any chemical, substance, waste, material, pollutant, or
contaminant defined as or deemed hazardous or toxic or otherwise regulated
under
any Environmental Law, including RCRA hazardous wastes, CERCLA hazardous
substances, and HSRA regulated substances, pesticides and other
agricultural chemicals, oil and petroleum products or byproducts and any
constituents thereof, urea formaldehyde insulation, lead in paint or drinking
water, mold, asbestos, and polychlorinated biphenyls (PCBs): (i) any
hazardous substance, hazardous material, hazardous waste, regulated substance,
or toxic substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum
products, or oil (and specifically shall include asbestos requiring abatement,
removal, or encapsulation pursuant to the requirements of Environmental Law),
provided, notwithstanding the foregoing or any other provision in this Agreement
to the contrary, the words “Hazardous Material” shall not mean or include any
such Hazardous Material used, generated, manufactured, stored, disposed of
or
otherwise handled in normal quantities in the ordinary course of business in
compliance with all applicable Environmental Laws, or such that may be naturally
occurring in any ambient air, surface water, ground water, land surface or
subsurface strata.
“Indemnified
Party” has the meaning as set forth in Section 7.12(a) of the
Agreement.
“Intellectual
Property” means copyrights, patents, trademarks, service marks, service
names, trade names, domain names, together with all goodwill associated
therewith, registrations and applications therefor, technology rights and
licenses, computer software (including any source or object codes therefor
or
documentation relating thereto), trade secrets, franchises, know-how,
inventions, and other intellectual property rights.
-50-
“IRS”
means the United States Internal Revenue Service.
“Knowledge”
as used with respect to Seller (including references to Seller being aware
of a
particular matter) means those facts that are known or should reasonably have
been known to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. or ▇▇▇ ▇. ▇▇▇▇▇▇. As used with
respect to Buyer (including references to Buyer being aware of a particular
matter), “Knowledge” means those facts that are known or should reasonably have
been known to ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. or ▇▇▇▇ ▇. ▇▇▇▇▇▇.
“Law”
means any code, law (including common law), ordinance, regulation, reporting
or
licensing requirement, rule, statute, regulation or order applicable to a Person
or its Assets, Liabilities or business, including those promulgated, interpreted
or enforced by any Regulatory Authority.
“Liability”
means any direct or indirect, primary or secondary, liability, indebtedness,
obligation, penalty, cost or expense (including reasonable attorneys fees,
costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course
of
business) of any type, whether accrued, absolute or contingent, liquidated
or
unliquidated, matured or unmatured, or otherwise.
“Lien”
means any conditional sale agreement, default of title, easement, encroachment,
encumbrance, hypothecation, infringement, lien, mortgage, pledge, reservation,
restriction, security interest, title retention or other security arrangement,
or any adverse right or interest, charge, or claim of any nature whatsoever
of,
on, or with respect to any property or any property interest, other than
(i) Liens for current property Taxes not yet due and payable,
and (ii) for any depository institution, pledges to
secure public deposits and other Liens incurred in the ordinary course of the
banking business.
“Litigation”
means any action, arbitration, cause of action, lawsuit, claim, complaint,
criminal prosecution, governmental or other examination or investigation, audit
(other than regular audits of financial statements by outside auditors),
compliance review, inspection, hearing, administrative or other proceeding
relating to or affecting a Party or any of its Subsidiaries, their respective
businesses, Assets or Liabilities (including Contracts related to Assets or
Liabilities), or the transactions contemplated by this Agreement, but shall
not
include regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
“Mailing
Date” has the meaning as set forth in Section 3.2(a)of the
Agreement.
“Material”
or “material” for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in question;
provided, that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
“Merger”
has the meaning as set forth in the Preamble of the Agreement.
“Merger
Consideration” has the meaning as set forth in Section 3.1(a)of the
Agreement.
“NCBCA”
means the North Carolina Business Corporation Act.
“Nonelection”
has the meaning as set forth in Section 3.2(a) of the
Agreement.
“Nonelection
Shares” has the meaning as set forth in Section 3.2(a)of the
Agreement.
-51-
“Non
Disclosure Agreement” means the letter agreement dated June 21, 2007
between Buyer and Seller Financial Advisor with respect to the confidential
information of Seller.
“Off-Balance
Sheet Arrangements” has the meaning as set forth in Section 4.6 of the
Agreement.
“Operating
Property” means any property owned, leased, or operated by the Party in
question or by any of its Subsidiaries or in which such Party or Subsidiary
holds a security interest or other interest (including an interest in a
fiduciary capacity), and, where required by the context, includes the owner
or
operator of such property, but only with respect to such property.
“Option
Spread” has the meaning as set forth in Section 3.6(a) of the
Agreement.
“Order”
means any administrative decision or award, decree, injunction, judgment, order,
quasi-judicial decision or award, directive, ruling, or writ of any Governmental
Authority.
“Participation
Facility” means any facility or property in which the Party in question
or any of its Subsidiaries participates in the management and, where required
by
the context, means the owner or operator of such facility or property, but
only
with respect to such facility or property.
“Party”
means Seller or Buyer.
“Party
in Interest” has the meaning as set forth in Section 4.15(e)of the
Agreement.
“Permit”
means any federal, state, local, and foreign Governmental Authority approval,
authorization, certificate, easement, filing, franchise, license, notice,
permit, or right to which any Person is a party or that is or may be binding
upon or inure to the benefit of any Person or its securities, Assets, or
business, the absence of which or a default under would constitute a Buyer
or
Seller Material Adverse Effect, as the case may be.
“Per-Share
Consideration” has the meaning as set forth in Section 3.1(a)of the
Agreement.
“Person”
means a natural person or any legal, commercial or Governmental Authority,
such
as, but not limited to, a corporation, general partnership, joint venture,
limited partnership, limited liability company, limited liability partnership,
trust, business association, group acting in concert, or any person acting
in a
representative capacity.
“Premium
Multiple” has the meaning as set forth in Section 7.12(b) of the
Agreement.
“Prohibited
Transaction” has the meaning as set forth in Section 4.15(e)of the
Agreement.
“Proxy
Statement/Prospectus” has the meaning as set forth in Section 7.1(a)of
the Agreement.
“RCRA”
has the meaning as set forth under the definition of “Environmental Laws” in
this Section 10.1(a) of the Agreement.
“Receiving
Party” has the meaning as set forth in Section 7.6(b) of the
Agreement.
“Regulatory
Authorities” means, collectively, the SEC, the Nasdaq Stock Market, the
NASD, the South Carolina State Board of Financial Institutions, the North
Carolina Commissioner of Banks, the FDIC, the Department of Justice, and the
Federal Reserve and all other federal, state, county, local or other
Governmental Authorities having jurisdiction over a Party or its
Subsidiaries.
-52-
“Reportable
Event” has the meaning as set forth in Section 4.15(g)of the
Agreement.
“Representative”
means any investment banker, financial advisor, attorney, accountant,
consultant, or other representative or agent of a Person.
“Registration
Statement” has the meaning as set forth in Section 7.1(a) of the
Agreement.
“Rights”
means all arrangements, calls, commitments, Contracts, options, rights to
subscribe to, scrip, warrants, or other binding obligations of any character
whatsoever by which a Person is or may be bound to issue additional shares
of
its capital stock or other securities, securities or rights convertible into
or
exchangeable for, shares of the capital stock or other securities of a Person
or
by which a Person is or may be bound to issue additional shares of its capital
stock or other Rights.
“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act” means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, and the rules and
regulations promulgated thereunder.
“SCBCA”
means the South Carolina Business Corporation Act of 1988.
“SEC”
means the United States Securities and Exchange
Commission.
“Securities
Act” means the Securities Act of 1933, and the rules and regulations
promulgated thereunder.
“Securities
Laws” means the Securities Act, the Exchange Act, the Investment
Company Act of 1940, the Investment Advisors Act of 1940, the Trust Indenture
Act of 1939, and the rules and regulations of any Regulatory Authority
promulgated thereunder.
“Seller”
has the meaning as set forth in the introduction of the
Agreement.
“Seller
Benefit Plan(s)” has the meaning as set forth in Section 4.15(a)of the
Agreement.
“Seller
Common Stock” means the common stock, par value $0.01 per share, of
Seller.
“Seller
Contracts” has the meaning as set forth in Section 4.16(a) of the
Agreement.
“Seller
D&O Policy” has the meaning as set forth in Section 7.12(b) of the
Agreement.
“Seller
Disclosure Memorandum” means the written information entitled “Seller
Disclosure Memorandum” delivered with this Agreement to Buyer describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of
any
other Section not specifically referenced with respect thereto.
“Seller
Entities” means, collectively, Seller and all Seller
Subsidiaries.
“Seller
ERISA Plan” has the meaning as set forth in Section 4.15(a)of the
Agreement.
“Seller
Exchange Act Reports” has the meaning as set forth in Section 4.5(a)of
the Agreement.
“Seller
Financial Advisor” means ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇.
-53-
“Seller
Financial Statements” means (i) the consolidated balance sheets of
Seller as of June 30, 2007, and the related statements of income, changes in
shareholders’ equity, and cash flows (including related notes and schedules, if
any) for the period ended June 30, 2007, and for each of the three fiscal years
ended December 31, 2006, as filed by Seller in the Seller Exchange
Act Reports, and (ii) the consolidated balance sheets of Seller
(including related notes and schedules, if any) and related statements of
income, changes in shareholders’ equity, and cash flows (including related notes
and schedules, if any) included in the Seller Exchange Act Reports, as amended,
filed with respect to periods ended subsequent to June 30, 2007.
“Seller
Material Adverse Effect” means an event, change or occurrence which,
individually or together with any other event, change or occurrence, has a
material adverse effect on (i) the financial position, business or results
of
operations of Seller and its Subsidiaries, taken as a whole, or (ii) the
ability of Seller to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this Agreement,
provided, that with respect to the preceding clause (i), “Seller
Material Adverse Effect” shall not be deemed (with respect to each of the
following clauses (A) through (D), only to the extent that the effect of a
change on Seller and its Subsidiaries taken as a whole it is not materially
different than on comparable U.S. banking organizations) to include the effects
of (A) changes in banking and other Laws of general applicability or
interpretations thereof by Governmental Authorities, (B) changes in GAAP or
regulatory accounting principles generally applicable to banks and their holding
companies, (C) changes in prevailing interest rates or other general economic
conditions affecting U.S. banking organizations generally, (D)any effect,
change, event, occurrence or circumstance relating to acts of terrorism, war,
national or international calamity or any other similar event, (E) actions
and
omissions of Seller (or any of its Subsidiaries) taken with the prior written
Consent of Buyer in contemplation of the transactions contemplated hereby,
(F)
the direct effects of negotiating, entering into and compliance with this
Agreement on the operating performance of Seller, including specifically
Seller’s costs and expenses associated therewith, including, but not limited to,
accounting, financial advisor, and legal fees, or (G) the announcement or
pendency of the transactions contemplated by this Agreement.
“Seller
Pension Plan” has the meaning as set forth in Section 4.15(a)of the
Agreement.
“Seller
Options” has the meaning as set forth in Section 3.6(a) of the
Agreement.
“Seller
Subsidiaries” means the Subsidiaries, if any, of Seller.
“Seller
Shareholders’ Meeting” means the meeting of Seller’s shareholders to be
held pursuant to Section 7.2 of the Agreement, including any adjournment or
adjournments thereof.
“Shortfall
Number” has the meaning as set forth in Section 3.2(c)(ii) of the
Agreement.
“Stock
Consideration” has the meaning as set forth in Section 3.1(a)of the
Agreement.
“Stock
Conversion Number” has the meaning as set forth in Section 3.2(a)of the
Agreement.
“Stock
Election” has the meaning as set forth in Section 3.2(a)of the
Agreement.
“Stock
Election Number” has the meaning as set forth in Section 3.2(a) of the
Agreement.
“Stock
Election Shares” has the meaning as set forth in Section 3.2(a) of the
Agreement.
“Subsidiaries”
means all those corporations, banks, associations, or other entities of which
the entity in question either (i) owns or controls 50% or more of the
outstanding equity securities either directly or through an unbroken chain
of
entities as to each of which 50% or more of the outstanding equity securities
is
owned directly or indirectly by its parent (provided, there shall not
be included any such entity the equity securities of which are owned or
controlled in a fiduciary capacity), (ii) in the case of partnerships,
serves as a general partner, (iii) in the case of a limited liability
company, serves as a managing member, or (iv) otherwise has the ability to
elect a majority of the directors, trustees or managing members
thereof.
-54-
“Superior
Proposal” means any Acquisition Proposal (on its most recently amended
or modified terms, if amended or modified) (i) involving the acquisition of
at least a majority of the outstanding equity interest in, or all or
substantially all of the assets and liabilities of, Seller and (ii) with respect
to which the Board of Directors of Seller (A) determines in good faith that
such Acquisition Proposal, if accepted, is reasonably likely to be consummated
on a timely basis, taking into account all legal, financial, regulatory and
other aspects of the Acquisition Proposal and the Person or Group making the
Acquisition Proposal, and (B) determines in its good faith judgment (based
on, among other things, the advice of its financial advisor) to be more
favorable to Seller’s shareholders than the Merger taking into account all
relevant factors (including whether, in the good faith judgment of the Board
of
Directors of Seller, after obtaining the advice of Seller’s financial advisor,
the Person or Group making such Acquisition Proposal is reasonably able to
finance the transaction and close it timely, and any proposed changes to this
Agreement that may be proposed by Buyer in response to such Acquisition
Proposal).
“Support
Agreements” has the meaning as set forth in Section 8.2(f) of the
Agreement.
“Surviving
Corporation” means Buyer as the surviving corporation resulting from
the Merger.
“Takeover
Laws” has the meaning as set forth in Section 4.21 of the
Agreement.
“Tax”
or “Taxes” means all taxes, charges, fees, levies, imposts,
duties, or assessments, including income, gross receipts, excise, employment,
sales, use, transfer, recording license, payroll, franchise, severance,
documentary, stamp, occupation, windfall profits, environmental, federal highway
use, commercial rent, customs duties, capital stock, paid-up capital, profits,
withholding, Social Security, single business and unemployment, disability,
real
property, personal property, registration, ad valorem, value added,
alternative or add-on minimum, estimated, or other taxes, fees, assessments
or
charges of any kind whatsoever, imposed or required to be withheld by any
Governmental Authority (domestic or foreign), including any interest, penalties,
and additions imposed thereon or with respect thereto.
“Tax
Return” means any report, return, information return, or other
information required to be supplied to a Governmental Authority in connection
with Taxes, including any return of an affiliated or combined or unitary group
that includes a Party or its Subsidiaries.
“Taxing
Authority” means the Internal Revenue Service and any other
Governmental Authority responsible for the administration of any
Tax.
“Termination
Fee” has the meaning as set forth in Section 9.3(a) of the
Agreement.
“Three-Day
Period” has the meaning as set forth in Section 7.3(c) of the
Agreement.
“Trust”
shall mean TSB Statutory Trust I, a statutory trust under Chapter 38 of
Title 12 of the Delaware Code pursuant to a Declaration of Trust dated as of
December 1, 2006 and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on December 1, 2006
-55-
“WARN
Act” has the meaning as set forth in Section 4.14(c)of the
Agreement.
(b) Any
singular term in this Agreement shall be deemed to include the plural, and
any
plural term the singular. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed followed by the
words “without limitation”, and such terms shall not be limited by enumeration
or example.
10.2 Expenses.
Each
of
the Parties shall bear and pay all direct costs and expenses incurred by it
or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees
and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel.
10.3 Brokers
and Finders.
Except
for
Seller Financial Advisor as to Seller and Sandler ▇’▇▇▇▇▇ + Partners as to
Buyer, each of the Parties represents and warrants that neither it nor any
of
its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers’ fees, brokerage fees, commissions, or finders’ fees in connection with
this Agreement or the transactions contemplated hereby. In the event
of a claim by any broker or finder based upon such broker’s representing or
being retained by or allegedly representing or being retained by Seller or
by
Buyer, each of Seller and Buyer, as the case may be, agrees to indemnify and
hold the other Party harmless from any Liability in respect of any such
claim. Seller has provided a copy of Seller Financial Advisor’s
engagement letter and expected fee for its services as Section 10.3 of the
Seller Disclosure Memorandum and shall pay all amounts due thereunder at Closing
and prior to the Effective Time.
10.4 Entire
Agreement.
Except
as
otherwise expressly provided herein, this Agreement (including the documents
and
instruments referred to herein) constitutes the entire agreement between the
Parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or
oral. Nothing in this Agreement expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, other than as provided in Section 7.12.
10.5 Amendments.
To
the
extent permitted by Law, and subject to Section 1.4, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after shareholder approval of this
Agreement has been obtained; provided, that after any such approval by
the holders of Seller Common Stock, there shall be made no amendment that
reduces or modifies in any respect the consideration to be received by holders
of Seller Common Stock.
10.6 Waivers.
(a) Prior
to
or at the Effective Time, Buyer, acting through its board of directors, chief
executive officer, or other authorized officer, shall have the right to waive
any Default in the performance of any term of this Agreement by Seller, to
waive
or extend the time for the compliance or fulfillment by Seller of any and all
of
its obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Buyer under this Agreement, except any condition
which, if not satisfied, would result in the violation of any Law. No
such waiver shall be effective unless in writing signed by a duly authorized
officer of Buyer.
-56-
(b) Prior
to
or at the Effective Time, Seller, acting through its board of directors, chief
executive officer, or other authorized officer, shall have the right to waive
any Default in the performance of any term of this Agreement by Buyer, to waive
or extend the time for the compliance or fulfillment by
Buyer of any and all of its obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of Seller under this Agreement, except any condition which, if
not
satisfied, would result in the violation of any Law. No such waiver
shall be effective unless in writing signed by a duly authorized officer of
Seller.
(c) The
failure of any Party at any time or times to require performance of any
provision hereof shall in no manner affect the right of such Party at a later
time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
10.7 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, including by merger or consolidation, 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.
10.8 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 prepaid, or by courier or overnight
carrier, to the persons at the addresses set forth below:
|
Buyer:
|
SCBT
Financial Corporation
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile
Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇.
|
|
|
|
Copy
to Counsel:
|
▇▇▇▇▇▇
Law Firm, P.A.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile
Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
Seller:
|
TSB
Financial Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile
Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
|
|
|
Copy
to Counsel:
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile
Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
|
-57-
All
notices, requests, waivers and other communications shall be deemed to have
been
effectively given (a) when personally delivered to the Party to be
notified, (b) when sent by confirmed facsimile to the Party to be notified
at the number set forth above, (c) three business days after deposit in the
United States mail postage prepaid by certified or registered mail with return
receipt requested and addressed to the Party to be notified as set forth above
or (d) one business day after deposit with a national overnight delivery
service, postage prepaid, addressed to the Party to be notified as set forth
above with next-business-day delivery guaranteed. A Party may change its notice
address given above by giving the other Parties 10 days’ written notice of the
new address.
10.9 Governing
Law.
Regardless
of any conflict of law or choice of law principles that might otherwise apply,
the Parties agree that this Agreement shall be governed by and construed in
all
respects in accordance with the Laws of the State of South
Carolina.
10.10 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one and
the
same instrument.
10.11 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 mean and refer to the referenced Articles and
Sections of this Agreement.
10.12 Interpretations.
Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed or
resolved against any Party, whether under any rule of construction or
otherwise. No Party to this Agreement shall be considered the
draftsman. The Parties acknowledge and agree that this Agreement has
been reviewed, negotiated, and accepted by all Parties and their attorneys
and
shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all Parties
hereto.
10.13 Enforcement
of Agreement.
The
Parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction,
this
being in addition to any other remedy to which they are entitled at law or
in
equity.
-58-
10.14 Severability.
Any
term
or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be only so broad
as
is enforceable.
[signatures
appear on next page]
-59-
IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officer as of the day and year
first above written.
|
SCBT
FINANCIAL CORPORATION
(BUYER)
|
|||
|
|
By:
|
/s/
▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇.
|
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇.
|
|||
|
President
and Chief Executive Officer
|
|||
|
TSB
FINANCIAL CORPORATION
(SELLER)
|
|||
|
|
By:
|
/s/
▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇.
|
|
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇.
|
|||
|
President
and Chief Executive Officer
|
|||
-60-
EXHIBIT
A
FORM
OF SUPPORT AGREEMENT
August
___, 2007
SCBT
Financial Corporation
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and
Gentlemen:
The
undersigned is a director of TSB Financial Corporation, a North Carolina
corporation (“Seller”), and the beneficial holder of shares of common stock of
Seller (the “Seller Common Stock”).
SCBT
Financial Corporation, a South Carolina corporation (“Buyer”), and Seller are
considering the execution of an Agreement and Plan of Merger (the “Agreement”)
contemplating the acquisition of Seller through the merger of Seller with and
into Buyer (the “Merger”). The consummation of the Merger pursuant to
the Agreement by Buyer is subject to the execution and delivery of this letter
agreement.
In
consideration of the substantial expenses that Buyer will incur in connection
with the transactions contemplated by the Agreement and to induce Buyer
to consummate the transactions contemplated by the Agreement and to
proceed to incur such expenses, the undersigned agrees and undertakes, in his
or
her capacity as a shareholder of Seller, and not in his or her capacity as
a
director or officer of Seller, as follows:
1. While
this
letter agreement is in effect the undersigned shall not, directly or indirectly,
except with the prior approval of Buyer, which approval shall not be
unreasonably withheld, (a) sell or otherwise dispose of or encumber (other
than
in connection with an ordinary bank loan) prior to the record date of the Seller
Shareholders Meeting (as defined in the Agreement) any or all of his or her
shares of Seller Common Stock, or (b) deposit any shares of Seller Common Stock
into a voting trust or enter into a voting agreement or arrangement with respect
to any shares of Seller Common Stock or grant any proxy with respect thereto,
other than for the purpose of voting to approve the Agreement and the Merger
and
matters related thereto.
2. While
this
letter agreement is in effect the undersigned shall vote all of the shares
of
Seller Common Stock for which the undersigned has sole voting authority, and
shall use his or her best efforts to cause to be voted all of the shares of
Seller Common Stock for which the undersigned has shared voting authority,
in
either case whether such shares are beneficially owned by the undersigned on
the
date of this letter agreement or are subsequently acquired: (a) for the approval
of the Agreement and the Merger at the Seller Shareholders Meeting; and (b)
against any Acquisition Proposal (as defined in the Agreement) (other than
the
Merger).
3. The
undersigned hereby waives any rights of appraisal, or rights to dissent from
the
Merger, that the undersigned may have.
4. The
undersigned acknowledges and agrees that any remedy at law for breach of the
foregoing provisions shall be inadequate and that, in addition to any other
relief which may be available, Buyer shall be entitled to temporary and
permanent injunctive relief without having to prove actual damages.
-61-
5. The
foregoing restrictions shall not apply to shares with respect to which the
undersigned may have voting power as a fiduciary for others. In
addition, this letter agreement shall only apply to actions taken by the
undersigned in his or her capacity as a shareholder of Seller and, if
applicable, shall not in any way limit or affect actions the undersigned may
take in his or her capacity as a director or officer of Seller.
6. This
letter agreement, and all rights and obligations of the parties hereunder,
shall
terminate upon the first to occur of (a) the Effective Time of the Merger or
(b)
the date upon which the Merger Agreement is terminated in accordance with its
terms, in which event the provisions of this Agreement shall
terminate.
7. As
of the date hereof, the undersigned has voting power (sole or shared) with
respect to the number of shares of Seller Common Stock set forth
below.
IN
WITNESS
WHEREOF, the undersigned has executed this agreement as of the date first above
written.
Very
truly
yours,
___________________________
___________________________
Print
Name
Number
of
shares owned with sole voting authority: _______________
Number
of
shares owned with shared voting authority: _______________
Accepted
and agreed to as of
the
date
first above written:
SCBT
FINANCIAL CORPORATION
___________________________
By:
▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇.
Its:
President and Chief Executive Officer
-62-
EXHIBIT
B
FORM
OF AFFILIATE’S AGREEMENT
August
___, 2007
SCBT
Financial Corporation
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and
Gentlemen:
I
have
been advised that I may be deemed to be, but do not admit that I am, an
“affiliate” of TSB Financial Corporation, a North Carolina corporation
(“Seller”), as that term is defined in Rule 144 and used in Rule 145 promulgated
by the Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933 (the “Securities Act”). I understand that pursuant to the
terms of the Agreement and Plan of Merger, dated as of August ___, 2007 (the
“Merger Agreement”), by and between Seller and SCBT Financial Corporation, a
South Carolina corporation (“Buyer”), Seller plans to merge with and into Buyer
(the “Merger”).
I
further
understand that as a result of the Merger, I may receive shares of common stock,
par value $2.50 per share, of Buyer (“Buyer Common Stock”) in exchange for
shares of common stock, par value $0.01 per share, of Seller (“Seller Common
Stock”).
I
have
carefully read this letter and reviewed the Merger Agreement and discussed
their
requirements and other applicable limitations upon my ability to sell, transfer,
or otherwise dispose of Buyer Common Stock, to the extent I felt necessary,
with
my counsel or counsel for Seller.
I
represent, warrant, and covenant with and to Buyer that in the event I receive
any shares of Buyer Common Stock as a result of the Merger:
1. I
shall
not make any sale, transfer, or other disposition of such shares of Buyer Common
Stock unless (i) such sale, transfer, or other disposition has been registered
under the Securities Act, which is not anticipated, (ii) such sale, transfer,
or
other disposition is made in conformity with the provisions of Rule 145 under
the Securities Act, or (iii) in the opinion of counsel in form and substance
reasonably satisfactory to Buyer, or under a “no-action” letter obtained by me
from the staff of the SEC, such sale, transfer, or other disposition will not
violate the registration requirements of, or is otherwise exempt from
registration under, the Securities Act.
2. I
understand that, subject to the last paragraph of this letter, Buyer is under
no
obligation to register the sale, transfer, or other disposition of shares of
Buyer Common Stock by me or on my behalf under the Securities Act or to take
any
other action necessary to make compliance with an exemption from such
registration available.
3. I
understand that stop transfer instructions will be given to Buyer’s transfer
agent with respect to shares of Buyer Common Stock issued to me as a result
of
the Merger and that there will be placed on the certificates for such shares,
or
any substitutions therefor, a legend stating in substance:
“The
shares represented by this certificate were issued as a result of the merger
of
TSB Financial Corporation with and into SCBT Financial Corporation (“Buyer”), in
a transaction to which Rule 145 promulgated under the Securities Act of 1933
applies. The shares represented by this certificate may be
transferred only in accordance with the terms of a letter agreement between
the
registered holder hereof and Buyer, a copy of which agreement is on file at
the
principal offices of Buyer.”
-63-
4. I
understand that, unless the transfer by me of the Buyer Common Stock issued
to
me as a result of the Merger has been registered under the Securities Act or
such transfer is made in conformity with the provisions of Rule 145(d) under
the
Securities Act, Buyer reserves the right, in its sole discretion, to place
the
following legend on the certificates for such shares, or any substitutions
therefor, issued to my transferee:
“The
shares represented by this certificate were acquired from [SHAREHOLDER] who,
in
turn, received such shares as a result of the merger of TSB Financial
Corporation with and into SCBT Financial Corporation, in a transaction to which
Rule 145 under the Securities Act of 1933 applies. The shares have
been acquired by the holder not with a view to, or for resale in connection
with, any distribution thereof within the meaning of the Securities Act of
1933
and may not be offered, sold, pledged or otherwise transferred except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933.”
It
is
understood and agreed that the legends set forth in paragraphs (3) and (4)
above
shall be removed by delivery of substitute certificates without such legends
(A)
if I shall have delivered to Buyer (i) a copy of a “no action” letter from the
staff of the SEC, or an opinion of counsel in form and substance reasonably
satisfactory to Buyer, to the effect that such legend is not required for
purposes of the Act, or (ii) evidence or representations reasonably satisfactory
to Buyer that Buyer Common Stock represented by such certificates is being
or
has been sold in conformity with the provisions of Rule 145(d) under the
Securities Act or its successor, and (B) one year after the Effective Time
of
the Merger, or such shorter period specified in Rule 145(d)(2) under the
Securities Act or its successor, if at such time I am not an affiliate of
Buyer.
I
further
understand and agree that the provisions of Rule 145 shall apply to all shares
of Buyer Common Stock that my spouse, any relative of mine, or any relative
of
my spouse, any one of whom has the same home as me, receives as a result of
the
Merger.
By
acceptance hereof, Buyer agrees, for a period of two years after the Effective
Time (as defined in the Agreement) that, so long as it is obligated to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
it will use commercially reasonable efforts to timely file such reports so
that
the public information requirements of Rule 144(c) promulgated under the
Securities Act are satisfied and the resale provisions of Rule 145(d)(1) and
(2)
are therefore available to me if I desire to transfer any Buyer Common Stock
issued to me in the Merger.
This
letter agreement shall terminate
automatically, without any further action of the parties, upon any termination
of the Merger Agreement.
Very
truly
yours,
By:___________________________
Name:
Accepted
this _____ day of ________________, 2007.
SCBT
FINANCIAL CORPORATION
-64-
By:
▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇.
Its:
President and Chief Executive Officer
-65-
EXHIBIT
C
FORM
OF CLAIMS LETTER
__________________,
2007
SCBT
Financial Corporation
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and
Gentlemen:
This
letter is delivered pursuant to the Agreement and Plan of Merger, dated as
of
August ___, 2007, by and between SCBT Financial Corporation, a South Carolina
corporation, and TSB Financial Corporation, a North Carolina corporation
(“Seller”).
In
my
capacity as an officer and/or a director of Seller and/or its wholly owned
subsidiary, The Scottish Bank, a North Carolina banking corporation (the
“Bank”), and as of the date of this letter, I do not, to the best of my
knowledge, have any claims, and I am not aware of any facts or circumstances
that I believe are likely to give rise to any claim by me for indemnification
under Seller’s or the Bank’s Articles of Incorporation or Bylaws as existing on
the date hereof or as may be afforded by the laws of the State of North Carolina
or otherwise.
|
|
Very truly yours, | |
| Signature of Officer or Director | ||
| Name of Officer or Director | ||
-66-
EXHIBIT
D
FORM
OF DIRECTOR AGREEMENT
DIRECTOR’S
AGREEMENT
THIS
DIRECTOR’S AGREEMENT (the
“Agreement”) is entered into as of __________, 2007 and shall become
effective on the Effective Time of the Merger provided in the Merger Agreement
(as defined below), between SCBT Financial Corporation, a South Carolina
corporation (“Buyer”), and TSB Financial Corporation, a North Carolina
corporation(“Seller”).
WHEREAS,
Buyer and Seller are parties
to an Agreement and Plan of Merger dated as of _________________, 2007, as
the
same may be amended or supplemented (the “Merger
Agreement”);
WHEREAS,
the undersigned director of
Seller (“Director”) is a director and shareholder of Seller and is
receiving Merger Consideration pursuant to the terms and conditions of the
Merger Agreement; and
WHEREAS,
the Merger Agreement
contemplates that, upon the execution and delivery of the Merger Agreement
by
Seller, as a condition and inducement to the willingness of Buyer to enter
into
the Merger Agreement, Director will enter into and perform this
Agreement.
IN
CONSIDERATION of the premises and
for other good and valuable consideration, including, without limitation, the
Merger Consideration to be received by Director, the sufficiency and receipt
of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. Certain
Definitions.
(a) “Affiliated
Company” means any company or entity controlled by, controlling or under
common control with Buyer or Seller.
(b) “Confidential
Information” means all information regarding Seller, Buyer and their
Affiliated Companies and any of their respective activities, businesses or
customers that is not generally known to persons not employed (whether as
employees or independent contractors) by Seller, Buyer or their respective
Affiliated Companies, that is not generally disclosed publicly to persons not
employed by Seller, Buyer or their respective Affiliated Companies (except
to
their regulatory authorities and pursuant to confidential or other relationships
where there is no expectation of public disclosure or use by third Persons),
and
that is the subject of reasonable efforts to keep it confidential, and/or where
such information is subject to limitations on disclosure or use by applicable
Laws. “Confidential Information” shall include, without
limitation, all customer information, customer lists, confidential methods
of
operation, lending and credit information, commissions, ▇▇▇▇-ups,
product/service formulas, information concerning techniques for use and
integration of websites and other products/services, current and future
development and expansion or contraction plans of Seller, Buyer or their
respective Affiliated Companies, sale/acquisition plans and contacts, marketing
plans and contacts, information concerning the legal affairs of and information
concerning the pricing of product and services, strategy, tactics and financial
affairs of Seller, Buyer or their respective Affiliated
Companies. “Confidential Information” also includes any
“confidential information,” “trade secrets” or any equivalent term under any
other federal, state or local Law. “Confidential Information”
shall not include information that (a) has become generally available
to the
public by the act of one who has the right to disclose such information without
violating any right or privilege of Seller or Buyer or their respective
Affiliated Companies or any duty owed to any of them; (b) was rightfully in
the
possession of a person or entity prior to receipt of such Confidential
Information, directly or indirectly, from the Director; or (c) is independently
developed by a person or entity without reference to or use of Confidential
Information. The Director acknowledges and agrees that the trading in
Buyer or Seller securities using Confidential Information or nonpublic
information may violate federal and state securities laws.
-67-
(c) Capitalized
terms used but not defined herein shall have the same meanings provided in
the
Merger Agreement.
2. Nondisclosure
of Confidential Information.
(a) Nondisclosure
of Confidential Information. For a period of one (1) year after
the Effective Time of the Merger, except as required by law, Director shall
not
directly or indirectly transmit or disclose any Confidential Information to
any
Person, or use or permit others to use any such Confidential Information,
directly or indirectly, without the prior express written consent of the Chief
Executive Officer of Buyer, which consent may be withheld in the sole discretion
of Buyer’s Chief Executive Officer. If required to disclose such
information by law, the Director shall use reasonable efforts to protect and
preserve the confidentiality of such information.
(b) Enforceability
of Covenants. Director, Buyer, and Seller agree that Director’s
obligations under these nondisclosure covenants are separate and distinct from
other provisions of this Agreement, and a failure or alleged failure of Seller
and Buyer to perform their obligations under any provision of this Agreement
or
other agreements with Director shall not constitute a defense to, or waiver
of
the enforceability of these nondisclosure covenants. Nothing in this
provision or this Agreement shall limit any rights or remedies otherwise
available to Seller, Buyer or any Affiliated Company under federal, state or
local law.
3. Nonrecruitment
and Nonsolicitation Covenants.
(a) Nonrecruitment
of Employees. Director hereby agrees that, for one(1) year
following the Effective Time, Director shall not, without the prior written
consent of the Buyer’s Chief Executive Officer, which consent may be withheld at
the sole discretion of the Buyer’s Chief Executive Officer, directly or
indirectly solicit or recruit for employment or encourage to leave employment
with Buyer or any of its Affiliated Companies, on his own behalf or on behalf
of
any other Person other than Buyer or any of its Affiliated Companies, any Person
who worked for Seller or any Seller Affiliated Company during Director’s
services as a director of Seller or any Seller Affiliated Company and who
performed services for Seller, Buyer or any Affiliated Company customers and
who
has not thereafter ceased to be employed by Seller, Buyer or any of their
Affiliated Companies for a period of not less than one year.
(b) Nonsolicitation
of Customers. Director hereby agrees that, for one (1) year
following the Effective Time, Director shall not, without the prior written
consent of the Buyer’s Chief Executive Officer, which consent may be withheld at
the sole discretion of Buyer’s Chief Executive Officer, directly or indirectly,
on behalf of himself or of anyone other than Buyer or any Affiliated Company,
solicit or attempt to solicit for the purpose of providing any Business
Activities (as defined in Section 3(c)) any customer of Buyer or any Buyer
Affiliated Company who was a customer of Seller or any Seller Affiliated Company
whom Director actively solicited or with whom Director worked, or otherwise
had
material contact, in the course of Director’s service as a director of Seller or
any Seller Affiliated Company.
-68-
(c) Noncompetition. Director
hereby agrees that, for one (1) year following the Effective Time, Director
shall not, without the prior written consent of Buyer’s Chief Executive Officer,
which consent may be withheld at the sole discretion of Buyer’s Chief Executive
Officer, shall not prepare or apply to commence, engage or participate in,
Business Activities with, for or on behalf of any new financial institution
as a
director, consultant, officer, employee, agent or shareholder of, or on behalf
of any other Person, business or enterprise that competes in the Restricted
Area
with the Buyer with respect to Business Activities. For purposes of
this Section 3(c), “Business Activities” shall be any business activities
conducted by Buyer, Seller or any of their Affiliated Companies, which consist
of commercial or consumer loans and extensions of credit, letters of credit,
commercial and consumer deposits and deposit accounts, securities repurchase
agreements and sweep accounts, cash management services, money transfer and
▇▇▇▇
payment services, internet or electronic banking, automated teller machines,
▇▇▇
and retirement accounts, mortgage loans, and home equity lines of
credit. For purposes of this Section 3(c), the “Restricted
Area” shall be Mecklenburg County, North Carolina. Nothing in
this Section 3(c) shall prohibit Director from acquiring or holding, for
investment purposes only, less than five percent (5%) of the outstanding
securities of any corporation which may compete directly or indirectly with
Seller, Buyer or any of their Affiliated Companies or preclude Director from
continuing any Business Activities conducted as of the date hereof.
(d) Enforceability
of Covenants. Director acknowledges and agrees that the covenants
in this Agreement are direct consideration for a sale of a business and should
be governed by standards applicable to restrictive covenants entered into in
connection with a sale of a business. Director acknowledges that each
of Buyer and their Affiliated Companies have a current and future expectation
of
business within the Restricted Area and from the current and proposed customers
of Seller that are derived from the acquisition of Seller by
Buyer. Director acknowledges that the term, geographic area, and
scope of the covenants set forth in this Agreement are reasonable, and agrees
that he will not, in any action, suit or other proceedings, deny the
reasonableness of, or assert the unreasonableness of, the premises,
consideration or scope of the covenants set forth herein. Director
agrees that his position as a director of Seller involves duties and authority
relating to all aspects of the Business Activities and all of the Restricted
Area. Director further acknowledges that complying with the
provisions contained in this Agreement will not preclude him from engaging
in a
lawful profession, trade or business, or from becoming gainfully
employed. Director and Buyer agree that Director’s obligations under
the above covenants are separate and distinct under this Agreement, and the
failure or alleged failure of the Buyer to perform its obligations under any
other provisions of this Agreement shall not constitute a defense to the
enforceability of this covenant. Director and Buyer agree that if any
portion of the foregoing covenants is deemed to be unenforceable because the
geography, time or scope of activities restricted is deemed to be too broad,
the
court shall be authorized to substitute for the overbroad term an enforceable
term that will enable the enforcement of the covenants to the maximum extent
possible under applicable law. Director acknowledges and agrees that
any breach or threatened breach of this covenant will result in irreparable
damage and injury to the Buyer and its Affiliated Companies and that Buyer
will
be entitled to exercise all rights including, without limitation, obtaining
one
or more temporary restraining orders, injunctive relief and other equitable
relief, including specific performance in the event of any breach or threatened
breach of this Agreement, in any federal or state court of competent
jurisdiction in South Carolina without the necessity of posting any bond or
security (all of which are waived by the Director), and to exercise all other
rights or remedies, at law or in equity, including, without limitation, the
rights to damages.
4. Successors.
(a) This
Agreement is personal to Director is not assignable by Director, and none of
Director’s duties hereunder may be delegated.
(b) This
Agreement may be assigned by, and shall be binding upon and inure to the benefit
of the Buyer and any of its Affiliated Companies and their successors and
assigns.
-69-
5. Miscellaneous.
(a) Waiver. Failure
of a party to insist, in one or more instances, on performance by the other
in
strict accordance with the terms and conditions of this Agreement shall not
be
deemed a waiver or relinquishment of any right granted in this Agreement or
of
the future performance of any such term or condition or of any other term or
condition of this Agreement, unless such waiver is contained in a writing signed
by the party making the waiver.
(b) Severability. If
any provision or covenant, or any part thereof, of this Agreement should be
held
by any court to be invalid, illegal or unenforceable, either in whole or in
part, such invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of the remaining provisions or covenants,
or any part thereof, of this Agreement, all of which shall remain in full force
and effect.
(c) Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of South Carolina.
(d) Notices. All
notices, requests, demands and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or three days after mailing if mailed, first class, certified mail,
postage prepaid:
| To Buyer: | SCBT Financial Corporation | |||
| ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. | ||||
| To Director: | ||||
A
party
may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
(e) Amendments
and Modifications. This Agreement may be amended or modified only
by a writing signed by both parties hereto, which makes specific reference
to
this Agreement.
(f) Entire
Agreement. Except as provided herein, this Agreement contains the
entire agreement between Buyer and Director with respect to the subject matter
hereof and, from and after the date hereof, this Agreement shall supersede
any
prior agreement between the parties with respect to the subject matter
hereof.
(g) Counterparts,
etc. This Agreement may be executed in identical counterparts,
each of which shall be deemed to be an original, but all of which together
shall
constitute one and the same instrument. A facsimile signature shall
constitute and have the same force and effect as an original signature for
all
purposes under this Agreement.
[Signatures
on following page]
-70-
IN
WITNESS
WHEREOF, the parties hereto have duly executed and delivered this Agreement
as
of the date first above written.
SCBT
FINANCIAL CORPORATION
By:
______________________________
Name:
Title
DIRECTOR:
____________________________________
-71-