MERGER AGREEMENT
between
FIRST NATIONAL CORPORATION
AND
FIRSTBANCORPORATION, INC.
Dated as of March 4, 1999
TABLE OF CONTENTS
ARTICLE I
DEFINED TERMS
1.1 Definitions
ARTICLE II
THE MERGER
2.1 The Merger
2.2 Effective Time
2.3 Effect of the Merger
2.4 Articles of Incorporation; Bylaws
2.5 Directors and Officers
ARTICLE III
CONVERSION AND EXCHANGE OF SHARES
3.1 Merger Consideration
3.2 Rights as Shareholders; Stock Transfers
3.3 Fractional Shares
3.4 Exchange Procedures
3.5 Anti-Dilution Provisions
3.6 Stock Options
3.7 Dissenting Shares
ARTICLE IV
THE CLOSING
4.1 Closing
4.2 Deliveries by FirstBancorporation
4.3 Deliveries by FNC
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FIRSTBANCORPORATION
5.1 Organization, Standing and Power
5.2 Authority; No Breach By Agreement
5.3 Capital Stock
5.4 Records
5.5 Subsidiaries and Affiliates
5.6 Financial Statements
5.7 Tax Matters
5.8 Real Property
5.9 Assets
5.10 Intellectual Property Rights
5.11 Loans, Accounts, Notes and Other Receivables; Loan Collateral
5.12 Securities Portfolio and Investments
5.13 Environmental Matters
5.14 Compliance with Laws
5.15 Labor Relations; Employment Matters
5.16 Employee Benefit Plans; ERISA
5.17 Insurance
5.18 Material Contracts
5.19 Legal Proceedings
5.20 Absence of Other Liabilities
5.21 Absence of Changes or Events
5.22 Reports
5.23 Accounting, Tax and Regulatory Matters
5.24 Charter Provisions
5.25 Certain Regulated Businesses
5.26 Commissions
5.27 Registration Statement; Joint Proxy Statement/Prospectus
5.28 Takeover Laws
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF FNC
6.1 Organization
6.2 Authority; No Breach By Agreement
6.3 Capital Stock
6.4 FNC's Financial Statements
6.5 Reports
6.6 Absence of Changes
6.7 Legal Proceedings
6.8 Accounting, Tax and Regulatory Matters
6.9 Commissions
6.10 Registration Statement; Joint Proxy Statement/Prospectus
6.11 Tax Matters
6.12 Loans, Accounts, Notes and Other Receivables; Loan Collateral
6.13 Securities Portfolio and Investments
6.14 Environmental Matters
6.15 Compliance with Laws
6.16 Labor Relations; Employment Matters
6.17 Absence of Other Liabilities
6.18 Certain Regulated Businesses
6.19 Takeover Laws
ARTICLE VII
COVENANTS
7.1 Covenants of FirstBancorporation
7.2 Covenants of FNC
7.3 Covenants of All Parties to the Agreement
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 Access to Information by FirstBancorporation
8.2 Access to Information
8.3 Access to Premises
8.4 Confidentiality
8.5 Publicity
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Mutual Conditions
9.2 Conditions to the Obligations of FirstBancorporation
9.3 Conditions to the Obligations of FNC
ARTICLE X
TERMINATION
10.1 Termination
10.2 Procedure and Effect of Termination
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Expenses
11.2 Survival of Representations
11.3 Amendment and Modification
11.4 Waiver of Compliance; Consents
11.5 Notices
11.6 Assignment; Third Party Beneficiaries
11.7 Separable Provisions
11.8 Governing Law
11.9 Counterparts
11.10 Interpretation
11.11 Entire Agreement
SCHEDULES
Schedule 1.1 FirstBancorporation Transaction Fees and Expenses
Schedule 5.1 Jurisdictional Qualifications
Schedule 5.2 Exceptions to Representation of no Breaches
Schedule 5.3 Five Percent Holders
Schedule 5.5 Affiliates
Schedule 5.7 Income Tax
Schedule 5.8 Real Property
Schedule 5.9 Liens
Schedule 5.10 Intellectual Property
Schedule 5.11 Delinquent Loans
Schedule 5.14 Compliance With Laws
Schedule 5.15 Loans to Officers, Directors, and Employees
Schedule 5.16 Employee Benefit Plans; ERISA
Schedule 5.17 Insurance
Schedule 5.18(a) Material Contracts
Schedule 5.18(b) Contracts Requiring Consents
Schedule 5.19 Litigation
Schedule 5.20 Undisclosed Liabilities
Schedule 6.11 Income Tax
Schedule 6.12 FNC Delinquent Loans
Schedule 6.15 FNC Compliance with Laws
Schedule 6.17 FNC Undisclosed Liabilities
Schedule 7.1(a) Ordinary Conduct of Business
Schedule 7.1(e) Retention Bonus Employees
Schedule 7.2 FNC Acquisitions
EXHIBITS
Exhibit A Form of Plan of Merger
Exhibit B Form of Affiliate Agreement
Exhibit C Form of Opinion of Counsel to FNC
Exhibit D Form of Employment and Noncompetition Agreement with
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Exhibit E Form of Opinion of Counsel to FirstBancorporation
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "AGREEMENT"), dated as of March 4, 1999,
is by and between FIRST NATIONAL CORPORATION, a South Carolina corporation
("FNC"), and FIRSTBANCORPORATION, INC., a South Carolina corporation
("FIRSTBANCORPORATION").
BACKGROUND STATEMENT
FNC and FirstBancorporation desire to effect a merger pursuant to
which FirstBancorporation will merge with and into FNC, and FNC will be the
surviving corporation (the "MERGER"). The parties intend that the Merger
qualify as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, and qualify for "pooling-of-interest"
accounting treatment.
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual representations,
warranties, covenants, agreements and conditions contained herein, the
parties hereto agree as follows:
TERMS ARTICLE I
DEFINED
1.1 DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"ACQUISITION PROPOSAL" has the meaning given to it in SECTION 7.1(b).
"ACT" means the Bank Holding Company Act of 1956, as amended.
"AFFILIATE" means, with respect to any Person, each of the Persons
that directly or indirectly, through one or more intermediaries, owns or
controls, or is controlled by or under common control with, such Person.
For the purpose of this Agreement, "CONTROL" means the possession, directly
or indirectly, of the power to direct or cause the direction of management
and policies, whether through the ownership of voting securities, by
contract or otherwise.
"AFFILIATE AGREEMENT" has the meaning given to it in SECTION 7.1(d).
"AGREEMENT" means this Merger Agreement and the exhibits and schedules
hereto, as amended or modified from time to time in accordance with
SECTION 11.3.
"ARTICLES OF MERGER" has the meaning given to it in SECTION 2.2.
"ASSETS" means all of the assets, properties, businesses and rights of
a Person of every kind, nature, character and description, whether real,
personal or mixed, tangible or intangible, accrued or contingent, whether
or not carried on any books and records of such Person, whether or not
owned in such Person's name and wherever located. Notwithstanding the
foregoing, "ASSETS", does not include Loan Collateral not foreclosed as of
the date with respect to which the term Assets is being used.
"ASSUMABLE OPTIONS" has the meaning given to it in SECTION 3.6.
"BANK MERGER" has the meaning given to it in SECTION 7.1(f).
"BENIFIT PLAN" means any employee pension, retirement, profit-sharing,
stock bonus, incentive, deferred compensation, stock option, employee stock
ownership, hospitalization, medical, dental, vacation, insurance, sick pay,
disability, severance or other plan, fund, program, policy, contract or
arrangement, whether arrived at through collective bargaining or otherwise,
providing employee benefits (including but not limited to any "employee
benefit plan" as that term is defined in Section 3(3) of ERISA and any
employee benefit plan that is a "cafeteria plan" as described in
Section 125 of the Code), currently maintained or previously maintained at
any time in the last five years by, sponsored in whole or in part by, or
contributed to by FirstBancorporation or any Subsidiary, for the benefit of
employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries, whether created in writing, through an
employee manual or similar document, or orally.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
that shall be a legal holiday in the State of South Carolina.
"CLAIM" has the meaning given to it in SECTION 7.2(c)(ii).
"CLOSING" means the closing of the Merger, as identified more
specifically in Article IV.
"CLOSING DATE" has the meaning given to it in SECTION 4.1.
"COBRA" has the meaning given to it in SECTION 5.16.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to
sections of the Code shall be construed also to refer to any successor
sections.
"CONSENT" means any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person given or granted
with respect to any Contract, Law, Order, or Permit.
"CONTINUING EMPLOYEES" has the meaning given to it in SECTION 7.2(e).
"CONTRACT" means any agreement, warranty, indenture, mortgage,
guaranty, lease, license or other contract, agreement, arrangement,
commitment or understanding, written or oral, to which a Person is a party.
"DEFAULT" means, with respect to a Contract, Order or Permit, (i) any
breach or violation of or default under such Contract, 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 or
default under such Contract, Order or Permit, or (iii) any occurrence of
any event that with or without the passage of time or the giving of notice
would give rise to a right to terminate or revoke, change the current terms
of, or renegotiate, or to accelerate, increase, or impose any Liability
under, such Contract, Order or Permit.
"DISSENTING SHARES" has the meaning given to it in SECTION 3.7.
"EFFECTIVE DATE" means the day on which the Effective Time occurs.
"EFFECTIVE TIME" has the meaning given to it in SECTION 2.2.
"ENVIRONMENTAL LAWS" means any federal, state or local law, statute,
ordinance, rule, regulation, permit, directive, license, approval,
guidance, interpretation, order or other legal requirement relating to the
protection of human health or the environment, including, but not limited
to, any requirement pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of materials
that are or may constitute a threat to human health or the environment.
Without limiting the foregoing, each of the following is an Environmental
Law: the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. 9601 et seq.) ("CERCLA"), the Hazardous Material
Transportation Act (49 U.S.C. 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. 6901 et seq.) ("RCRA"), the Federal Water
Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act
(42 U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
2601 et seq.), the Safe Drinking Water Act (42 U.S.C. 300 et seq.) and
the Occupational Safety and Health Act (29 U.S.C. 651 et seq.) ("OSHA"),
as such laws and regulations have been or are in the future amended or
supplemented, and each similar federal, state or local statute, and each
rule and regulation promulgated under such federal, state and local laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"EXCHANGE RATIO has the meaning given to it in SECTION 3.1.
"FDIC" means the Federal Deposit Insurance Corporation.
"FFIEC" means the Federal Financial Institutions Examination Council.
"FINANCIAL STATEMENTS" means FirstBancorporation's audited
consolidated statements of income, cash flow and shareholder's equity for
the years ended December 31, 1998, December 31, 1997 and 1996 and audited
balance sheets as of December 31, 1998 and 1997.
"FIRST NATIONAL BANK" means First National Bank, a national banking
association.
"FIRST SECURITIES CORPORATION" means First Securities Corporation, a
South Carolina corporation.
"FIRSTBANK" means FirstBank, National Association, a national banking
association.
"FIRSTBANCORPORATION" has the meaning given to it in the introductory
paragraph hereof.
"FIRSTBANCORPORATION OPTION" has the meaning given to it in
SECTION 5.3.
"FIRSTBANCORPORATION STOCK" means the common stock of
FirstBancorporation, par value $.01 per share.
"FLORENCE COUNTY NATIONAL BANK" means ▇▇▇▇▇▇▇▇ County National Bank, a
national banking association.
"FNC" has the meaning given to it in the introductory paragraph
hereof.
"FNC FINANCIAL STATEMENTS" has the meaning given to it in SECTION 6.4.
"FNC FIRSTBANCORPORATION SHARES" has the meaning given to it in
SECTION 3.1(c).
"FNC STOCK" means the common stock of FNC, par value $2.50 per share,
as traded on the American Stock Exchange.
"FNC SUBSIDIARIES" means First National Bank, ▇▇▇▇▇▇▇▇ County National
Bank, and National Bank of York County, and "FNC SUBSIDIARY" means any of
them.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means generally
accepted accounting principles as recognized by the American Institute of
Certified Public Accountants, as in effect from time to time, consistently
applied and maintained on a consistent basis for a Person throughout the
period indicated and consistent with such Person's prior financial
practice.
"GOVERNMENTAL AUTHORITY" means any nation, province or state, or any
political subdivision thereof, and any agency, department, natural person
or other entity exercising executive, legislative, regulatory or
administrative functions of or pertaining to government, including
Regulatory Authorities.
"HAZARDOUS MATERIAL" means any substance or material that either is or
contains a substance designated as a hazardous waste, hazardous substance,
hazardous material, pollutant, contaminant or toxic substance under any
Environmental Law or is otherwise regulated under any Environmental Law, or
the presence of which in some quantity requires investigation, notification
or remediation under any Environmental Law.
"INCOME TAXES" means all federal, state or local income taxes
(inclusive of any interest and penalties thereon) imposed on a Person with
respect to its assets or operations and which are based in whole or in part
upon income, but does not include any other Taxes.
"INDEMNIFIED LIABILITIES" has the meaning given to it in
SECTION 7.2(c)(ii).
"INDEMNIFIED PARTIES" has the meaning given to it in
SECTION 7.2(c)(ii).
"INTELLECTUAL PROPERTY" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications
and patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(b) all trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated therewith,
and all applications, registrations and renewals in connection therewith,
(c) all copyrights and all applications, registrations and renewals in
connection therewith, (d) all know-how, trade secrets, whether patentable
or unpatentable and whether or not reduced to practice (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production process and techniques, technical data, designs, drawings,
specifications, pricing and cost information and business and marketing
plans and proposals), (e) all computer software (including data and related
documentation other than off-the-shelf software) and (f) all other
proprietary rights.
"INTERIM FINANCIAL STATEMENTS" means the Interim Monthly Financial
Statements and the Interim Quarterly Financial Statements.
"INTERIM MONTHLY FINANCIAL STATEMENTS" has the meaning given to it in
SECTION 7.1(g).
"INTERIM QUARTERLY FINANCIAL STATEMENTS" has the meaning given to it
in SECTION 7.1(g).
"JOINT PROXY STATEMENT/PROSPECTUS" has the meaning given to it in
SECTION 5.27.
"KNOWLEDGE OF FNC" means the actual knowledge of the directors and
senior officers of FNC and the FNC Subsidiaries.
"KNOWLEDGE OF FIRSTBANCORPORATION" means the actual knowledge of the
directors and senior officers of FirstBancorporation and the Subsidiaries.
"LAW" means any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities or business promulgated, interpreted or enforced by any
Governmental Authority.
"LIABILITY" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured or otherwise,
which is required under Generally Accepted Accounting Principles to be
reflected in an audited balance sheet or disclosed in the notes thereto.
"LIEN" means, whether contractual or statutory, any conditional sale
agreement, participation or repurchase agreement, assignment, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge or claim of any nature whatsoever of, on, or with respect to any
property or property interest.
"LITIGATION" means any action, arbitration, cause of action,
complaint, criminal prosecution, governmental investigation, hearing, or
administrative or other proceeding, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by Regulatory
Authorities.
"LOAN COLLATERAL" means, with respect to any Person, all of the
assets, properties, businesses and rights of every kind, nature, character
and description, whether real, personal, or mixed, tangible or intangible,
accrued or contingent, owned by whomever and wherever located, in which
such Person has taken a security interest with respect to, on which such
Person has placed a Lien with respect to, or which is otherwise used to
secure, any loan made by such Person or any note, account, or other
receivable payable to such Person.
"MATERIAL ADVERSE EFFECT" means, with respect to a party, any effect
or effects that (i) are or could reasonably be material and adverse to the
condition (financial or otherwise), operations, business, loan portfolio or
investment portfolio of such party and its subsidiaries taken as a whole,
or (ii) would materially impair the ability of such party to perform its
obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking
and similar laws of general applicability or interpretations thereof by
courts or Governmental Authorities, or other changes affecting depository
institutions generally, including changes in general economic conditions
and changes in prevailing interest and deposit rates; (b) changes in
Generally Accepted Accounting Principles or regulatory accounting
requirements applicable to banks and their holding companies generally;
(c) any modifications or changes to valuation policies and practices in
connection with the Merger or restructuring change taken at the written
request of FNC in connection with the Merger, in each case in accordance
with Generally Accepted Accounting Principles; (d) changes resulting from
transaction expenses (such as legal, accounting and investment bankers'
fees) incurred in connection with this Agreement and the Merger (which fees
and expenses for FirstBancorporation shall not materially exceed the
estimates set forth on SCHEDULE 1.1); and (e) actions or omissions of a
party or its subsidiaries taken with the written consent of the other party
in consideration of the transactions contemplated by the Agreement.
"MATERIAL CONTRACT" has the meaning given to it in SECTION 5.18(a).
"MATERIAL PERMIT" has the meaning given to it in SECTION 5.2(b).
"MERGER" has the meaning given to it in the Background Statement
hereof.
"MERGER CONSIDERATION" has the meaning given to it in SECTION 2.1.
"MIDLANDS BANK" means FirstBank of the Midlands, National Association,
a national banking association.
"NATIONAL BANK OF YORK COUNTY" means National Bank of York County, a
national banking association.
"NEW CERTIFICATES" has the meaning given to it in SECTION 3.4.
"OCC" means Office of the Comptroller of the Currency.
"OLD CERTIFICATES" has the meaning given to it in SECTION 3.4.
"ORDER" means any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, foreign or other court, arbitrator,
mediator, tribunal, administrative agency or Governmental Authority.
"PERMIT" means any approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right given by a
Governmental Authority to which any Person is a subject or that is or may
be binding upon or inure to the benefit of any Person or its securities,
Assets or business.
"PERMITTED LIENS" means (a) Liens for current property Taxes not yet
due and payable, (b) pledges to secure deposits in the ordinary course of
business consistent with past practices, (c) Liens as security for Federal
Home Loan Bank and Federal Reserve Bank advances entered into in the
ordinary course of business consistent with past practices, (d) Liens
granted in connection with repurchase agreements entered into in the
ordinary course of business consistent with past practices and (e) in the
case of Real Property, easements, restrictions and similar non-monetary
Liens which do not adversely affect the use, value or marketability of such
Real Property.
"PERSON" means a corporation, a company, an association, a joint
venture, a partnership, an organization, a business, an individual, a
trust, a Governmental Authority or any other legal entity.
"PLAN OF MERGER" has the meaning given to it in SECTION 2.2.
"POLICIES" has the meaning given to it in SECTION 5.17.
"REAL PROPERTY" means all of the land, buildings, premises, or other
real property in which a Person has ownership or possessory rights, whether
by title, lease or otherwise (including banking facilities and any
foreclosed properties). Notwithstanding the foregoing, "REAL PROPERTY"
does not include any Loan Collateral not yet foreclosed as of the date with
respect to which the term "Real Property" is being used.
"REGISTRATION STATEMENT" has the meaning given to it in SECTION 5.27.
"REGULATORY AUTHORITIES" means, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of Governors
of the Federal Reserve System, the South Carolina Commissioner of Banks,
the OCC, the FDIC, and all other federal and state regulatory agencies
having jurisdiction over the parties and their respective subsidiaries, and
the SEC.
"REGULATORY REPORTS" has the meaning given to it in SECTION 5.22.
"REPLACEMENT OPTIONS" has the meaning given to it in SECTION 3.6.
"REPORTS" has the meaning given to it in SECTION 6.5.
"REPRESENTATIVES" has the meaning given to it in SECTION 7.1(b).
"SCBCA" means the South Carolina Business Corporation Act of 1988, as
amended.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning given to it in SECTION 5.22.
"SECURITIES LAWS" means the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisors Act of 1940, the Trust Indenture Act of 1939, each as amended, and
the rules and regulations of any Governmental Authority promulgated under
each.
"SHAREHOLDER MEETINGS" has the meaning given to it in SECTION 5.27.
"STOCK OPTION PLANS" has the meaning given to it in SECTION 3.6.
"SUBSIDIARY MERGER" has the meaning given to it in SECTION 7.1(f).
"SUBSIDIARIES" means, collectively, FirstBank, Midlands Bank, First
Securities Corporation, and "SUBSIDIARY" means any of them.
"SUPERIOR PROPOSAL" has the meaning given to it in SECTION 7.1(b).
"SURVIVING CORPORATION" has the meaning given to it in SECTION 2.1.
"TAKEOVER LAWS" means the South Carolina Control Share Acquisition Act
(Section 35-2-101 et seq. of the Code of Laws of South Carolina 1976) and
the South Carolina Business Combination Act (Section 35-2-201 et seq. of
the Code of Laws of South Carolina 1976).
"TAXES" means all taxes, charges, fees, levies or other assessments
(whether federal, state, local or foreign), including without limitation
income, gross receipts, excise, property, estate, sales, use, value added,
transfer, license, payroll, franchise, ad valorem, withholding, Social
Security and unemployment taxes, as well as any interest, penalties and
other additions to such taxes, charges, fees, levies or other assessments.
"TAX RETURN" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
"TREASURY REGULATIONS" means the Income Tax Regulations to the Code.
"TREASURY SHARES" has the meaning given to it in SECTION 3.1.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms hereof and subject to the conditions set
forth in ARTICLE IX, and in accordance with the SCBCA, at the Effective
Time, FirstBancorporation shall be merged with and into FNC. As a result
of the Merger, the separate corporate existence of FirstBancorporation
shall cease and FNC shall continue as the surviving corporation of the
Merger (the "SURVIVING CORPORATION"). Notwithstanding anything to the
contrary contained in this SECTION 2.1, FNC may elect to merge
FirstBancorporation with and into a direct or indirect wholly-owned
subsidiary of FNC; provided, however, that no such election shall (i) alter
or change the amount or kind of consideration to be issued to holders of
FirstBancorporation Stock as provided for in this Agreement (the "MERGER
CONSIDERATION"), (ii) cause the Merger not to qualify as a tax-free
reorganization under Section 368 of the Code or for "pooling of interests"
accounting treatment, (iii) materially impede or materially delay
consummation of the transactions contemplated by this Agreement, or
(iv) materially diminish or alter the obligations of FNC under this
Agreement. In such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing and to
provide, as the case may be, that such other wholly-owned subsidiary of FNC
shall be the Surviving Corporation.
2.2 EFFECTIVE TIME. Subject to the satisfaction or waiver of the
conditions set forth in ARTICLE IX, the Merger shall become effective on
the date and at the time of the filing of articles of merger (the "ARTICLES
OF MERGER"), in the form required by and executed in accordance with the
SCBCA, or at such other time specified in the Articles of Merger. The date
and time when the Merger shall become effective shall be referred to herein
as the "EFFECTIVE TIME." Unless otherwise agreed by the parties, at or as
soon as practicable after the Closing, FNC and FirstBancorporation shall
cause the Articles of Merger to be executed and filed with the Secretary of
State of South Carolina, as required by the SCBCA, and shall take any and
all other actions and do any and all other things to cause the Merger to
become effective as contemplated hereby. The plan of merger, which shall
be substantially in the form of EXHIBIT A hereto (the "PLAN OF MERGER"),
shall be set forth in the Articles of Merger.
2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the SCBCA. Without
limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises
of FirstBancorporation shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of
FirstBancorporation shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
2.4 ARTICLES OF INCORPORATION; BYLAWS.
(a) Unless otherwise determined by FNC prior to the Effective Time, at the
Effective Time, the Articles of Incorporation of FNC, as in effect
immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation (as amended by the Articles of
Merger).
(b) Unless otherwise determined by FNC prior to the Effective Time, the
Bylaws of FNC, as in effect immediately prior to the Effective Time, shall
be the Bylaws of the Surviving Corporation until thereafter amended as
provided by law, the Articles of Incorporation of the Surviving Corporation
and such Bylaws.
2.5 DIRECTORS AND OFFICERS. The directors of FNC immediately after the
Effective Time, together with the two individuals designated in
SECTION 7.2(d) hereof, shall be the directors of the Surviving Corporation,
each to hold office in accordance with the Articles of Incorporation and
Bylaws of the Surviving Corporation and the SCBCA, and the officers of FNC
immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
ARTICLE III
CONVERSION AND EXCHANGE OF SHARES
3.1 MERGER CONSIDERATION. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Merger and without any
action on the part of any Person:
(a) Each share of FirstBancorporation Stock, excluding Dissenting Shares,
Treasury Shares and FNC FirstBancorporation Shares, issued and outstanding
immediately prior to the Effective Time shall become and be converted into
1.222 shares of FNC Stock (the "EXCHANGE RATIO). The Exchange Ratio is
subject to adjustment as set forth in SECTION 3.5.
(b) Each share of FNC Stock issued and outstanding immediately prior to
the Effective Time shall remain issued and outstanding from and after the
Effective Time.
(c) Each share of FirstBancorporation Stock held in treasury by
FirstBancorporation or otherwise owned by FirstBancorporation or the
Subsidiaries ("TREASURY SHARES"), and each share of FirstBancorporation
Stock owned by FNC or the FNC Subsidiaries ("FNC FIRSTBANCORPORATION
SHARES"), immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in
exchange therefor.
3.2 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of shares of FirstBancorporation Stock shall cease to be, and shall
have no rights as, shareholders of FirstBancorporation, other than (i) to
receive any dividend or other distribution with respect to shares of
FirstBancorporation Stock with a record date occurring prior to the
Effective Time and the consideration provided under this ARTICLE III and
(ii) those rights afforded to the holders of Dissenting Shares under the
SCBCA. After the Effective Time, there shall be no transfers on the stock
transfer books of FirstBancorporation or the Surviving Corporation of
shares of FirstBancorporation Stock.
3.3 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of FNC Stock and no certificates or scrip therefor, or
other evidence of ownership thereof, will be issued in the Merger; instead,
FNC shall pay to each holder of FirstBancorporation Stock who would
otherwise be entitled to a fractional share of FNC Stock (after taking into
account all Old Certificates delivered by such holder) an amount in cash
(without interest) determined by multiplying such fraction by the last sale
price of FNC Stock published by the American Stock Exchange (as reported in
The Wall Street Journal or, if not reported therein, in another
authoritative source), for the trading day immediately preceding the
Effective Date.
3.4 EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Time, but not later than 10 Business Days after the Effective Date, FNC
shall send or cause to be sent to each former holder of record of shares of
FirstBancorporation Stock immediately prior to the Effective Time
transmittal materials for use in exchanging such shareholder's certificates
formerly representing shares of FirstBancorporation Stock (the "OLD
CERTIFICATES") for the consideration set forth in this ARTICLE III. FNC
shall cause the certificates representing the shares of FNC Stock (the "NEW
CERTIFICATES") into which shares of FirstBancorporation Stock are converted
at the Effective Time and/or any check in respect of any fractional share
interest or dividends or distributions which such Person shall be entitled
to receive to be delivered to such shareholder upon delivery to FNC of Old
Certificates representing such shares of FirstBancorporation Stock (or
indemnity reasonably satisfactory to FNC that such certificates are lost,
stolen or destroyed) owned by such shareholder and properly completed
transmittal materials. No interest will be paid on any such cash to be
paid in lieu of fractional share interests or in respect of dividends or
distributions which any such Person shall be entitled to receive pursuant
to this ARTICLE III upon such delivery. Old Certificates surrendered for
exchange by any Affiliate of FirstBancorporation shall not be exchanged for
New Certificates until FNC has received an Affiliate Agreement from such
Person as specified in SECTION 7.1(d). Notwithstanding the foregoing, no
party hereto shall be liable to any former holder of FirstBancorporation
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws. At the election of
FNC, no dividends or other distributions with respect to FNC Stock with a
record date occurring on or after the Effective Date shall be paid to the
holder of any unsurrendered Old Certificate representing shares of
FirstBancorporation Stock converted in the Merger into the right to receive
shares of such FNC Stock until the holder thereof shall be entitled to
receive New Certificates in exchange therefor in accordance with the
procedures set forth in this SECTION 3.4. After becoming so entitled in
accordance with this SECTION 3.4, the record holder thereof shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to
shares of FNC Stock such holder had the right to receive upon surrender of
the Old Certificates.
3.5 ANTI-DILUTION PROVISIONS. In the event FNC changes (or establishes a
record date for changing) the number of shares of FNC Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding FNC Stock and the record date or effective date therefor shall
be prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.6 STOCK OPTIONS. At the Effective Time, each outstanding option to
purchase shares of FirstBancorporation Stock (in each case, an "ASSUMABLE
OPTION") granted under (i) the 1986 Amended and Restated Non-Qualified
Stock Option Plan of FirstBancorporation, Inc., and (ii) the 1996 Stock
Option Plan of FirstBancorporation, Inc. (collectively, the "STOCK OPTION
PLANS"), which have not been exercised prior to the Effective Time, shall
be converted into an option (a "REPLACEMENT OPTION") to acquire, on the
same terms and conditions as were applicable under such Assumable Option,
the number of shares of FNC Stock equal to (A) the number of shares of
FirstBancorporation Stock subject to the Assumable Option, multiplied by
(B) the Exchange Ratio (such product rounded to the nearest whole number),
at an exercise price per share (rounded to the nearest whole cent) equal to
(y) the aggregate exercise price for the shares of FirstBancorporation
Stock which were purchasable pursuant to such Assumable Option divided by
(z) the number of full shares of FNC Stock subject to such Replacement
Option in accordance with the foregoing. Notwithstanding the foregoing,
each Assumable Option which is intended to be an "incentive stock option"
(as defined in Section 422 of the Code) shall be adjusted in accordance
with the requirements of Section 424 of the Code. At or prior to the
Effective Time, FirstBancorporation shall use its reasonable best efforts
to take all action necessary, including obtaining any necessary consents
from optionees, to permit the replacement of the outstanding Assumable
Options by FNC pursuant to this SECTION 3.6 and to permit FNC to assume the
Stock Option Plans. FirstBancorporation shall further take all action
necessary to amend the Stock Option Plans to eliminate automatic grants or
awards thereunder following the Effective Time. At the Effective Time, FNC
shall assume the Stock Option Plans provided that such assumption shall be
only in respect of the Replacement Options and that FNC shall have no
obligation with respect to any awards under the Stock Option Plans other
than the Replacement Options and shall have no obligation to make any
additional grants or awards under the Stock Option Plans. Prior to and at
all times after the Effective Time, FNC shall reserve for issuance such
number of shares of FNC Stock as necessary so as to permit the exercise of
Replacement Options granted in the manner contemplated by this Agreement.
FNC shall file a registration statement on Form S-8 (or an amendment to the
Registration Statement to the same effect) as soon as reasonably
practicable after the Effective Time so as to permit the exercise of such
options and the sale of the shares received by the optionee upon such
exercise at and after the Effective Time and FNC shall continue to make
such filings thereafter as may be necessary to permit the continued
exercise of options and sale of such shares; provided, however, that the
parties acknowledge and agree that "affiliates" (as described in SECTION
7.1(d)) of FirstBancorporation as of the Effective Time and affiliates of
FNC shall be required to comply with the provisions of Rule 144 and
Rule 145 under the Securities Act of 1933, as amended (or any successor
rules) with respect to the sale of shares of FNC Stock acquired upon the
exercise of Replacement Options.
3.7 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
shares of FirstBancorporation Stock that are outstanding immediately prior
to the Effective Time and which are held by a holder who shall have
properly given written notice of his intent to exercise dissenters' rights
with respect to such shares in connection with the Merger and in compliance
with Chapter 13 of the SCBCA (collectively, the "DISSENTING SHARES") shall
not be converted into or represent the right to receive the Merger
Consideration. Such holder shall be entitled to receive payment of the
appraised value of such Dissenting Shares held by him in accordance with
the provisions of such Chapter 13, except that all Dissenting Shares held
by shareholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such shares under such
Chapter 13 shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration, without any interest thereon, upon
surrender, in the manner provided in SECTION 3.4, of the Old Certificates.
(b) FirstBancorporation shall give FNC (i) prompt notice of any demands
for appraisal received by FirstBancorporation, withdrawals of such demands,
and any other instruments served pursuant to the SCBCA in respect of
Dissenting Shares and received by FirstBancorporation and (ii) the
opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the SCBCA. FirstBancorporation shall not,
except with the prior written consent of FNC, make any payment with respect
to any demands for appraisal or offer to settle or settle any such demands.
ARTICLE IV
THE CLOSING
4.1 CLOSING. Upon the terms hereof and subject to the satisfaction
or waiver of the conditions set forth in ARTICLE IX, the Closing of the
Merger shall take place at the offices of FNC in Orangeburg, South Carolina
on a date specified by FNC (such date, the "CLOSING DATE") after the
expiration of any and all required waiting periods following the effective
date of required approvals of the Merger by Regulatory Authorities (but in
no event more than 10 Business Days following the expiration of all such
required waiting periods). At the Closing, the parties will execute,
deliver and file all documents necessary to effect the transactions
contemplated herein, including the Articles of Merger.
4.2 DELIVERIES BY FIRSTBANCORPORATION. At or by the Closing,
FirstBancorporation shall have caused the following documents to be
executed and delivered to FNC:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.3; and
(b) all other documents, certificates and instruments required
hereunder to be delivered by FirstBancorporation, or as may reasonably be
requested by FNC at or prior to the Closing.
4.3 DELIVERIES BY FNC. At or by the Closing, FNC shall have caused
the following documents to be executed and delivered to
FirstBancorporation:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.2; and
(b) all other documents, certificates and instruments required
hereunder to be delivered by FNC, or as may reasonably be requested by
FirstBancorporation at or prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FIRSTBANCORPORATION
FirstBancorporation represents and warrants to FNC as follows:
5.1 ORGANIZATION, STANDING AND POWER.
(a) Each of FirstBancorporation and First Securities Corporation is a
corporation duly organized, validly existing and in good standing under the
Laws of the State of South Carolina, and FirstBancorporation is duly
registered as a bank holding company under the Act. Each of FirstBank and
Midlands Bank is a national banking association organized and existing
under the laws of the United States of America. Each of
FirstBancorporation and the Subsidiaries has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its Assets. Each of FirstBancorporation and the Subsidiaries 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 where the failure to be
so qualified or licensed would not have a Material Adverse Effect on
FirstBancorporation), and all such jurisdictions are set forth on
SCHEDULE 5.1. SCHEDULE 5.1 also lists and separately identifies any
additional jurisdictions in which FirstBancorporation or any Subsidiary has
offices or conducts business, or where its employees are present to provide
services on behalf of FirstBancorporation or such Subsidiary, but in which
such Person is not so qualified or licensed.
(b) Each of FirstBank and Midlands Bank is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and all deposits in FirstBank and Midlands Bank are insured by
the FDIC to the maximum extent permitted by applicable Law.
FirstBancorporation has received all requisite approvals and consents of
the Regulatory Authorities to own and operate the Subsidiaries.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) FirstBancorporation has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of its obligations under 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 FirstBancorporation, subject only to the
adoption and approval of this Agreement by the shareholders of
FirstBancorporation. This Agreement shall constitute a legal, valid and
binding obligation of FirstBancorporation, enforceable against
FirstBancorporation in accordance with its terms (except in all cases as
such enforceability may be limited by a court acting in equity, applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the enforcement of creditors' rights generally).
(b) Neither the execution and delivery of this Agreement by
FirstBancorporation, nor the consummation by FirstBancorporation of the
transactions contemplated hereby, nor compliance by FirstBancorporation
with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of (A) the articles of association or bylaws of
FirstBank or Midlands Bank or (B) the articles of incorporation or bylaws
of FirstBancorporation or any other Subsidiary, or (ii) except as disclosed
in SCHEDULE 5.2 or in SCHEDULE 5.18, 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 FirstBancorporation or any Subsidiary under, (A) any
Material Contract or Material Permit (as defined below) of
FirstBancorporation or any Subsidiary or (B) any material loan, account,
note or other receivable reflected as an asset on the books and records of
FirstBancorporation and the Subsidiaries, or (iii) subject to obtaining the
requisite Consents referred to in SECTION 9.1(b) of this Agreement, violate
any Law or Order applicable to FirstBancorporation or any Subsidiary or any
of their respective Assets in a manner that would impose any material
liability, obligation or limitation on FirstBancorporation, any Subsidiary,
FNC, any FNC Subsidiary or any of their respective businesses. For
purposes of this Agreement, "Material Permit" shall mean a Permit that is
necessary for a party and its subsidiaries to operate their respective
businesses as currently conducted or to own their respective Assets.
(c) Except as disclosed in SCHEDULE 5.2, no notice to, filing with or
Consent of any Governmental Authority by FirstBancorporation or any
Subsidiary is necessary for the consummation by FirstBancorporation of the
Merger and the other transactions contemplated in this Agreement.
(d) The affirmative vote of the holders of two-thirds of the outstanding
shares of FirstBancorporation Stock is the only vote of the holders of any
class or series of FirstBancorporation capital stock necessary to approve
this Agreement and the Merger.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of FirstBancorporation consists of
(i) 1,000,000 shares of preferred stock, par value $.01 per share, of which
no shares are issued and outstanding, and (ii) 3,000,000 shares of
FirstBancorporation Stock, of which 963,325 shares are issued and
outstanding as of the date of this Agreement, which constitutes
FirstBancorporation's only issued and outstanding securities. As of the
date of this Agreement, there are Assumable Options to purchase 15,575
shares of FirstBancorporation Stock outstanding under the Stock Option
Plans and options to purchase 13,341 shares of FirstBancorporation Stock
outstanding under 1986 Bank Incentive Stock Option Plan of The Savings Bank
of Beaufort County, F.S.B., which options will terminate upon the Effective
Time of the Merger unless exercised prior thereto (together with the
Assumable Options, the "FIRSTBANCORPORATION OPTIONS"). Other than the
aforementioned shares of FirstBancorporation Stock and FirstBancorporation
Options, there are no outstanding warrants, options, agreements,
convertible or exchangeable securities, or other commitments pursuant to
which FirstBancorporation is or may become obligated to issue, sell,
purchase, return, or redeem any shares of capital stock or other securities
of FirstBancorporation, and there are no equity securities of
FirstBancorporation reserved for issuance for any purpose. Each
outstanding share of FirstBancorporation Stock (i) has been duly authorized
and is validly issued and outstanding, and is fully paid and nonassessable,
(ii) has not been issued in violation of the preemptive rights of any
shareholder, and (iii) has been issued in compliance with the Securities
Laws.
(b) SCHEDULE 5.3 sets forth the names of all Persons of record who own
more than 5% of the outstanding shares of FirstBancorporation Stock and the
number of shares of FirstBancorporation Stock owned by each such Person.
(c) The authorized capital stock of (A) FirstBank is (x) 1,000,000 shares
of preferred stock, no par value, of which no shares are issued and
outstanding, and (y) 1,000,000 shares of common stock, par value $5.00 per
share, of which 1,000 shares are issued and outstanding and owned of record
and beneficially held entirely by FirstBancorporation, (B) Midlands Bank is
1,000,000 shares of common stock, no par value, of which 200,000 shares are
issued and outstanding and owned of record and beneficially held entirely
by FirstBancorporation, and (C) First Securities Corporation is 1,000,000
shares of common stock, par value $.01 per share, of which 100,000 shares
are issued and outstanding and owned of record and beneficially held
entirely by FirstBank. There are no outstanding warrants, options,
agreements, convertible or exchangeable securities, or other commitments
pursuant to which any Subsidiary is or may become obligated to issue, sell,
purchase, return, or redeem any shares of capital stock or other securities
of any Subsidiary, and there are no equity securities of any Subsidiary
reserved for issuance for any purpose. Each outstanding share of capital
stock of the Subsidiaries (i) has been duly authorized and is validly
issued and outstanding, and is fully paid and nonassessable, (ii) has not
been issued in violation of the preemptive rights of any shareholder, and
(iii) has been issued in compliance with the Securities Laws.
5.4 RECORDS. Complete and accurate copies of the articles of
incorporation or charter and bylaws of each of FirstBancorporation and the
Subsidiaries have been delivered to FNC. The stock book of each such Person
contains complete and accurate records of the record share ownership of the
issued and outstanding shares of stock thereof; provided, however, that
this sentence shall be deemed to be accurate for purposes of SECTION 9.3(a)
unless any such incompleteness or inaccuracy could reasonably be expected
to impose a liability or obligation on FirstBancorporation, any Subsidiary,
FNC or any FNC Subsidiary or impede, delay or prevent the consummation of
the transactions contemplated hereby.
5.5 SUBSIDIARIES AND AFFILIATES. Other than marketable securities
issued by Persons of which FirstBancorporation and the Subsidiaries do not,
in the aggregate, own more than 5% of the outstanding shares of voting
common stock, neither FirstBancorporation nor any Subsidiary owns, directly
or indirectly, any capital stock of or any other equity interests in any
Person other than the Subsidiaries. Neither FirstBancorporation or any
Subsidiary own any shares of FNC Stock. SCHEDULE 5.5 sets forth all
Affiliates of FirstBancorporation or any Subsidiary.
5.6 FINANCIAL STATEMENTS. FirstBancorporation has provided or made
available to FNC complete copies of all of the Financial Statements. Each
of the Financial Statements, together with notes thereto, have been, and on
the Closing Date each of the Interim Quarterly Financial Statements will
have been, prepared in accordance with Generally Accepted Accounting
Principles and fairly present, and on the Closing Date each of the Interim
Quarterly Financial Statements will fairly present, in all material
respects the results of operations and financial position of
FirstBancorporation and the Subsidiaries for the periods and as of the
dates set forth therein (except that in respect of Interim Quarterly
Financial Statements, notes may be omitted and such statements may be
subject to normal recurring year-end adjustments). Each of the Interim
Monthly Financial Statements will be prepared in the ordinary course of
business consistent with past practices.
5.7 TAX MATTERS. Each of FirstBancorporation and the Subsidiaries has
timely filed (including extension periods) all Tax Returns required to be
filed for any period ending on or before the date hereof, or if applicable,
any period that includes such date. All such Tax Returns are correct and
complete in all material respects. Each of FirstBancorporation and the
Subsidiaries has timely paid or will timely pay or cause to be paid all
Taxes (whether or not shown on any Tax Return) when due to any taxing
authority with respect to all such periods. Neither FirstBancorporation
nor any of the Subsidiaries has received written notice that the Internal
Revenue Service or any other taxing authority has asserted against
FirstBancorporation or any of the Subsidiaries any deficiency or claim for
additional Taxes in connection therewith which could reasonably result in a
material liability to FirstBancorporation or FNC and neither
FirstBancorporation nor any of the Subsidiaries reasonably expects any
authority to assess any additional Taxes for any period for which Tax
Returns have been filed. Neither FirstBancorporation nor any of the
Subsidiaries has filed a consent under Code 341(f) concerning collapsible
corporations. Neither FirstBancorporation nor any of the Subsidiaries has
made any payments, nor is it obligated to make any payments, nor is it a
party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Code 280G. Neither
FirstBancorporation nor any of the Subsidiaries has been a United States
real property holding corporation within the meaning of Code 897(c)(2)
during the applicable period specified in Code 897(c)(1)(A)(ii). To the
Knowledge of FirstBancorporation, each of FirstBancorporation and the
Subsidiaries has disclosed on the federal Income Tax Returns of
FirstBancorporation and the Subsidiaries all positions taken therein that
could give rise to a substantial understatement of federal Income Taxes
within the meaning of Code 6662. Neither FirstBancorporation nor any of
the Subsidiaries has been a member of an affiliated group (as defined by
the Code) filing a consolidated federal income tax return with any Person
other than FirstBancorporation or the Subsidiaries nor does it have any
liability for the Income Taxes of any Person other than FirstBancorporation
and the Subsidiaries under Treas. Reg. 1.1502-6 (or any similar provision
of state, local or foreign law), as a transferee or successor, by contract,
or otherwise. The books and records of FirstBancorporation and each of the
Subsidiaries accurately and completely set forth in all material respects
the basis of FirstBancorporation and the Subsidiaries in its assets and the
amount of any net operating loss, net capital loss, unused investment or
other credit, unused foreign tax, or excess charitable contribution
allocable to FirstBancorporation or the Subsidiaries, all as of
December 31, 1998. The unpaid Income Taxes of FirstBancorporation and the
Subsidiaries did not, as of December 31, 1998, exceed in any material
respect the reserve for tax liability (rather than any reserve for deferred
taxes established to reflect timing differences between book and tax
income) set forth on the balance sheet as of such date contained in the
Financial Statements, and any such unpaid Income Taxes do not exceed in any
material respect that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past practices of
FirstBancorporation in filing its Income Tax returns. Neither
FirstBancorporation nor any of the Subsidiaries has been granted nor has
FirstBancorporation or any of the Subsidiaries been given any waiver of any
statute of limitations with respect to, or any extension of a period for
the assessment of any Tax. All deposits required by law to be made by
FirstBancorporation or the Subsidiaries with respect to employees'
withholding taxes have been made. Each of FirstBancorporation and the
Subsidiaries has withheld and paid in all material respects all Taxes
required to have been withheld and paid in connection with the amounts paid
or owing to any employee, independent contractor, creditor, shareholder or
other third party. There are no Liens for the payment of Taxes on any
assets of FirstBancorporation or any of the Subsidiaries except for
statutory Liens for property Taxes that are not past due as to payment.
There are no disputes or claims pending against FirstBancorporation or any
of the Subsidiaries for past due Taxes in a material amount, and, to the
Knowledge of FirstBancorporation, there is no claim or dispute threatened
against FirstBancorporation or any of the Subsidiaries, or any basis for
such a claim or dispute, for past due Taxes. During the past five years,
no such claim has been made by an authority in a jurisdiction where
FirstBancorporation or any of the Subsidiaries does not file Tax Returns.
As of the date hereof, there are not any matters under discussion with any
federal, state, local or other authority with respect to any additional
Taxes relating to FirstBancorporation or any of the Subsidiaries. All
amounts required to be paid by FirstBancorporation or any of the
Subsidiaries as estimated Income Taxes under Code Section 6655, and any
comparable provisions of state or local statutes, have been duly paid,
except where the failure to make such payment would not, individually or in
the aggregate with other such nonpayments, result in a material liability
to FirstBancorporation or FNC. There are no tax rulings, requests for
rulings or closing agreements relating to FirstBancorporation or any of the
Subsidiaries that could affect its liability for Income Taxes for any
period after the Closing Date. Any adjustment of Taxes of
FirstBancorporation or any of the Subsidiaries made by the Internal Revenue
Service in any examination which is required to be reported to state,
foreign, or local taxing authorites has been so reported and any additional
Taxes due with respect thereto have been paid. To the Knowledge of
FirstBancorporation, there are no facts that, if known to any taxing
authority, would likely result in the issuance of a notice of proposed
deficiency or similar notice of intention to assess Income Taxes in any
material amount against FirstBancorporation or any of the Subsidiaries.
Neither FirstBancorporation nor any of the Subsidiaries has taken any
action not in accordance with its past practices that would have the effect
of deferring any tax liability for FirstBancorporation or any of the
Subsidiaries from any taxable period ending on or before the Closing Date
to any taxable period ending after the Closing Date. No material amount of
income recognized, for federal, state, local or foreign Income Tax
purposes, by FirstBancorporation or any of the Subsidiaries during the
period beginning January 1, 1999 and ending on the Closing Date will be
derived other than in the ordinary course of business or arise from
transactions of a type not reflected on the relevant return for the taxable
period ending on December 31, 1998. Neither FirstBancorporation nor any of
the Subsidiaries has any deferred gain or loss arising from deferred
intercompany transactions (as described in Section 1.1502-13 of the
Treasury Regulations) with respect to the stock or obligations of any other
member of FirstBancorporation's or any of the Subsidiaries' affiliated
group (as described in Section 1.1502-14 of the Treasury Regulations). No
property of FirstBancorporation or any of the Subsidiaries is "tax exempt
use property" within the meaning of Section 168(h) of the Code. Except as
set forth on SCHEDULE 5.7, neither FirstBancorporation nor any of the
Subsidiaries is required to include in income any adjustment pursuant to
Section 481(a) of the Code (or similar provisions of other law or
regulation) by reason of a change in an accounting method, nor does
FirstBancorporation or any of the Subsidiaries have any knowledge that the
Internal Revenue Service (or other taxing authority) has proposed or is
considering any such change in an accounting method. Neither
FirstBancorporation nor any of the Subsidiaries is a party to an interest
rate swap, currency swap, or similar transaction. Neither
FirstBancorporation nor any of the Subsidiaries has any corporate
acquisition indebtedness, as defined in Section 279(b) of the Code, or any
obligations described in Section 279(a)(2) of the Code. The accruals for
deferred federal income taxes reflected in the Financial Statements for the
period ended December 31, 1998 are adequate to cover any deferred income
tax liability of FirstBancorporation and each of the Subsidiaries
determined in accordance with Generally Accepted Accounting Principles
through the date thereof. All Income Taxes as to which FirstBancorporation
and each of the Subsidiaries may be liable which relate to a period ending
on or before December 31, 1998 have been adequately accrued or reserved in
the Financial Statements as of such date in accordance with Generally
Accepted Accounting Principles.
5.8 REAL PROPERTY.
(a) SCHEDULE 5.8 lists all Real Property owned or leased by
FirstBancorporation or any of the Subsidiaries as of the date hereof,
separately listing that which is owned and that which is leased and whether
it is owned or leased by FirstBancorporation or one of the Subsidiaries.
Except as indicated on SCHEDULE 5.8, with respect to all Real Property
owned by FirstBancorporation or any of the Subsidiaries,
FirstBancorporation or the Subsidiary, as the case may be, has good and
marketable fee simple title to such Real Property and owns the same free
and clear of all Liens (other than Permitted Liens). Except as set forth
on SCHEDULE 5.8, with respect to all Real Property leased by
FirstBancorporation or any of the Subsidiaries: (i) each lease of Real
Property is valid and enforceable in accordance with its terms in all
material respects, (ii) there exists no material Default by
FirstBancorporation or any of the Subsidiaries under such lease, and
(iii) each such lease may be assigned to FNC and the FNC Subsidiaries, and
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not create a material Default
thereunder. All improvements and fixtures in or on the Real Property owned
or leased by FirstBancorporation or any of the Subsidiaries are in good
condition and repair, ordinary wear and tear excepted, and to the Knowledge
of FirstBancorporation, there does not exist any condition that interferes
with FirstBancorporation's or the Subsidiaries', as the case may be, use or
affects the economic value thereof.
(b) The Real Property owned or leased by FirstBancorporation or any of the
Subsidiaries substantially complies with all applicable federal, state and
local laws, regulations, ordinances or orders of any Governmental
Authority, including those relating to zoning, building and use permits,
and such Real Property as is currently used for commercial banking
facilities may be so used under applicable zoning ordinances as a matter of
right rather than as a conditional or nonconforming use.
5.9 ASSETS. Except as disclosed on SCHEDULE 5.9, each of
FirstBancorporation and the Subsidiaries has good and marketable title,
free and clear of all Liens (other than Permitted Liens), to all of their
respective owned material Assets. All material tangible personal
properties used in the business of FirstBancorporation or any of the
Subsidiaries are in good condition and repair, ordinary wear and tear
excepted, and are usable in the ordinary course of business consistent with
FirstBancorporation's or the Subsidiary's past practices. All material
Assets held under leases or subleases by FirstBancorporation or any of the
Subsidiaries are held under valid Contracts enforceable in accordance with
their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other
Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceedings may be brought), and each such Contract is in full force
and effect. The Assets of FirstBancorporation and the Subsidiaries include
all assets required to operate the business of FirstBancorporation and the
Subsidiaries as presently conducted.
5.10 INTELLECTUAL PROPERTY RIGHTS.
(a) Each of FirstBancorporation and the Subsidiaries owns all right, title
and interest to, free and clear of all Liens (other than Permitted Liens),
or has the legally enforceable right to use (pursuant to license,
sublicense, agreement or permission), free and clear of all Liens (other
than Permitted Liens), all Intellectual Property currently used in or
necessary to its business as currently conducted, except where the failure
to have any such right would not, individually or in the aggregate with all
other such failures, have a Material Adverse Effect on FirstBancorporation.
All registered trademarks and patents owned or used by FirstBancorporation
or any of the Subsidiaries (together with any application therefor) and all
trade names, copyrights and processes used by FirstBancorporation or any of
the Subsidiaries are listed on SCHEDULE 5.10. Except as disclosed on
SCHEDULE 5.10, neither FirstBancorporation nor any of the Subsidiaries has
pledged, mortgaged, assigned, licensed, granted permission with respect to
or otherwise transferred any such Intellectual Property to any third party.
Except as set forth on SCHEDULE 5.10, none of FirstBancorporation's or the
Subsidiaries' rights with respect to any such Intellectual Property will be
terminated, limited or otherwise affected by its execution of this
Agreement or its consummation of the transactions contemplated by this
Agreement, except where any such termination, limitation or affect would
not, individually or in the aggregate with all other such terminations,
limitations or affects, have a Material Adverse Effect on
FirstBancorporation.
(b) Neither FirstBancorporation nor any of the Subsidiaries has received,
or has reason to believe that it will not continue to receive, a rating of
less than "satisfactory" on any Year 2000 Report of Examination of any
Regulatory Authority. FirstBancorporation has made available to FNC a
complete and accurate copy of its plan, including an estimate of the
anticipated associated costs, for addressing the issues set forth in the
statements of the FFIEC dated May 5, 1997, entitled "Year 2000 Project
Management Awareness," and December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such
issues affect it and the Subsidiaries, and such plan is in material
compliance with the schedule set forth in the FFIEC statements. Except as
set forth on SCHEDULE 5.10, to the Knowledge of FirstBancorporation, there
are no issues with respect to its or the Subsidiaries hardware and software
systems that would prevent it or the Subsidiaries from being Year 2000
compliant in a timely manner, except where any such issue would not,
individually or in the aggregate with all other such issues, have a
Material Adverse Effect on FirstBancorporation.
5.11 LOANS, ACCOUNTS, NOTES AND OTHER RECEIVABLEs; LOAN COLLATERAL.
(a) All loans, accounts, notes and other receivables reflected as assets
on each of FirstBancorporation's and the Subsidiaries' books and records
(i) have resulted from bona fide business transactions in the ordinary
course of such Person's operations, (ii) were to the Knowledge of
FirstBancorporation made in compliance with such Person's standard loan
policies and procedures, and (iii) are owned by such Person free and clear
of all Liens (other than Permitted Liens), or other exceptions to title or
to the ownership or collection rights of any other person or entity.
(b) All records of FirstBancorporation and the Subsidiaries regarding all
outstanding loans, accounts, notes and other receivables are accurate in
all material respects, and with respect to each loan that
FirstBancorporation's or any of the Subsidiaries' loan documentation
indicates is secured by Loan Collateral, to the Knowledge of
FirstBancorporation such loan is secured by valid, perfected and
enforceable liens on all such Loan Collateral having the priority described
in such Person's documentation of such loan.
(c) Each material loan reflected as an asset on FirstBancorporation's or
any of the Subsidiaries' books as of the date hereof, and each material
guaranty therefor, is the legal, valid and binding obligation of the
obligor or guarantor thereon, and no defense, offset or counterclaim has
been asserted with respect to any such loan or guaranty.
(d) SCHEDULE 5.11 lists as of the date hereof: (i) each loan, extension
of credit or other Asset that is classified by any Regulatory Authority or
FirstBancorporation or any of the Subsidiaries as "Loss", "Doubtful",
"Substandard" or "Special Mention" (or otherwise by words of similar
import) or that FirstBancorporation or any of the Subsidiaries has
designated as a special asset or for special handling or placed on any
"watch list" because of concerns regarding the ultimate collectibility or
deteriorating condition of such Asset or any obligor or Loan Collateral
therefor; and (ii) each loan or extension of credit of FirstBancorporation
or any of the Subsidiaries that is past due 30 days or more as to the
payment of principal and/or interest, or as to which FirstBancorporation or
any Subsidiary has given written notice of default which has not been
cured, or is to the Knowledge of FirstBancorporation the subject of a
proceeding in bankruptcy, or as to which the obligor otherwise has
indicated any inability or intention not to repay such loan or extension of
credit.
(e) Each of the loans and other extensions of credit by
FirstBancorporation or any of the Subsidiaries (with the exception of those
loans and extensions of credit listed on SCHEDULE 5.11) is as of the date
hereof to the Knowledge of FirstBancorporation collectible in the ordinary
course of such Person's business in an amount that is not less than the
amount at which it is carried on such Person's books and records net of
reserves reflected on such Person's books and records.
(f) Each of FirstBancorporation's and the Subsidiaries' reserve for
possible loan losses shown in the Financial Statements and the Interim
Quarterly Financial Statements (i) has been (or will be in the case of the
Interim Quarterly Financial Statements) established in conformity with
Generally Accepted Accounting Principles and all applicable requirements of
applicable Regulatory Authorities, (ii) in the reasonable opinion of such
Person's management, as of the respective dates referenced therein, is (or
will be in the case of the Interim Quarterly Financial Statements)
reasonable in view of the size and character of such Person's loan
portfolio, current economic conditions and other relevant factors, and
(iii) in the reasonable opinion of such Person's management, as of the
respective dates referenced therein, is (or will be in the case of the
Interim Quarterly Financial Statements) adequate to provide for losses
relating to or the risk of loss inherent in such Person's loan portfolio.
(g) Neither the terms of any loan made by FirstBancorporation or any of
the Subsidiaries, nor any of the loan documentation, nor the manner in
which such loans have been administered and serviced, violates in any
material respect any Law applicable thereto, including without limitation,
the Truth-in-Lending Act, the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, Regulations O and Z of the Federal Reserve Board,
the Community Reinvestment Act of 1977, the Equal Credit Opportunity Act,
all as amended, and state laws, rules and regulations relating to consumer
protection, installment sales and usury, except where any such violation
would not, individually or in the aggregate with all other such violations,
have a Material Adverse Effect on FirstBancorporation.
5.12 SECURITIES PORTFOLIO AND INVESTMENTS. All securities owned by
FirstBancorporation or any of the Subsidiaries (whether owned of record or
beneficially) are held free and clear of all Liens (other than Permitted
Liens). There are no voting trusts or other agreements or undertakings to
which FirstBancorporation or any of the Subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in
the market values of United States Treasury and agency or municipal
securities, since December 31, 1998, there has been no significant
deterioration or material adverse change in the quality, or any material
decrease in the value, of the securities portfolio of FirstBancorporation
and the Subsidiaries, taken as a whole.
5.13 ENVIRONMENTAL MATTERS.
(a) All of the Real Property owned or leased by FirstBancorporation or any
Subsidiary and all of the Loan Collateral that is in the nature of real
property is and has been in compliance with all Environmental Laws, except
where any such noncompliance would not, individually or in the aggregate
with all other such noncompliances, have a Material Adverse Effect on
FirstBancorporation.
(b) As of the date hereof, there is no Litigation pending or, to the
Knowledge of FirstBancorporation, threatened, before any court,
Governmental Authority, board or other forum relating to the Real Property
owned or leased by FirstBancorporation or any Subsidiary or any Loan
Collateral that is in the nature of real property in which
FirstBancorporation or any Subsidiary has been or may be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating
to the release into the environment of any Hazardous Material, and to the
Knowledge of FirstBancorporation there is no reasonable basis for any such
Litigation.
(c) There have been no releases of Hazardous Materials in, on, under or
affecting any of the Real Property owned or leased by FirstBancorporation
or any Subsidiary or any Loan Collateral that is in the nature of real
property, except where any such release would not, individually or in the
aggregate with all other such releases, have a Material Adverse Effect on
FirstBancorporation.
5.14 COMPLIANCE WITH LAWS. Each of FirstBancorporation and the
Subsidiaries has in effect all Permits required for it to own, lease, or
operate its Assets and to carry on its business as now conducted, and there
has occurred no Default under any Material Permit. Except as disclosed in
SCHEDULE 5.14, neither FirstBancorporation nor any of the Subsidiaries:
(i) is in material violation of any Laws, Orders, or Permits applicable to
its business or employees conducting its business; and (ii) has since
December 31, 1995, received any notification or communication from any
Governmental Authority (A) asserting that it is in material violation of
any of the Laws or Orders that such Governmental Authority enforces,
(B) threatening to revoke any Permits, or (C) requiring it to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or to adopt any
resolution or similar undertaking that restricts the conduct of its
business or in any manner relates to its capital adequacy, its credit or
reserve policies, its management or the payment of dividends.
5.15 LABOR RELATIONS; EMPLOYMENT MATTERS.
(a) Neither FirstBancorporation nor any of the Subsidiaries is party to
any collective bargaining agreement, nor is it the subject of any
Litigation seeking to compel it to bargain with any labor organization as
to wages or conditions of employment, nor is there any strike or other
labor dispute involving FirstBancorporation or any of the Subsidiaries
pending or threatened, and to the Knowledge of FirstBancorporation, there
is no activity involving FirstBancorporation's or any of the Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in
any other organization activity.
(b) Except as set forth in SCHUDULE 5.15, there are no obligations
(including obligations under any loans) payable or owing by
FirstBancorporation or any Subsidiary to any Affiliates, officers,
directors, or employees of FirstBancorporation or any Subsidiary or any of
their Affiliates, except salaries, wages, bonuses and salary advances,
benefits and reimbursement of expenses incurred and accrued in the ordinary
course of business, nor are there any obligations (including obligations
under any loans) payable or owing by any such Persons or their Affiliates
to FirstBancorporation or any Subsidiary, nor has FirstBancorporation or
any Subsidiary guaranteed any of such Persons' loans or obligations to any
Person; provided, however, that the foregoing representation and warranty
shall only apply to material obligations payable or owing by
FirstBancorporation or any Subsidiary to, and material obligations payable
or owing by, employees of FirstBancorporation or any Subsidiary who are not
Affiliates, officers or directors of FirstBancorporation or any Subsidiary.
Except as set forth in SCHEDULE 5.15, each employee of FirstBancorporation
and each Subsidiary is employed on an "at-will" basis, and there are no
employment agreements or similar arrangements with any such employees.
(c) Each of FirstBancorporation and the Subsidiaries is in
substantial compliance with all laws and other obligations relating to
employment, denial of employment or employment opportunity and termination
of employment.
(d) There is no controversy pending or, to the Knowledge of
FirstBancorporation, threatened between FirstBancorporation or any of the
Subsidiaries and any of its present or former officers, directors,
supervisory personnel or any group of its employees, except where any such
controversy would not, individually or in the aggregate with all other such
controversies, have a Material Adverse Effect on FirstBancorporation.
5.16 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 5.16 identifies each Benefit Plan by name and ERISA plan
number, if any. Neither FirstBancorporation nor any of the Subsidiaries
has a formal plan or commitment nor has it made an announcement of its
intentions, whether or not legally binding, to create any additional
Benefit Plan or modify or change any existing Benefit Plan except as
specifically contemplated by this Agreement. With respect to each Benefit
Plan, a true and complete copy of each of the following has been delivered
to FNC:
(i) the written Benefit Plan, if any (including all amendments
thereto);
(ii) the annual returns or reports (including, without
limitation, reports on the Form 5500 series, including all attachments
thereto), if required under ERISA or the Code, for the three most
recent plan years with filing deadlines prior to the date of the
Agreement or for which returns have actually been prepared or filed
prior to the date of the Agreement and a copy of each summary annual
report with respect to each such annual report;
(iii) the most recent summary plan description, if any,
together with each subsequent summary of material modifications,
required under ERISA, and all other material employee communications;
(iv) all written rules, regulations, procedures and
interpretations, if any, for such Benefit Plan;
(v) if such Benefit Plan is funded through a trust or other
funding arrangement, including insurance contracts, the trust or other
funding agreement (including all amendments thereto) and the latest
financial statements thereof;
(vi) all contracts relating to such Benefit Plan with respect to
which it may have any liability, including, without limitation,
insurance contracts, investment management agreements, subscription
and participation agreements, administration agreements and record
keeping agreements;
(vii) if such Benefit Plan is intended to be qualified under
Section 401(a) of the Code, (A) the most recent determination letter
received from the Internal Revenue Service, (B) each subsequent
determination letter, and (C) complete copies of the determination
letter applications (including attachments and cover letters) for such
determination letters; and
(viii) all rulings, opinion letters, information letters or
advisory opinions issued by the Internal Revenue Service or the United
States Department of Labor within the ten-year period prior to the
date of this Agreement.
(b) Prohibited Transactions. No prohibited transaction (as defined
in Section 4975 of the Code or Section 406 of ERISA) or transaction that
would violate Section 404 of ERISA has occurred with respect to any Benefit
Plan which is an "employee benefit plan" as defined in Section 3(3) of
ERISA in connection with which FirstBancorporation or any of the
Subsidiaries or any of their respective officers, directors or employees
would be subject, directly or indirectly, to any tax, penalty or liability
to any person for prohibited transactions or breach of fiduciary
responsibility under ERISA or the Code (including, without limitation,
liability for a breach of fiduciary responsibility by a cofiduciary
pursuant to Section 405 of ERISA).
(c) Funding. Except as disclosed on SCHEDULE 5.16, full payment has
been made of all amounts that each of FirstBancorporation and the
Subsidiaries is required to have paid under the terms of each Benefit Plan
and applicable law (including any employee salary deferral contributions
described in Section 125 or 401(k) of the Code).
(d) Compliance with Applicable Law. (i) Each Benefit Plan that is
subject to Title I of ERISA conforms to, and its administration is in
substantial compliance with, applicable federal laws, including but not
limited to ERISA; (ii) each Benefit Plan that is intended to be qualified
under Section 401(a) of the Code meets all of the applicable operational
requirements for qualification and meets all of the plan document
requirements for qualification that are required to be included in the plan
document as of the Closing Date, and either a favorable determination
letter has been received or has been applied for, and nothing has occurred
since the most recent favorable determination letter that would adversely
affect such qualification; (iii) each Benefit Plan that includes a cash or
deferred arrangement described in Section 401(k) of the Code has been
administered in accordance with all applicable requirements of
Section 401(k) and the Treasury Regulations issued thereunder; and
(iv) each Benefit Plan that includes a cafeteria plan described in
Section 125 of the Code has been administered in accordance with all
applicable requirements of Section 125 and the Treasury Regulations issued
thereunder. There is no pending or, to the Knowledge of
FirstBancorporation, threatened action, claim or proceeding against or with
respect to any Benefit Plan by the Internal Revenue Service, the Department
of Labor, the Equal Employment Opportunity Commission, or any participant,
beneficiary or any other person or entity involving any aspect of the
Benefit Plans (other than routine benefit claims), nor to the Knowledge of
FirstBancorporation are there any facts that could form the basis for any
such action, claim or proceeding. The reporting and disclosure
requirements of the Code and ERISA, the bonding requirements of ERISA, and
other provisions applicable to the Benefit Plans have been fully complied
with in all material respects.
(e) Multiemployer Plans; Pension Plans. Neither FirstBancorporation
nor any of the Subsidiaries participates in or contributes to, nor has it
ever participated in or contributed to, any "multiemployer plan." Except
as disclosed on SCHEDULE 5.16, neither FirstBancorporation nor any of the
Subsidiaries maintains nor has ever maintained an "employee pension benefit
plan" as defined in Section 3(2) of ERISA that is subject to Title IV of
ERISA.
(f) Effect of Agreement. Except as disclosed on SCHEDULE 5.16, the
execution and performance of this Agreement will not result in any
(i) payment (whether retirement benefits, severance pay, unemployment
compensation, "change-in-control" payment or otherwise) becoming due from
FirstBancorporation, any Subsidiary, FNC or any FNC Subsidiary to any
employee, former employee or director of FirstBancorporation or any of the
Subsidiaries, (ii) increase in benefits otherwise payable under any Benefit
Plan, or (iii) acceleration of the time of payment or vesting of any such
benefits. No amounts payable by FirstBancorporation, any Subsidiary, FNC
or any FNC Subsidiary to any officer, employee or director of
FirstBancorporation or any of the Subsidiaries under any Benefit Plan in
connection with the transactions contemplated hereby will fail to be
deductible for federal income tax purposes by virtue of Section 280G or
Section 162(m) of the Code.
(g) Benefits for Former Employees. Except as disclosed on
SCHEDULE 5.16, no Benefit Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect
to current or former employees beyond retirement or other termination of
service other than (i) coverage mandated by Section 4980B of the Code,
Part 6 of Subtitle B of Title I of ERISA and Title XXII of the Public
Health Service Act (collectively, "COBRA"); (ii) death benefits or
retirement benefits under any Benefit Plan qualified under Section 401(a)
of the Code; (iii) disability benefits under any "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA) that have been fully provided
for by insurance or otherwise; (iv) deferred compensation benefits accrued
as liabilities on the books of FirstBancorporation or any of the
Subsidiaries; or (v) benefits the full cost of which is borne by the
current or former employee (or his or her beneficiary). Each Benefit Plan
that is subject to the provisions of COBRA has been, and as of the Closing
Date will have been, maintained in compliance with the provisions of COBRA.
5.17 INSURANCE SCHEDULE 5.17 lists all of the insurance policies involving
a one-time or annual premium payment in excess of $10,000 (the "POLICIES")
maintained by each of FirstBancorporation and the Subsidiaries, and for
each indicates the insurer's name, policy number, expiration date and
amount and type of coverage. The Policies provide coverage in such amounts
and against such liabilities, casualties, losses or risks as is customary
or reasonable for entities engaged in FirstBancorporation's or the
Subsidiary's, as the case may be, business or as is required by applicable
law or regulations. Each of the Policies is in full force and effect and
is valid and enforceable in accordance with its terms, and is underwritten
by an insurer of recognized financial responsibility and qualified to
transact business in South Carolina. FirstBancorporation or the
Subsidiary, as the case may be, has taken all requisite actions (including
the giving of required notices) under each such Policy in order to preserve
all rights thereunder with respect to all matters, and the coverage of all
such Policies will not be restricted as a result of the transactions
contemplated hereby. Neither FirstBancorporation nor any of the
Subsidiaries is in Default under the provisions of any Policy, nor has it
received notice of cancellation, nonrenewal, reduction or elimination of
coverage, or premium increase with respect to any Policy, except as set
forth in SCHEDULE 5.17. There has been no failure to pay any premium on
any Policy, and there have been no material inaccuracies or misstatements
in any application for any Policy. There are no material pending claims
with respect to any Policy that are not fully covered by insurance
maintained by FirstBancorporation or any Subsidiary (subject only to
deductible amounts), and to the Knowledge of FirstBancorporation, there
exists no state of facts and there is no anticipated event the occurrence
of which is reasonably likely to form the basis for any such claim.
5.18 CONTRACTS.
(a) SCHEDULE 5.18(a) sets forth each Contract (other than Contracts
evidencing loans or other extensions of credit, deposit liabilities,
purchases of federal funds, Federal Home Loan Bank or Federal Reserve Bank
advances and trade payables, in each case entered into in the ordinary
course of business consistent with past practices) to which
FirstBancorporation or any Subsidiary is a party or by which it or its
Assets are bound that (i) is not terminable in writing without penalty on
30 days' notice or less and involves an annual obligation to or by
FirstBancorporation or any Subsidiary exceeding $10,000, (ii) relates to
the borrowing of money by FirstBancorporation or any Subsidiary or the
guarantee by FirstBancorporation or any Subsidiary of any obligation for
borrowed money, (iii) is a lease of Real Property by FirstBancorporation
or a Subsidiary, or (iv) is otherwise material to FirstBancorporation's or
any Subsidiary's business or its Assets (other than documentation regarding
lending transactions) (such Contracts set forth on SCHEDULE 5.18(a) being
referred to herein as the "MATERIAL CONTRACTS"). With respect to each
Material Contract, except as noted on SCHEDULE 5.18(a), (i) such Material
Contract is in full force and effect; (ii) no party thereto is in Default
thereunder; (iii) no party thereto has repudiated or waived any material
provision thereof; and (iv) a complete copy thereof, including all
amendments thereto, has been delivered to FNC. Except as noted on
SCHEDULE 5.18(a), with respect to any Material Contract under which
FirstBancorporation or any of the Subsidiaries is indebted for money
borrowed, such indebtedness is prepayable at any time by
FirstBancorporation or the Subsidiary, as the case may be, without penalty
or premium.
(b) SCHEDULE 5.18(b) sets forth each Material Contract to which
FirstBancorporation or any of the Subsidiaries is a party or by which it or
its Assets are bound, the terms of which (i) prevent or restrict the
assignment of such Material Contract by FirstBancorporation or any
Subsidiary, and define assignment to include a change in control of
FirstBancorporation or any Subsidiary, the merger or consolidation of
FirstBancorporation or any Subsidiary with another entity or other similar
dispositions of FirstBancorporation or any Subsidiary, (ii) will be or are
likely to be violated by the consummation of the transactions contemplated
herein, or (iii) otherwise make the Consent of one or more other parties to
such Material Contract necessary or desirable in connection with the
transactions contemplated herein.
5.19 LEGAL PROCEEDINGS. Except as listed on SCHEDULE 5.19, as of the date
hereof, there is no Material Litigation (as defined below) instituted or
pending or, to the Knowledge of FirstBancorporation, threatened against
FirstBancorporation or any of the Subsidiaries or against any of their
respective Assets, and there are no Orders outstanding against or
unsatisfied by FirstBancorporation or any of the Subsidiaries or against
any of their respective Assets. For purposes of this Agreement, "MATERIAL
LITIGATION" shall mean (i) any Litigation involving a claim for equitable
relief or monetary damages in excess of $10,000, (ii) any Litigation
commenced by, or involving, any Governmental Authority and (iii) any other
Litigation that in the reasonable opinion of FirstBancorporation is
material to its business and operations. FirstBancorporation shall provide
FNC with notice of all Material Litigation and Orders arising after the
date hereof.
5.20 ABSENCE OF OTHER LIABILITIES. Except as disclosed on SCHEDULE 5.20,
neither FirstBancorporation nor any of the Subsidiaries has any Liabilities
other than (i) Liabilities reserved against or otherwise disclosed in the
Financial Statements or the notes to the Financial Statements, and
(ii) Liabilities incurred after December 31, 1998 in the ordinary course of
business consistent (in amount and kind) with past practice or Liabilities
incurred in accordance with the specific terms of this Agreement (and
transaction fees and expenses not materially in excess of the estimates set
forth in SCHEDULE 1.1). Except as disclosed in SCHEDULE 5.20, no facts or
circumstances exist that would reasonably be expected to serve as the basis
for any other Liabilities of FirstBancorporation or any of the Subsidiaries
that would be required to be disclosed on SCHEDULE 5.20.
5.21 ABSENCE OF CHANGES OR EVENTS. Since December 31, 1998, neither
FirstBancorporation nor any Subsidiary has: (i) issued any shares of its
capital stock or declared, set aside or paid any dividend or distribution
with respect to shares of its capital stock other than the issuance of
shares pursuant to the exercise of FirstBancorporation Options and
dividends and distributions to FirstBancorporation by the Subsidiaries;
(ii) made any material changes in any Benefit Plan; (iii) granted or made
any commitments with respect to any increases in any form of compensation
to its employees except in the ordinary course of business consistent with
past practices; (iv) entered into any Material Contract or conducted its
business other than in the ordinary course of business consistent with past
practices and this Agreement; or (v) suffered any Material Adverse Effect.
5.22 REPORTS.
(a) Since December 31, 1995, FirstBancorporation has filed on a timely
basis all reports, registrations and statements, together with any
amendments, that it was required to file with the SEC, including without
limitation Forms 10-KSB, Forms 10-QSB and proxy statements (collectively,
the "SEC REPORTS"). As of their respective dates, the SEC Reports complied
in all material respects with all of the rules and regulations promulgated
by the SEC and did 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 in
which they were made, not misleading.
(b) Each of FirstBancorporation and the Subsidiaries has filed and
delivered or made available to FNC to the extent permitted by Law all
forms, reports, statements and documents, together with any amendments
required to be made with respect thereto, required to be filed by such
Person with the OCC, the FDIC and the Board of Governors of the Federal
Reserve System and any other Regulatory Authority since December 31, 1995
(other than the SEC Reports) (collectively, the "REGULATORY REPORTS"). The
Regulatory Reports at the time filed and amended were in all material
respects accurate and complete and complied in all material respects with
all applicable Laws and the other requirements applicable thereto. As of
its respective date, each such Regulatory Report 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.
(c) None of the information supplied or to be supplied by
FirstBancorporation or any of the Subsidiaries in writing for inclusion in
any document to be filed by FNC or FirstBancorporation or any of the
Subsidiaries with the OCC, the FDIC, the Board of Governors of the Federal
Reserve System or any other Regulatory Authority in connection with the
actions contemplated hereby is or will be false or misleading with respect
to any material fact, nor does it or will it omit to state any material
fact necessary to make such information not misleading. All documents that
FirstBancorporation or any of the Subsidiaries is responsible for filing
with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with
the provisions of applicable Law.
5.23 ACCOUNTING, TAX AND REGULATORY MATTERS. Neither FirstBancorporation
nor any of the Subsidiaries has taken any action, and to the Knowledge of
FirstBancorporation there is no fact or circumstance, that is reasonably
likely to (i) prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as
a reorganization within the meaning of Section 368(a) of the Code, or
(ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in SECTION 9.1(b) of this Agreement or result in
the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
5.24 CHARTER PROVISIONS. Each of FirstBancorporation and the Subsidiaries
has taken all action so that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any
Person under the articles of incorporation, articles of association,
bylaws, or other governing instruments of FirstBancorporation and the
Subsidiaries or restrict or impair the ability of FNC or any FNC Subsidiary
to vote or otherwise to exercise the rights of a shareholder with respect
to shares of FirstBancorporation and the Subsidiaries that may be directly
or indirectly acquired or controlled by it.
5.25 CERTAIN REGULATED BUSINESSES. Neither FirstBancorporation nor
any of the Subsidiaries is an "investment company" as defined in the
Investment Company Act of 1940, as amended, nor is it a "public utility
holding company" as defined in the Public Utility Holding Company Act of
1935, as amended.
5.26 COMMISSIONS. No broker, finder or other Person is entitled to
any brokerage fees, commissions or finder's fees from FirstBancorporation
or any Subsidiary in connection with the transactions contemplated hereby
by reason of any action taken by FirstBancorporation, any of the
Subsidiaries or any of FirstBancorporation's shareholders other than the
payment of fees to RP Financial LC in an amount not to exceed $42,500, plus
reasonable out-of-pocket expenses.
5.27 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS. Subject to
the accuracy of the representations contained in SECTION 6.10, the
information supplied by FirstBancorporation or any Subsidiary in writing
for inclusion in the registration statement (the "REGISTRATION STATEMENT")
covering the shares of FNC Stock to be issued pursuant to this Agreement
shall not, at the time the Registration Statement (including any amendments
or supplements thereto) is declared effective by the SEC, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading. The joint proxy statement/prospectus that may be sent to
the shareholders of FNC to consider the Merger and the issuance of shares
of FNC Stock in connection with the Merger (if the Merger is structured as
a merger of FirstBancorporation with and into FNC as provided by
SECTION 2.1 of this Agreement), and that will be sent to the shareholders
of FirstBancorporation in connection with the meeting of the shareholders
of FirstBancorporation to consider the Merger (all such meetings
collectively, the "SHAREHOLDER MEETINGS") (such proxy statement/prospectus
as amended or supplemented is referred to herein as the "JOINT PROXY
STATEMENT/PROSPECTUS") will not, on the date the Joint Proxy
Statement/Prospectus is first mailed to shareholders, at the time of the
Shareholder Meetings and at the Effective Time, (a) contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, or (b) contain any statement which (i) at
the time and in light of the circumstances under which it was made is false
or misleading with respect to any material fact or (ii) omits to state any
material fact necessary to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Shareholder Meetings which has become false or misleading. If at any time
prior to the Effective Time any event relating to FirstBancorporation or
any Subsidiary or any of their Affiliates, officers or directors should be
discovered by FirstBancorporation or any Subsidiary which should be set
forth in an amendment to the Registration Statement or a supplement to the
Joint Proxy Statement/Prospectus, FirstBancorporation will promptly inform
FNC. The Joint Proxy Statement/Prospectus shall comply in all material
respects with the requirements of the Securities Laws. Notwithstanding the
foregoing, neither FirstBancorporation nor any Subsidiary makes any
representation or warranty with respect to any information supplied by FNC
or any FNC Subsidiary which is contained or incorporated by reference in,
or furnished in connection with the preparation of, the Registration
Statement or the Joint Proxy Statement/Prospectus.
5.28 TAKEOVER LAWS. FirstBancorporation has taken all actions
required to be taken by it in order to exempt this Agreement and the
transactions contemplated hereby from the requirements of any Takeover Laws
applicable to FirstBancorporation and the Subsidiaries.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF FNC
FNC represents and warrants to FirstBancorporation as follows:
6.1 ORGANIZATION.
(a) FNC is a corporation duly organized, validly existing and in good
standing under the Laws of the State of South Carolina, and is duly
registered as a bank holding company under the Act. Each of the FNC
Subsidiaries is a national banking association organized and existing under
the laws of the United States of America. Each of FNC and the FNC
Subsidiaries has the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its Assets.
(b) Each FNC Subsidiary is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and
all deposits in the FNC Subsidiaries are insured by the FDIC to the maximum
extent permitted by applicable Law.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) FNC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of and
performance of its obligations under this Agreement and the other documents
contemplated hereby, and the consummation of the transactions contemplated
herein, including the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of FNC, subject
only to the approval of this Agreement by the shareholders of FNC. This
Agreement represents a legal, valid, and binding obligation of FNC,
enforceable against it in accordance with its terms (except in all cases as
such enforceability may be limited by a court acting in equity, applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the enforcement of creditors' rights generally).
(b) Neither the execution and delivery of this Agreement by FNC, nor the
consummation by FNC of the transactions contemplated hereby, nor compliance
by FNC with any of the provisions hereof, will (i) conflict with or result
in a breach of any provision of (A) the articles of association or bylaws
of any FNC Subsidiary, or (B) the articles of incorporation or bylaws of
FNC, 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
FNC or any FNC Subsidiary under, (A) any "material contract" (within the
meaning of Item 601(b)10 of the SEC's Regulation S-K) or Material Permit of
FNC or any FNC Subsidiary or (B) any material loan, account, note or other
receivable reflected as an asset on the books and records of FNC and the
FNC Subsidiaries, or (iii) subject to obtaining the requisite Consents
referred to in SECTION 9.1(b) of this Agreement, violate any Law or Order
applicable to FNC or any FNC Subsidiary or any of their respective Assets
in a manner that would impose any material liability, obligation or
limitation on FNC or any FNC Subsidiary.
(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 Internal Revenue Service or the Pension Benefit
Guaranty Corporation with respect to any employee benefit plans, and other
than Consents, filings, or notifications that are to be made or obtained
pursuant to this Agreement, no notice to, filing with, or Consent of, any
Governmental Authority is necessary for the consummation by FNC of the
Merger and the other transactions contemplated in this Agreement.
(d) Assuming the Board of Directors of FNC recommends this Agreement to
the shareholders of FNC, the affirmative vote of the holders of two-thirds
of the outstanding shares of FNC Stock is the only vote of the holders of
any class or series of FNC capital stock necessary to approve this
Agreement and the Merger.
6.3 CAPTIAL STOCK.
(a) The authorized capital stock of FNC consists of 40,000,000 shares of
FNC Stock, of which 5,821,775 shares were issued and outstanding as of
December 31, 1998, which constitutes FNC's only issued and outstanding
securities as of such date. Each outstanding share of FNC Stock (i) has
been duly authorized and is validly issued and outstanding, and is fully
paid and nonassessable, (ii) has not been issued in violation of the
preemptive rights of any shareholders, and (iii) has been issued in
compliance with the Securities Laws.
(b) Shares of FNC Stock to be issued hereunder are duly authorized and,
upon issuance, will be validly issued and outstanding and fully paid and
nonassessable, free and clear of any Liens. Shares of FNC Stock to be
issued hereunder will be issued in compliance with the Securities Laws.
None of the shares of FNC Stock to be issued pursuant to this Agreement
will be issued in violation of any preemptive rights of the current or past
shareholders of FNC.
6.4 FNC'S FINANCIAL STATEMENTS. FNC's consolidated audited statements of
income, cash flow and shareholders' equity for the years ended December 31,
1998, 1997 and 1996 and audited balance sheet as of December 31, 1998 and
1997, together with the notes thereto, which have been provided or made
available to FirstBancorporation (collectively, the "FNC FINANCIAL
STATEMENTS"), have been prepared in accordance with Generally Accepted
Accounting Principles and fairly present in all material respects the
results of operations and financial position of FNC for the periods and as
of the dates set forth therein.
6.5 REPORTS. Since December 31, 1995, FNC has filed on a timely basis all
reports, registrations and statements, together with any required
amendments thereto, that it was required to file with: (i) the SEC,
including without limitation Forms 10-K, Forms 10-Q and proxy statements;
and (ii) other Regulatory Authorities (collectively, the "REPORTS"). The
Reports at the time filed and amended were in all material respects
accurate and complete and complied in all material respects with all
applicable Laws and the other requirements applicable thereto. As of its
respective date, each such Report did 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 materially misleading.
6.6 ABSENCE OF CHANGES. Since December 31, 1998, FNC and the FNC
Subsidiaries have conducted their respective businesses in the ordinary and
usual course (excluding the incurrence of expenses in connection with this
Agreement and the transactions contemplated hereby), and FNC has not
incurred a Material Adverse Effect.
6.7 LEGAL PROCEEDINGS. Except as disclosed in the Reports filed by FNC
prior to the date hereof, there is no Litigation instituted or pending or,
to the Knowledge of FNC, threatened against FNC or any FNC Subsidiary, or
against any Asset, interest or right of FNC or any FNC Subsidiary, that is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNC, nor are there any Orders outstanding against FNC or
any FNC Subsidiary that are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FNC.
6.8 ACCOUNTING, TAX AND REGULATORY MATTERS. Neither FNC nor any of the
FNC Subsidiaries has taken any action, and to the Knowledge of FNC there is
no fact or circumstance, that is reasonably likely, to (i) prevent the
Merger from qualifying for pooling-of-interests accounting treatment or as
a reorganization within the meaning of Section 368(a) of the Code, or
(ii) materially impede or delay obtaining any Consents of Regulatory
Authorities referred to in SECTION 9.1(b) of this Agreement or result in
the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
6.9 COMMISSIONS. No broker, finder or other Person is entitled to
any brokerage fees, commissions or finder's fees from FNC or any FNC
Subsidiary in connection with the transactions contemplated hereby by
reason of any action taken by FNC or any of the FNC Subsidiaries other than
the payment of fees to The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ & Company.
6.10 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS. Subject to
the accuracy of the representations contained in SECTION 5.27, the
information supplied by FNC or any FNC Subsidiary in writing for inclusion
in the Registration Statement shall not, at the time the Registration
Statement (including any amendments or supplements thereto) is declared
effective by the SEC, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. The Joint Proxy
Statement/Prospectus will not, on the date the Joint Proxy
Statement/Prospectus is first mailed to shareholders, at the time of the
Shareholder Meetings and at the Effective Time, (a) contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of circumstances under which they
were made, not misleading, or (b) contain any statement which (i) at the
time and in light of the circumstances under which it was made is false or
misleading with respect to any material fact or (ii) omits to state any
material fact necessary to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Shareholder Meetings which has become false or misleading. If at any time
prior to the Effective Time any event relating to FNC, the FNC Subsidiaries
or any of their Affiliates, officers or directors should be discovered by
FNC or any FNC Subsidiary which should be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy
Statement/Prospectus, FNC will promptly inform FirstBancorporation. The
Joint Proxy Statement/Prospectus shall comply in all material respects with
the requirements of the Securities Laws. Notwithstanding the foregoing,
FNC makes no representation or warranty with respect to any information
supplied by FirstBancorporation or the Subsidiaries which is contained or
incorporated by reference in, or furnished in connection with the
preparation of, the Registration Statement or the Joint Proxy
Statement/Prospectus.
6.11 TAX MATTERS. Each of FNC and the FNC Subsidiaries has timely filed
(including extension periods) all Tax Returns required to be filed for any
period ending on or before the date hereof, or if applicable, any period
that includes such date. All such Tax Returns are correct and complete in
all material respects. Each of FNC and the FNC Subsidiaries has timely
paid or will timely pay or cause to be paid all Taxes (whether or not shown
on any Tax Return) when due to any taxing authority with respect to all
such periods. Neither FNC nor any of the FNC Subsidiaries has received
written notice that the Internal Revenue Service or any other taxing
authority has asserted against FNC or any of the FNC Subsidiaries any
deficiency or claim for additional Taxes in connection therewith which
could reasonably result in a material liability to FNC and neither FNC nor
any of the FNC Subsidiaries reasonably expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed.
Neither FNC nor any of the FNC Subsidiaries has filed a consent under Code
341(f) concerning collapsible corporations. Neither FNC nor any of the
FNC Subsidiaries has made any payments, nor is it obligated to make any
payments, nor is it a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code 280G. Neither FNC nor any of the FNC Subsidiaries
has been a United States real property holding corporation within the
meaning of Code 897(c)(2) during the applicable period specified in Code
897(c)(1)(A)(ii). To the knowledge of FNC, each of FNC and the FNC
Subsidiaries has disclosed on the federal Income Tax Returns of FNC and the
FNC Subsidiaries all positions taken therein that could give rise to a
substantial understatement of federal Income Taxes within the meaning of
Code 6662. Neither FNC nor any of the FNC Subsidiaries has been a member
of an affiliated group (as defined by the Code) filing a consolidated
federal income tax return with any Person other than FNC or the FNC
Subsidiaries nor does it have any liability for the Income Taxes of any
Person other than FNC and the FNC Subsidiaries under Treas. Reg. 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee
or successor, by contract, or otherwise. The books and records of FNC and
each of the FNC Subsidiaries accurately and completely set forth in all
material respects the basis of FNC and the FNC Subsidiaries in its assets
and the amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign tax, or excess charitable
contribution allocable to FNC or the FNC Subsidiaries, all as of December
31, 1998. The unpaid Income Taxes of FNC and the FNC Subsidiaries did not,
as of December 31, 1998, exceed in any material respect the reserve for tax
liability (rather than any reserve for deferred taxes established to
reflect timing differences between book and tax income) set forth on the
balance sheet as of such date contained in the FNC Financial Statements,
and any such unpaid Income Taxes do not exceed in any material respect that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past practices of FNC in filing its Income Tax returns.
Neither FNC nor any of the FNC Subsidiaries has been granted nor has FNC or
any of the FNC Subsidiaries been given any waiver of any statute of
limitations with respect to, or any extension of a period for the
assessment of any Tax. All deposits required by law to be made by FNC or
the FNC Subsidiaries with respect to employees' withholding taxes have been
made. Each of FNC and the FNC Subsidiaries has withheld and paid in all
material respects all Taxes required to have been withheld and paid in
connection with the amounts paid or owing to any employee, independent
contractor, creditor, shareholder or other third party. There are no Liens
for the payment of Taxes on any assets of FNC or any of the FNC
Subsidiaries except for statutory Liens for property Taxes that are not
past due as to payment. There are no disputes or claims pending against
FNC or any of the FNC Subsidiaries for past due Taxes in a material amount,
and, to the Knowledge of FNC, there is no claim or dispute threatened
against FNC or any of the FNC Subsidiaries, or any basis for such a claim
or dispute, for past due Taxes. During the past five years, no such claim
has been made by an authority in a jurisdiction where FNC or any of the FNC
Subsidiaries does not file Tax Returns. As of the date hereof, there are
not any matters under discussion with any federal, state, local or other
authority with respect to any additional Taxes relating to FNC or any of
the FNC Subsidiaries. All amounts required to be paid by FNC or any of the
FNC Subsidiaries as estimated Income Taxes under Code Section 6655, and any
comparable provisions of state or local statutes, have been duly paid,
except where the failure to make such payments would not, individually or
in the aggregate with other such nonpayments, result in a material
liability to FNC. There are no tax rulings, requests for rulings or
closing agreements relating to FNC or any of the FNC Subsidiaries that
could affect its liability for Income Taxes for any period after the
Closing Date. Any adjustment of Taxes of FNC or any of the FNC
Subsidiaries made by the Internal Revenue Service in any examination which
is required to be reported to state, foreign, or local taxing authorities
has been so reported and any additional Taxes due with respect thereto have
been paid. To the Knowledge of the FNC, there are no facts that, f known
to any taxing authority, would likely result in the issuance of a notice of
proposed deficiency or similar notice of intention to assess Income Taxes
in any material amount against FNC or any of the FNC Subsidiaries. Neither
FNC nor any of the FNC Subsidiaries has taken any action not in accordance
with its past practices that would have the effect of deferring any tax
liability for FNC or any of the FNC Subsidiaries from any taxable period
ending on or before the Closing Date to any taxable period ending after the
Closing Date. No material amount of income recognized, for federal, state,
local or foreign Income Tax purposes, by FNC or any of the FNC Subsidiaries
during the period beginning January 1, 1999 and ending on the Closing Date
will be derived other than in the ordinary course of business or arise from
transactions of a type not reflected on the relevant return for the taxable
period ending on December 31, 1998. Neither FNC nor any of the FNC
Subsidiaries has any deferred gain or loss arising from deferred
intercompany transactions (as described in Section 1.1502-13 of the
Treasury Regulations) with respect to the stock or obligations of any other
member of FNC's or any of the FNC Subsidiaries' affiliated group (as
described in Section 1.1502-14 of the Treasury Regulations). No property
of FNC or any of the FNC Subsidiaries is "tax exempt use property" within
the meaning of Section 168(h) of the Code. Except as set forth on SCHEDULE
6.11, neither FNC nor any of the FNC Subsidiaries is required to include in
income any adjustment pursuant to Section 481(a) of the Code (or similar
provisions of other law or regulation) by reason of a change in an
accounting method, nor does FNC or any of the FNC Subsidiaries have any
knowledge that the Internal Revenue Service (or other taxing authority) has
proposed or is considering any such change in an accounting method.
Neither FNC nor any of the FNC Subsidiaries is a party to an interest rate
swap, currency swap, or similar transaction. Neither FNC nor any of the
FNC Subsidiaries has any corporate acquisition indebtedness, as defined in
Section 279(b) of the Code, or any obligations described in Section
279(a)(2) of the Code. The accruals for deferred federal income taxes
reflected in the FNC Financial Statements, for the period ended
December 31, 1998 are adequate to cover any deferred income tax liability
of FNC and each of the FNC Subsidiaries determined in accordance with
Generally Accepted Accounting Principles through the date thereof. All
Income Taxes as to which FNC and each of the FNC Subsidiaries may be liable
which relate to period ending on or before the December 31, 1998 have been
adequately accrued or reserved in the FNC Financial Statements as of such
date in accordance with Generally Accepted Accounting Principles.
6.12 LOANS, ACCOUNTS, NOTES AND OTHER RECIEVABLES; LOAN COLLATERAL.
(a) All loans, accounts, notes and other receivables reflected as assets
on each of FNC's and the FNC Subsidiaries' books and records (i) have
resulted from bona fide business transactions in the ordinary course of
such Person's operations, (ii) were to the Knowledge of FNC made in
compliance with such Person's standard loan policies and procedures, and
(iii) are owned by such Person free and clear of all Liens (other than
Permitted Liens), or other exceptions to title or to the ownership or
collection rights of any other person or entity.
(b) All records of FNC and the FNC Subsidiaries regarding all outstanding
loans, accounts, notes and other receivables are accurate in all material
respects, and with respect to each loan that FNC's or any of the FNC
Subsidiaries' loan documentation indicates is secured by Loan Collateral,
to the Knowledge of FNC such loan is secured by valid, perfected and
enforceable liens on all such Loan Collateral having the priority described
in such Person's documentation of such loan.
(c) Each material loan reflected as an asset on FNC's or any of the FNC
Subsidiaries' books as of the date hereof, and each material guaranty
therefor, is the legal, valid and binding obligation of the obligor or
guarantor thereon, and no defense, offset or counterclaim has been asserted
with respect to any such loan or guaranty.
(d) SCHEDULE 6.12 lists as of the date hereof: (i) each loan, extension
of credit or other Asset that is classified by any Regulatory Authority or
FNC or any of the FNC Subsidiaries as "Loss", "Doubtful", "Substandard" or
"Special Mention" (or otherwise by words of similar import) or that FNC or
any of the FNC Subsidiaries has designated as a special asset or for
special handling or placed on any "watch list" because of concerns
regarding the ultimate collectibility or deteriorating condition of such
Asset or any obligor or Loan Collateral therefor; and (ii) each loan or
extension of credit of FNC or any of the FNC Subsidiaries that is past due
30 days or more as to the payment of principal and/or interest, or as to
which FNC or any FNC Subsidiary has given written notice of default which
has not been cured, or is to the Knowledge of FNC the subject of a
proceeding in bankruptcy, or as to which the obligor otherwise has
indicated any inability or intention not to repay such loan or extension of
credit; provided that SCHEDULE 6.12 shall list only such loans, extensions
of credit or Assets described in subclauses (i) and (ii) above that have
an original principal amount in excess of $250,000.
(e) Each of the loans and other extensions of credit by FNC or any of the
FNC Subsidiaries (with the exception of those loans and extensions of
credit listed on SCHEDULE 6.12) is as of the date hereof to the Knowledge
of FNC collectible in the ordinary course of such Person's business in an
amount that is not less than the amount at which it is carried on such
Person's books and records net of reserves reflected on such Person's books
and records.
(f) Each of FNC's and the FNC Subsidiaries' reserve for possible loan
losses shown in the FNC Financial Statements (i) has been established in
conformity with Generally Accepted Accounting Principles and all applicable
requirements of applicable Regulatory Authorities, (ii) in the reasonable
opinion of such Person's management, as of the respective dates referenced
therein, is reasonable in view of the size and character of such Person's
loan portfolio, current economic conditions and other relevant factors, and
(iii) in the reasonable opinion of such Person's management, as of the
respective dates referenced therein, is adequate to provide for losses
relating to or the risk of loss inherent in such Person's loan portfolio.
(g) Neither the terms of any loan made by FNC or any of the FNC
Subsidiaries, nor any of the loan documentation, nor the manner in which
such loans have been administered and serviced, violates in any material
respect any Law applicable thereto, including without limitation, the
Truth-in-Lending Act, the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, Regulations O and Z of the Federal Reserve Board,
the Community Reinvestment Act of 1977, the Equal Credit Opportunity Act,
all as amended, and state laws, rules and regulations relating to consumer
protection, installment sales and usury, except where any such violation
would not, individually or in the aggregate with all other such violations,
have a Material Adverse Effect on FNC.
6.13 SECURITIES PROTFOLIO AND INVESTMENTS. All securities owned by FNC or
any of the FNC Subsidiaries (whether owned of record or beneficially) are
held free and clear of all Liens (other than Permitted Liens). There are
no voting trusts or other agreements or undertakings to which FNC or any of
the FNC Subsidiaries is a party with respect to the voting of any such
securities. Except for fluctuations in the market values of United States
Treasury and agency or municipal securities, since December 31, 1998, there
has been no significant deterioration or material adverse change in the
quality, or any material decrease in the value, of the securities portfolio
of FNC and the FNC Subsidiaries, taken as a whole.
6.14 ENVIRONMENTAL MATTERS.
(a) All of the Real Property owned or leased by FNC or any FNC Subsidiary
and all of the Loan Collateral that is in the nature of real property is
and has been in compliance with all Environmental Laws, except where any
such noncompliance would not, individually or in the aggregate with all
other such noncompliances, have a Material Adverse Effect on FNC.
(b) As of the date hereof, there is no Litigation pending or, to the
Knowledge of FNC, threatened, before any court, Governmental Authority,
board or other forum relating to the Real Property owned or leased by FNC
or any FNC Subsidiary or any Loan Collateral that is in the nature of real
property in which FNC or any FNC Subsidiary has been or may be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating
to the release into the environment of any Hazardous Material, and to the
Knowledge of FNC there is no reasonable basis for any such Litigation.
(c) There have been no releases of Hazardous Materials in, on, under or
affecting any of the Real Property owned or leased by FNC or any FNC
Subsidiary or any Loan Collateral that is in the nature of real property,
except where any release would not, individually or in the aggregate with
all other such releases, have a Material Adverse Effect on FNC.
6.15 COMPLIANCE WITH LAWS. Each of FNC and the FNC Subsidiaries has in
effect all Permits required for it to own, lease, or operate its Assets and
to carry on its business as now conducted, and there has occurred no
Default under any Material Permit. Except as disclosed in SCHEDULE 6.15,
neither FNC nor any of the FNC Subsidiaries: (i) is in material violation
of any Laws, Orders, or Permits applicable to its business or employees
conducting its business; and (ii) has since December 31, 1995, received any
notification or communication from any Governmental Authority (A) asserting
that it is in material violation of any of the Laws or Orders that such
Governmental Authority enforces, (B) threatening to revoke any Permits, or
(C) requiring it to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any resolution or similar undertaking that
restricts the conduct of its business or in any manner relates to its
capital adequacy, its credit or reserve policies, its management or the
payment of dividends.
6.16 LABOR RELATIONS; EMPLOYMENT MATTERS.
(a) Each of FNC and the FNC Subsidiaries is in substantial compliance
with all laws and other obligations relating to employment, denial of
employment or employment opportunity and termination of employment.
(b) There is no controversy pending or, to the Knowledge of FNC,
threatened between FNC or any of the FNC Subsidiaries and any of its
present or former officers, directors, supervisory personnel or any group
of its employees, except where any such controversy would not, individually
or in the aggregate with all other such controversies, have a Material
Adverse Effect on FNC.
6.17 ABSENCE OF OTHER LIABILITIES. Except as disclosed on SCHEDULE 6.17,
neither FNC nor any of the FNC Subsidiaries has any Liabilities other than
(i) Liabilities reserved against or otherwise disclosed in the FNC
Financial Statements or the notes thereto, and (ii) Liabilities incurred
after December 31, 1998 in the ordinary course of business consistent (in
amount and kind) with past practice or Liabilities incurred accordance with
this Agreement (including transaction fees and expenses incurred in
connection with the Merger). Except as disclosed in SCHEDULE 6.17, no
facts or circumstances exist that would reasonably be expected to serve as
the basis for any other Liabilities of FNC or any of the FNC Subsidiaries
that would be required to be disclosed on SCHEDULE 6.17. Neither FNC nor
any of the FNC Subsidiaries has received, or has reason to believe that it
will not continue to receive, a rating of less than "satisfactory" on any
Year 2000 Report of Examination of any Regulatory Authority.
6.18 CERTAIN REGULATED BUSINESSES. Neither FNC nor any of the FNC
Subsidiaries is an "investment company" as defined in the Investment
Company Act of 1940, as amended, nor is it a "public utility holding
company" as defined in the Public Utility Holding Company Act of 1935, as
amended.
6.19 TAKEOVER LAWS. FNC has taken all actions required to be taken by it
in order to exempt this Agreement and the transactions contemplated hereby
from the requirements of any Takeover Laws applicable to FNC and the FNC
Subsidiaries.
ARTICLE VII
COVENANTS
7.1 COVENANTS OF FIRSTBANCORPORATION.
(a) Ordinary Conduct of Business. Except as otherwise contemplated
by this Agreement, FirstBancorporation will, and will cause each of the
Subsidiaries to, from the date of this Agreement to the Closing, conduct
its business in the ordinary course in substantially the same manner as
presently conducted and will make reasonable commercial efforts consistent
with past practices to preserve its relationships with other Persons.
Additionally, except as otherwise contemplated by this Agreement or as set
forth on SCHEDULE 7.1(a), FirstBancorporation will not, nor will it permit
any of the Subsidiaries to, do any of the following without the prior
written consent of FNC:
(i) amend its articles of incorporation, articles of association or
bylaws;
(ii) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver any stock, options or equity equivalents of any
class or any other of its securities (other than the issuance of shares of
FirstBancorporation Stock pursuant to the exercise of FirstBancorporation
Options outstanding on the date of this Agreement), or amend any of the
terms of any securities outstanding as of the date hereof;
(iii) (A) split, combine or reclassify any shares of its capital
stock, (B) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, or (C) redeem or otherwise acquire any of its
securities;
(iv) (A) incur or assume any long-term debt or issue any debt
securities or, except under existing lines of credit and in amounts not
material to it, incur or assume any short-term debt other than in the
ordinary course of business, (B) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person, (C) make any capital contributions
to, or investments in, any other Person that, individually or in the
aggregate, are greater than $10,000, or any new loan, loan renewal or
advance to any Person or its Affiliates that, individually or in the
aggregate, is greater than $350,000 other than those loans, renewals or
advances for which FirstBancorporation or any Subsidiary has committed to
make as of the date hereof (provided that any consent of FNC to make any
such loan, loan renewal or advance shall not be unreasonably withheld),
(D) pledge or otherwise encumber shares of its capital stock or
(E) mortgage or pledge any of its Assets, tangible or intangible, or create
or suffer to exist any Lien thereupon, except for Permitted Liens;
(v) adopt or amend any Benefit Plan;
(vi) grant to any director or senior officer any increase in his or
her compensation or grant to any employee an increase in his or her
compensation other than in the ordinary course of business consistent with
past practice, or pay or agree to pay to any such person any bonus,
severance or termination payment except in accordance with this Agreement,
specifically including any such payment that becomes payable by virtue of
the Merger or upon the termination of such person after the Closing;
(vii) enter into or amend any employment Contract;
(viii) (A) acquire, sell, lease or dispose of any material Assets
outside the ordinary course of business, (B) enter into any Contract or
transaction outside the ordinary course of business consistent with past
practice, or (C) acquire, lease, dispose or agree to acquire, lease or
dispose of any Real Property;
(ix) (A) voluntarily change or modify any of the accounting principles
or practices used by it or (B) revalue in any material respect any of its
Assets, including without limitation writing down the value of inventory or
writing off notes or accounts receivable other than in the ordinary course
of business;
(x) (A) acquire any Person (or division thereof), any equity interest
therein or the assets thereof; (B) enter into, cancel or modify any
Contract other than in the ordinary course of business consistent with past
practices; (C) enter into, cancel or modify any Material Contract (provided
that any consent of FNC to renew a Material Contract shall not be
unreasonably withheld); (D) authorize any new capital expenditure or
expenditures that, individually or in the aggregate, are in excess of
$10,000 (provided that any consent of FNC to authorize such expenditure or
expenditures shall not be unreasonably withheld); or (E) enter into or
amend any Contract with respect to any of the foregoing;
(xi) pay, discharge or satisfy, cancel, waive or modify any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
in the ordinary course of business of liabilities reflected or reserved
against in or contemplated by the Financial Statements or on SCHEDULE 5.20,
or incurred in the ordinary course of business consistent with past
practices or in connection with this Agreement and the Merger;
(xii) settle or compromise any pending or threatened suit, action
or claim relating to the transactions contemplated hereby;
(xiii) take, or agree in writing or otherwise to take, any action
that would make any of the representations or warranties of it contained in
this Agreement untrue or incorrect in any material respect or would result
in any of the conditions set forth in this Agreement not being satisfied;
or
(xiv) agree, whether in writing or otherwise, to do any of the
foregoing.
(b) No Solicitation. From the date of this Agreement until the
Effective Time or the termination of this Agreement pursuant to its terms,
FirstBancorporation agrees that it will not and will not permit any of the
Subsidiaries, or any of its or their officers, directors, employees,
representatives, agents, or Affiliates, including, without limitation, any
investment banker, attorney or accountant retained by FirstBancorporation
or any of the Subsidiaries (collectively, the "REPRESENTATIVES") to,
directly or indirectly, (i) initiate, solicit, encourage or otherwise
facilitate (including by way of furnishing information), any inquiries or
the making of any proposal or offer that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal (as defined below), or
(ii) enter into or maintain or continue discussions or negotiate with any
Person in furtherance of such inquiries or to obtain an Acquisition
Proposal, or (iii) agree to, approve, recommend, or endorse any Acquisition
Proposal, or authorize or permit any of the Subsidiaries or Representatives
to take any such action and FirstBancorporation shall promptly notify FNC
of any such inquiries and proposals received by FirstBancorporation or any
of the Subsidiaries or Representatives, relating to any of such matters;
provided, however, that nothing contained in this Agreement shall prohibit
the board of directors of FirstBancorporation from (A) furnishing
information to, or engaging in discussions or negotiations with, any Person
in response to an unsolicited bona fide written Acquisition Proposal; or
(B) recommending such an unsolicited bona fide written Acquisition Proposal
to the shareholders of FirstBancorporation, if and only to the extent that
(1) the board of directors of FirstBancorporation concludes in good faith
(after consultation with its financial advisors) that such Acquisition
Proposal would constitute a Superior Proposal (as hereinafter defined),
(2) the board of directors of FirstBancorporation determines in good faith
(after consultation with outside legal counsel) that the failure to take
such action would result in a breach by the board of directors of
FirstBancorporation of its fiduciary duties to FirstBancorporation
shareholders under the Laws of South Carolina, (3) prior to furnishing such
information to, or entering into discussions or negotiations with, such
Person, FirstBancorporation provides prompt written notice to FNC to the
effect that it is furnishing information to, or entering into discussions
or negotiations with, such Person (which notice shall identify the nature
and material terms of the proposal) and (4) prior to providing any
information or data to any Person in connection with an Acquisition
Proposal by any such Person, the board of directors of FirstBancorporation
receives from such Person an executed confidentiality agreement with
provisions no less favorable to FirstBancorporation than the
confidentiality agreement previously entered into between
FirstBancorporation and FNC in connection with the consideration of the
Merger. FirstBancorporation agrees that it will, and will cause its
Representatives to, immediately cease and cause to be terminated any
existing activities, discussions, or negotiations with any parties
regarding any Acquisition Proposal. FirstBancorporation agrees to keep FNC
fully and timely informed of the status of any discussions, negotiations,
furnishing of non-public information, or other activities relating to an
Acquisition Proposal.
For purposes of this Agreement, "ACQUISITION PROPOSAL" means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by this Agreement) involving FirstBancorporation
or the Subsidiaries: (i) any merger, reorganization, consolidation, share
exchange, recapitalization, business combination, liquidation, dissolution,
or other similar transaction involving, or any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of all or any significant
portion of the assets or 20% or more of the equity securities of,
FirstBancorporation or any of the Subsidiaries, in a single transaction or
series of related transactions which could reasonably be expected to
interfere with the completion of the Merger; or (ii) any tender offer or
exchange offer for 20% or more of the outstanding shares of capital stock
of FirstBancorporation or the filing of a registration statement under the
Securities Laws in connection therewith.
For purposes of this Agreement, "SUPERIOR PROPOSAL" means a bona fide
Acquisition Proposal received by FirstBancorporation after the date hereof
from a third Person that the board of directors of FirstBancorporation
determines in its good faith judgment to be more favorable to
FirstBancorporation's shareholders than the Merger (based on, among other
things, the written opinion of FirstBancorporation's independent financial
advisor that the value of the consideration to FirstBancorporation's
shareholders provided for in such proposal exceeds the value of the
consideration to FirstBancorporation's shareholders provided for in the
Merger) and for which financing, to the extent required, is then committed
or which, in the good faith judgment of the board of directors of
FirstBancorporation (based on the written advice of FirstBancorporation's
independent financial advisor), is reasonably capable of being obtained by
such third Person.
(c) Charter Provisions. FirstBancorporation shall take all necessary
action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby
do not and will not result in the grant of any rights to any Person under
the articles of incorporation, articles of association, bylaws or other
governing instruments of FirstBancorporation or any Subsidiary or restrict
or impair the ability of FNC to exercise the rights of a shareholder with
respect to shares of a FirstBancorporation Subsidiary that are to be
acquired or controlled by it.
(d) Agreements of Affiliates. Not later than the 15th day prior to
the mailing of the Joint Proxy Statement/Prospectus to the shareholders of
FirstBancorporation, FirstBancorporation shall deliver to FNC a schedule of
each Person that, to the Knowledge of FirstBancorporation, is or is
reasonably likely to be, as of the date of the FirstBancorporation
Shareholders' Meeting, deemed to be an "affiliate" of FirstBancorporation
as that term is used in Rule 145 under the Securities Act of 1933, as
amended, or SEC Accounting Series Releases 130 and 135.
FirstBancorporation shall use its reasonable best efforts to cause each
Person who may be deemed to be an affiliate of FirstBancorporation as
described above to execute and deliver to FirstBancorporation and FNC on or
before the date of mailing of the Joint Proxy Statement/Prospectus an
agreement (each an "AFFILIATE AGREEMENT") in the form attached as EXHIBIT B
to this Agreement. Shares of FNC Stock issued to an affiliate of
FirstBancorporation described above in exchange for shares of
FirstBancorporation Stock shall not be transferable until such time as such
transfer would not affect the treatment of the Merger as a "pooling of
interest" under Generally Accepted Accounting Principles (which under
current Law would be after financial results covering at least 30 days of
combined operations of FNC and FirstBancorporation have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies). Shares of FNC Stock issued to an affiliate of
FirstBancorporation described above in exchange for shares of
FirstBancorporation Stock shall not be transferable except in accordance
with the Securities Laws and the rules and regulations thereunder,
including Rules 144 and 145 under the Securities Act of 1933, as amended.
FNC shall be entitled to place restrictive legends upon certificates for
FNC Stock issued to affiliates of FirstBancorporation described above
pursuant to this Agreement to enforce the provisions of this
SECTION 7.1(d).
(e) Shareholder Approval. FirstBancorporation will, at the earliest
practical date after the Registration Statement becomes effective, hold a
meeting of its shareholders for the purpose of voting upon adoption of this
Agreement and approval of the Merger under applicable Law. In connection
with such Shareholders' Meeting, (i) FirstBancorporation shall use its
reasonable best efforts to cause its board of directors to recommend
(subject to compliance with the board members' fiduciary duties as advised
by counsel) to its shareholders the adoption of this Agreement and the
consummation of the Merger, and (ii) FirstBancorporation shall use its
reasonable best efforts to cause its board of directors and officers
(subject to compliance with the board members' and officers' fiduciary
duties as advised by counsel) to obtain such shareholder approval.
(f) Merger of FirstBank and Midlands Bank. If requested by FNC,
FirstBancorporation shall take all action necessary to cause Midlands Bank
to be merged with and into FirstBank (the "SUBSIDIARY MERGER") not later
than immediately prior to the Effective Time, including without limitation
filing all applications, reports and statements with all Regulatory
Authorities having jurisdiction over such transaction. If requested by
FNC, FirstBancorporation shall take all action necessary to cause FirstBank
and Midlands Bank to file applications, reports and statements with all
Regulatory Authorities having jurisdiction regarding the merger of such
Subsidiaries with and into First National Bank (the "BANK MERGER") not
earlier than the Effective Time. Notwithstanding anything to the contrary,
in connection with the transactions and filings described in this SECTION
7.1(f), (i) FNC shall bear the cost of all filing fees and charges to be
paid to Regulatory Authorities, (ii) neither the Subsidiary Merger nor the
Bank Merger will be undertaken if it would materially impede or delay the
consummation of the Merger or cause the Merger not to qualify as a tax-free
organization under Section 368 of the Code or for "pooling of interests"
accounting treatment, and (iii) FirstBancorporation shall be under no
obligation to consummate the Subsidiary Merger until it shall have received
reasonably satisfactory evidence that the Merger will be consummated
immediately thereafter.
(g) Financial Statements. No later than the 10th day of each month
from the date of this Agreement until the Effective Time or the termination
of this Agreement pursuant to its terms, FirstBancorporation shall deliver
to FNC such interim monthly unaudited statements of income, cash flow and
shareholder's equity for the immediately preceding calendar month and an
interim unaudited balance sheet as of the end of such month (collectively,
the "INTERIM MONTHLY FINANCIAL STATEMENTS") that it prepares in the
ordinary course of business consistent with past practices. No later than
45 days after the end of each calendar quarter following the date of this
Agreement until the Effective Time or the termination of this Agreement
pursuant to its terms (but in no event later than the availability of such
financial statements), FirstBancorporation shall deliver to FNC
consolidated interim quarterly unaudited statements of income, cash flow
and shareholder's equity for the immediately preceding calendar quarter and
an interim unaudited balance sheet as of the end of such quarter
(collectively, the "INTERIM QUARTERLY FINANCIAL STATEMENTS"). The Interim
Quarterly Financial Statements shall be prepared in accordance with
Generally Accepted Accounting Principles except that notes thereto may be
omitted and such statements may be subject to normal recurring year-end
adjustment.
(h) Benefit Plans. FirstBancorporation shall take all action
necessary or otherwise appropriate to terminate any 401(k) profit-sharing
plan of FirstBancorporation or the Subsidiaries, effective prior to the
Effective Time, including without limitation (i) the timely adoption of a
valid resolution of the appropriate board of directors terminating such
plan, and (ii) fully vesting all account balances of participants in such
plan.
7.2 COVENANTS OF FNC.
(a) Listing of Additional Shares. FNC will notify the American Stock
Exchange by the Effective Time of the listing of the shares of FNC Stock to
be issued in connection with the Merger and FNC shall take all other
actions required to effect such listing as of the Effective Time.
(b) Shareholder Approval. If the Merger is structured as a Merger of
FirstBancorporation with and into FNC as provided by SECTION 2.1 of this
Agreement, FNC will, at the earliest practicable date after the
Registration Statement becomes effective, hold a meeting of its
shareholders for the purpose of voting upon the adoption of this Agreement
and the approval of the Merger and/or the issuance of the Merger
Consideration under applicable Law. In connection with such Shareholders'
Meeting, (i) FNC shall use its reasonable best efforts to cause its board
of directors to recommend (subject to compliance with the board members'
fiduciary duties as advised by counsel) to its shareholders the adoption of
this Agreement and the consummation of the Merger, and (ii) FNC shall use
its reasonable best efforts to cause its board of directors and officers
(subject to compliance with the board members' and officers' fiduciary
duties as advised by counsel) to obtain such shareholder approval.
(c) Directors and Officers Insurance and Indemnification.
(i) FNC shall maintain, or shall cause the FNC Subsidiaries to maintain,
in effect for three years from the Closing Date, if available, the current
directors' and officers' liability insurance policies maintained by
FirstBancorporation and the Subsidiaries; provided, however, that FNC may
substitute therefor policies of at least the same coverage containing terms
and conditions that are not taken as a whole materially less favorable to
the insured with respect to matters occurring prior to the Effective Time
of the Merger. If such insurance is not obtained at least five Business
Days prior to the anticipated Closing Date, then FirstBancorporation shall
be permitted to purchase tail coverage on the existing policies for such
three year period.
(ii) From and after the Effective Time, FNC shall indemnify, defend and
hold harmless each person who is now, or who has been at any time before
the date hereof or who becomes before the Effective Time, an officer,
director or employee of FirstBancorporation or the Subsidiaries (the
"INDEMNIFIED PARTIES") against all losses, claims, damages, costs, expenses
(including reasonable attorneys' fees), liabilities, judgments, fines or
amounts that are paid in settlement (which settlement shall require the
prior written consent of FNC, which consent shall not be unreasonably
withheld) of or in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, or administrative (each a "CLAIM"),
in which an Indemnified Party is, or is threatened to be made, a party or
witness arising in whole or in part out of the fact that such person is or
was a director, officer or employee of FirstBancorporation or any of the
Subsidiaries if such Claim pertains to any matter or fact arising, existing
or occurring before the Effective Time (including without limitation the
Merger and the other transactions contemplated hereby), regardless of
whether such Claim is asserted or claimed before, at or after the Effective
Time (the "INDEMNIFIED LIABILITIES"), to the fullest extent permitted by
applicable Law in effect as of the date hereof or as amended applicable to
a time before the Effective Time. Any Indemnified Party wishing to claim
indemnification under this SECTION 7.2(c)(ii), upon learning of any Claim,
shall notify FNC (but the failure so to so notify shall not relieve FNC
from any liability which it may have under this SECTION 7.2(c)(ii), except
to the extent such failure materially prejudices FNC). In the event of any
such Claim, whether arising before, on or after the Effective Time, (A) FNC
shall have the right to assume the defense thereof (in which event the
Indemnified Parties will cooperate in the defense of any such matter) and
upon such assumption, FNC shall not be liable to any Indemnified Party for
any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense therefor,
except that if FNC elects not to assume such defense, or counsel for the
Indemnified Parties reasonably advises the Indemnified Parties that there
are or may be (whether or not any have yet actually arisen) issues which
raise conflicts of interest between FNC and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them, and
FNC shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (B) FNC shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for all Indemnified Parties whose
reasonable fees and expenses shall be paid promptly as statements are
received, (C) FNC shall not be liable for any settlement effected without
its prior written consent (which consent shall not be unreasonably
withheld), and (D) FNC shall have no obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law (it being acknowledged
by the parties hereto that in the event of any good faith dispute about the
lawfulness of such indemnification, FNC or FirstBancorporation or the
Subsidiaries may place the amounts at issue in escrow pending the final and
nonappealable determination of such dispute). The obligations of FNC
pursuant to this SECTION 7.2(c) are intended to be enforceable against FNC
directly by the Indemnified Parties. If FNC or any of its successors or
assigns shall consolidate with or merge into any other entity and shall not
be the continuing or surviving entity of such consolidation or merger or
shall transfer all or substantially all of its assets to any entity, then
and in each case, FNC (or such successor and assign) shall use its
reasonable best efforts to cause the successors and assigns of FNC to
assume the obligations set forth in this SECTION 7.2(c)(ii).
(d) Directors. At the Effective Time, FNC will cause ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (or their designees, if reasonably acceptable to
FNC) to be elected to the board of directors of FNC to serve as such until
the 2000 annual meeting of FNC's shareholders. FNC will use its reasonable
best efforts to cause ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. to be
nominated at the 2000 annual meeting of FNC's shareholders to serve as a
director of the Company for a term expiring at the 2001 annual meeting of
FNC's shareholders and the 2002 annual meeting of FNC's shareholders,
respectively. At the Effective Time or as soon thereafter as practicable,
FNC will cause ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(or their designees, if reasonably acceptable to FNC) to serve as members
of the board of directors of First National Bank until the 2000 annual
meeting of FNC's shareholders.
(e) Employees.
(i) After the Effective Time, except as specifically provided by this
Agreement or set forth on SCHEDULE 5.15, any and all of
FirstBancorporation's or the Subsidiaries' employees will be employed on an
"at-will" basis, and nothing in this Agreement shall be deemed to
constitute an employment agreement with any such person to obligate FNC or
any FNC Subsidiary to employ any such person for any specific period of
time or in any specific position or to restrict FNC's or any FNC
Subsidiary's right to terminate the employment of any such person at any
time and for any reason satisfactory to it (subject to the payment of
severance as set forth in subsection (ii) below).
(ii) FNC shall, with respect to each employee of FirstBancorporation or any
Subsidiary who is employed by FirstBancorporation or any Subsidiary
immediately before the Effective Time who experiences a separation of
service during the six-month period commencing on the Effective Time, pay
to such employee a one-time severance payment in the amount of two times
such employee's weekly salary at the time of termination times the number
of years of credited service of such employee with FirstBancorporation or
any Subsidiary and FNC or any FNC Subsidiary plus any accrued but unused
vacation leave during such service; provided, however, that the aggregate
liability of FNC hereunder shall not exceed $200,000, and provided further
that the provisions hereof shall not apply to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III or any
employee of FirstBancorporation or any Subsidiary that is entitled to
severance or a change of control payment pursuant to a written agreement
with FirstBancorporation or any Subsidiary that is in effect on the date
hereof or at the Effective Time.
(iii) Each employee of FirstBancorporation or a Subsidiary set
forth on SCHEDULE 7.1(e) shall be entitled to receive a "retention" bonus
from FirstBancorporation or the Subsidiaries equal to no more than six
months of such employee's annual base salary as of the date of this
Agreement in the event that FirstBancorporation and FNC determine in good
faith that the retention bonus is appropriate to induce the employee to
continue his employment through the Effective Date and up to three months
thereafter; provided, that retention bonuses in the aggregate shall not
exceed $75,000 and no retention bonus shall be paid to an employee who
voluntarily terminates his employment prior to the expiration of the
designated retention period (which shall be no earlier than the Effective
Date).
(iv) Employees of FirstBancorporation or any Subsidiary that continue
employment with FNC or the FNC Subsidiaries after the Effective Time will
be entitled to benefits consistent with and no less favorable than the
benefits being provided or to be provided to similarly situated employees
of FNC and the FNC Subsidiaries ("CONTINUING EMPLOYEES"), with credit for
past service with FirstBancorporation or the Subsidiaries for purposes of
participation, eligibility, vesting and accrual of benefits under all of
such benefit plans and arrangements, except that there will be no past
credit service for the accrual of benefits under any existing qualified
defined benefit pension plan. Continuing Employees shall not be subject to
any waiting periods or pre-existing condition exclusions under the group
health plan of FNC or any FNC Subsidiary to the extent that such periods
are longer or restrictions impose a greater limitation than the periods or
limitations imposed under the applicable group health plan of
FirstBancorporation or the applicable Subsidiary; and provided to the
extent that the initial period of coverage for Continuing Employees under
any plan of FNC or any FNC Subsidiary, whichever is applicable, that is an
"employee welfare benefit plan" as defined in Section 3(1) of ERISA is not
a full 12-month period of coverage, Continuing Employees shall be given
credit under the applicable welfare plan for any deductibles and co-insurance
payments made by such Continuing Employees under the corresponding welfare
plan of FirstBancorporation or any of the Subsidiaries during the balance of
such 12-month period of coverage.
(v) FNC shall, and shall cause the FNC Subsidiaries to, honor any and all
vacation and sick leave of Continuing Employees accrued with
FirstBancorporation or the Subsidiaries and shall credit each Continuing
Employee for past service with FirstBancorporation or the Subsidiaries for
purposes of calculating such employee's entitlements to vacation and sick
leave under the employment policies of FNC and the FNC Subsidiaries.
(vi) At the Closing, FNC shall cause First National Bank to enter into a
consulting arrangement with ▇▇▇▇▇▇ ▇. ▇▇▇▇ in form and substance reasonably
satisfactory to FNC and FirstBancorporation (the "Consulting Agreement"),
under which ▇▇. ▇▇▇▇ shall agree to provide consulting services to FNC and
the FNC Subsidiaries and to not compete with such entities, and First
National Bank would make aggregate consulting payments to ▇▇. ▇▇▇▇ in an
amount not in excess of $120,000 over the three-year period after Closing.
(f) Negative Covenants. From the date of this Agreement until the
Effective Time, FNC covenants and agrees that it will not do or agree or
commit to do, or permit any of the Subsidiaries to do or agree or commit to
do, any of the following with the prior written consent of
FirstBancorporation, which consent shall not be unreasonably withheld with
regard to subclause (ii) or subclause (iii):
(i) in the case of FNC only, declare or pay any cash dividend other
than quarterly dividends at a rate not more than 20% in excess of the
current quarterly dividend rate of 13 cents per share or establish a record
date for any such quarterly dividends inconsistent with past practices; or
(ii) make any acquisition (including an acquisition of branch offices
and related deposit liabilities) that materially delays the consummation of
the Merger except as set forth on SCHEDULE 7.2; or
(iii) take, or agree to take in writing or otherwise, any action
that would make any of the representations or warranties of it contained in
this Agreement untrue or incorrect in any material respect or would result
in any of the conditions set forth in this Agreement not being satisfied.
7.3 COVENANTS OF ALL PARTIES TO THE AGREEMENT.
(a) Joint Proxy Statement/Prospectus; Registration Statement. FNC
and FirstBancorporation shall cooperate in the timely preparation and
filing with the SEC of the Registration Statement. FirstBancorporation
will furnish to FNC the information required to be included in the
Registration Statement with respect to its business and affairs before it
is filed with the SEC and again before any amendments are filed, and shall
have the right to review and consult with FNC on the form of, and any
characterizations of such information included in, the Registration
Statement prior to the filing with the SEC. Such Registration Statement,
at the time it becomes effective and on the Effective Date, shall in all
material respects conform to the requirements of the Securities Laws. FNC
shall take all actions required to register or obtain exemptions from such
registration for the FNC Common Stock to be issued in connection with the
Merger under applicable state "Blue Sky" securities laws, as appropriate.
The Registration Statement shall include the form of Joint Proxy
Statement/Prospectus. The parties shall use their reasonable best efforts
to cause the Joint Proxy Statement/Prospectus to be cleared by the SEC for
mailing to their respective shareholders, and the Joint Proxy
Statement/Prospectus shall, on the date of mailing and on the Effective
Time, conform in all material respects to the requirements of the
Securities Laws. FirstBancorporation and FNC (if applicable) shall cause
the Joint Proxy Statement/Prospectus to be mailed to their respective
shareholders.
(b) Reorganization for Tax Purposes. Each of the parties hereto
undertakes and agrees to use its reasonable best efforts to cause the
Merger to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and that it will not intentionally take any
action that would cause the Merger to fail to so qualify.
(c) Accounting Treatment. Each of the parties hereto undertakes and
agrees to use its reasonable best efforts to cause the Merger to qualify to
be treated as a "pooling-of-interests" under Generally Accepted Accounting
Principles and that it will not intentionally take any action that would
cause the Merger to fail to so qualify. Each of the parties hereto shall
use its reasonable best efforts to cause its "affiliates" (as defined in
SECTION 7.1(d) of this Agreement) to not transfer shares of FNC Stock until
such time as such transfer would not affect the treatment of the Merger as
a "pooling of interest" under Generally Accepted Accounting Principles.
(d) Notification. Each party hereto agrees to notify promptly the
other party hereto of any event, fact, or other circumstance arising after
the date hereof that would have caused any representation or warranty
herein, including any information on any schedule hereto, to be untrue or
misleading had such event, fact, or circumstance arisen prior to the
execution of this Agreement. The parties hereto will exercise their
reasonable best efforts to ensure that no such events, facts, or other
circumstances occur, come to pass, or become true.
(e) Consummation of Agreement. The parties hereto each agree to use
their reasonable best efforts to perform or fulfill all conditions and
obligations to be performed or fulfilled by them under this Agreement so
that the transactions contemplated hereby shall be consummated. Except for
events that are the subject of specific provisions of this Agreement, if
any event should occur, either within or outside the control of
FirstBancorporation or FNC that would materially delay or prevent
fulfillment of the conditions upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, each party will
notify the others of any such event and the parties will use their
reasonable, diligent and good faith efforts to cure or minimize the same as
expeditiously as possible. Each party hereto shall use its reasonable best
efforts to obtain all Consents required for the consummation of the
transactions contemplated by this Agreement and to assist in the procuring
or providing of all documents which must be procured or provided pursuant
to ARTICLE IX hereof.
(f) Maintenance of Corporate Existence. Each of the parties hereto
shall maintain in full force and effect their respective corporate
existences.
(g) Applications and Reports. FNC shall promptly prepare and file, and
FirstBancorporation and the Subsidiaries shall cooperate in the preparation
and, where appropriate, filing of, applications, reports and statements
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement. The party
responsible for the making of any filing shall provide the other party with
its proposed filing information for review and comment prior to filing
(including any subsequent filings) and copies of all comments and
correspondence received from Regulatory Authorities with respect thereto.
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 ACCESS TO INFORMATION BY FIRSTBANCORPORATION. Prior to the
Closing Date, FirstBancorporation shall, and FirstBancorporation shall
cause each of the Subsidiaries to:
(a) give FNC and its authorized representatives reasonable access,
during normal business hours and upon reasonable notice, to the books,
records, offices and other facilities and properties of
FirstBancorporation; and
(b) furnish FNC with such financial and operating data and other
information with respect to the business operations of FirstBancorporation
including, but not limited to, information relating to Taxes as FNC may
from time to time request.
8.2 ACCESS TO INFORMATION BY FNC. Prior to the Closing Date, FNC
shall, and FNC shall cause each of the FNC Subsidiaries to:
(a) give FirstBancorporation and its authorized representatives
reasonable access, during normal business hours and upon reasonable notice,
to the books, records, offices and other facilities and properties of FNC;
and
(b) furnish FirstBancorporation with such financial and operating
data and other information with respect to the business operations of FNC
including, but not limited to, information relating to Taxes as
FirstBancorporation may from time to time request.
8.3 ACCESS TO PREMISES. Prior to Closing, FirstBancorporation shall
give FNC and its authorized representatives access to all of the Real
Property owned or leased by FirstBancorporation or any Subsidiary for the
purpose of inspecting such property.
8.4 CONFIDENTIALITY. Prior to Closing, except as otherwise provided
in this Agreement, the parties hereto shall not discuss or disclose, and
each will use its reasonable best efforts to cause its employees, lenders,
accountants, representatives, agents, consultants and advisors not to
discuss or disclose, or use for any purpose other than the transactions
contemplated hereby, the subject matter or transactions contemplated by
this Agreement or information pertaining to FirstBancorporation or FNC,
with any other Person without the prior consent of the other party hereto,
unless (a) such information is public other than as a result of a violation
of this Agreement or (b) the use of such information is necessary or
appropriate in making any filing or obtaining any Consent necessary or
desirable for the consummation of the transactions contemplated hereby.
8.5 PUBLICITY. Without the prior consent of the other party (which
consent shall not be unreasonably withheld), no party hereto shall issue
any news release or other public announcement or disclosure, or prior to
the initial press release regarding the execution of this Agreement, have
any communications with its employees, suppliers or customers, regarding
this Agreement or the transactions contemplated hereby, except as may be
required by law, but in which case the disclosing party shall provide the
other parties hereto with reasonable advance notice of the timing and
substance of any such disclosure.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 MUTUAL CONDITIONS. The respective obligations of each party hereto to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by both parties:
(a) Adverse Proceedings. Neither FirstBancorporation, any
Subsidiary, FNC nor any FNC Subsidiary shall be subject to any order,
decree or injunction of a court of competent jurisdiction that enjoins or
prohibits the consummation of this Agreement and no Governmental Authority
shall have instituted a suit or proceeding that is then pending and seeks
to enjoin or prohibit the transactions contemplated hereby. Any party who
is subject to any such order, decree or injunction or the subject of any
such suit or proceeding shall take any steps within that party's control to
cause any such order, decree or injunction to be modified so as to permit
the Closing and to cause any such suit or proceeding to be dismissed.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger, the Subsidiary Merger and the Bank 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 that is necessary to consummate the actions
contemplated hereby shall contain non-standard conditions which in the
reasonable judgment of the board of directors of either party hereto would
so materially adversely impact the economic or business assumptions of the
transactions contemplated by this Agreement that had such condition or
requirement been known, such party would not, in its reasonable judgment,
have entered into this Agreement.
(c) Effectiveness of Registration Statement. (i) The Registration
Statement covering the shares of FNC Stock to be issued pursuant hereto
shall have been declared effective by the SEC, and no stop order suspending
such effectiveness shall have been initiated or, to the Knowledge of FNC,
threatened by the SEC, and (ii) FNC shall have received all state
securities or "Blue Sky" permits or other authorizations, or confirmations
as to the availability of an exemption from such registration requirements
as may be necessary to issue the shares of FNC Stock to be issued in the
Merger, and no proceedings shall be pending or, to the Knowledge of FNC,
threatened by any state "Blue Sky" securities administration to suspend the
effectiveness of the Registration Statement.
(d) AMEX Listing. The shares of FNC Stock to be issued in the Merger
shall have been approved for listing on the American Stock Exchange as of
the Effective Time, subject to notice of issuance.
(e) Pooling Opinion. FNC shall have received assurances from ▇.▇. ▇▇▇▇ &
Company, LLP, in form and substance reasonably satisfactory to FNC, to the
effect that the Merger will qualify to be treated as a "pooling of
interests" for accounting purposes. FNC also shall have received a letter
from ▇.▇. ▇▇▇▇ & Company, LLP, in form and substance reasonably
satisfactory to FNC, to the effect that such accountants are not aware of
any fact or circumstance applicable to FirstBancorporation that might cause
the Merger not to qualify for such treatment. Nothing shall have come to
the attention of FNC that any event has occurred or will occur or that any
condition or circumstance exists that makes it likely that the Merger may
not so qualify.
9.2 CONDITIONS TO THE OBLIGATIONS OF FIRSTBANCORPORATION. The
obligation of FirstBancorporation to effect the transactions contemplated
hereby shall be further subject to the fulfillment of the following
conditions, unless waived by FirstBancorporation:
(a) All representations and warranties of FNC contained in SECTIONS
6.1, 6.2, 6.3, 6.9 and 6.18 of this Agreement shall be true and correct as
of the Closing Date as though made as of such date (except for
representations and warranties that are made as of a specific date, which
shall be true and correct as of such date). All other representations and
warranties of FNC contained in this Agreement shall be true and correct in
all material respects as of the Closing Date as though made as of such date
(except for representations and warranties that are made as of a specific
date, which shall be true and correct in all material respects as of such
date, and except for representations and warranties qualified by the words
"material," "in all material respects," "in any material amount,"
"substantial," and the like, and representations and warranties that
exclude matters that would not have a "material effect," result in a
"material liability," have a "Material Adverse Effect" or the like, which
representations and warranties shall be true and correct). FNC and the FNC
Subsidiaries shall have performed and complied in all material respects
with all covenants and agreements contained in this Agreement required to
be performed and complied with by them at or prior to the Closing.
FirstBancorporation shall have received a certificate to the matters set
forth in this SECTION 9.2(a) signed by FNC.
(b) All documents required to have been executed and delivered by FNC
to FirstBancorporation at or prior to the Closing shall have been so
executed and delivered, whether or not such documents have been or will be
executed and delivered by the other parties contemplated thereby.
(c) FirstBancorporation shall have received an opinion of ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., counsel to FNC, dated as of the Closing Date, in
form and substance reasonably acceptable to FirstBancorporation, as to the
matters set forth in EXHIBIT C.
(d) As of the Closing Date, FirstBancorporation shall have received the
following documents with respect to FNC:
(i) a true and complete copy of its articles of incorporation and all
amendments thereto, certified by the jurisdiction of its incorporation as
of a recent date;
(ii) a true and complete copy of its bylaws, certified by its
Secretary or an Assistant Secretary;
(iii) a certificate from its Secretary or an Assistant Secretary
certifying that its articles of incorporation have not been amended since
the date of the certificate described in subsection (i) above and that
nothing has occurred since such date that would adversely affect its
existence;
(iv) a true and complete copy of the resolutions of its board of
directors and shareholders authorizing the execution, delivery and
performance of this Agreement, and all instruments and documents to be
delivered in connection herewith, and the transactions contemplated hereby,
certified by its Secretary or an Assistant Secretary;
(v) a certificate from its Secretary or an Assistant Secretary
certifying the incumbency and signatures of its officers who will execute
documents at the Closing or who have executed this Agreement; and
(vi) such other documents, agreements or certificates as reasonably
requested by FirstBancorporation.
9.3 CONDITIONS TO THE OBLIGATIONS OF FNC. The obligations of FNC to
effect the transactions contemplated hereby shall be further subject to the
fulfillment of the following conditions, unless waived by FNC:
(a) All representations and warranties of FirstBancorporation
contained in SECTIONS 5.1, 5.2, 5.3, 5.4, 5.5, 5.24, 5.25, and 5.26 of this
Agreement shall be true and correct as of the Closing Date as though made
as of such date (except for representations and warranties that are made as
of a specific date, which shall be true and correct as of such date). All
other representations and warranties of FirstBancorporation contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date as though made as of such date (except for representations and
warranties that are made as of a specific date, which shall be true and
correct in all material respects as of such date, and except for
representations and warranties qualified by the words "material," "in all
material respects," "in any material amount," "substantial," and the like,
and representations and warranties that exclude matters that would not have
a "material effect", result in a "material liability," have a "Material
Adverse Effect" or the like, which representations and warranties shall be
true and correct). FirstBancorporation and the Subsidiaries shall have
performed and complied in all material respects with all covenants and
agreements contained in this Agreement required to be performed and
complied with by them at or prior to the Closing. FNC shall have received
certificates to the matters set forth in this SECTION 9.3(a) signed by an
authorized officer of FirstBancorporation.
(b) There shall be no Litigation instituted or pending or, to the
Knowledge of FirstBancorporation, threatened against FirstBancorporation or
any of the Subsidiaries or against any of their respective Assets, and
there shall be no Orders outstanding or unsatisfied by FirstBancorporation
or any of the Subsidiaries or against any of their respective Assets, that
would have, individually or in the aggregate with all such Litigation and
Orders, a Material Adverse Effect on FirstBancorporation. FNC shall have
received a certificate to the matters set forth in this SECTION 9.3(b)
signed by an authorized officer of FirstBancorporation.
(c) All documents required to have been executed and delivered by
FirstBancorporation to FNC at or prior to the Closing shall have been so
executed and delivered, whether or not such documents have been or will be
executed and delivered by the other parties contemplated thereby.
(d) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, shall have entered into an Employment and
Noncompetition Agreement with FNC substantially in the form of EXHIBIT D
and such agreement shall be in full force and effect as of the Effective
Time.
(e) FNC shall have received the written Affiliate Agreements signed
by all Persons who are affiliates of FirstBancorporation as provided in
SECTION 7.1(d).
(f) FNC shall have received a legal opinion from Breyer & Associates,
PC, special counsel to FirstBancorporation, dated as of the Closing Date,
in form and substance reasonably satisfactory to FNC, as to the matters set
forth in EXHIBIT E.
(g) FirstBancorporation hereto shall have obtained any and all Consents
required for consummation of the Merger or for the preventing of any
Default under any and all Real Property leases and FirstBancorporation's
servicing contract with ▇▇▇▇ ▇▇▇▇▇ and Associates, Inc.
(h) FNC shall have received evidence that FirstBancorporation or a
Subsidiary shall have received extensions for the leases on terms
reasonably satisfactory to FNC for (i) the main office of
FirstBancorporation located in Beaufort, South Carolina, and (ii) the
branch office of FirstBancorporation or a Subsidiary located in Lady's
Island, South Carolina.
(i) The holders of no more than 5% of the outstanding shares of
FirstBancorporation Stock shall have given written notice of their intent
to demand payment for their shares and shall not have voted for the Merger,
pursuant to Chapter 13 of the SCBCA.
(j) As of the Closing Date, FNC shall have received the following
documents with respect to FirstBancorporation and each of the Subsidiaries:
(i) a long-form certificate of its corporate existence issued by the
jurisdiction of its incorporation as of a recent date and a certificate of
existence or authority as a foreign corporation issued as of a recent date
by each of the jurisdictions in which it is qualified to do business as a
foreign corporation, as indicated on SCHEDULE 5.1;
(ii) a true and complete copy of its articles of incorporation or
articles of association and all amendments thereto, certified by the
jurisdiction of its incorporation as of a recent date;
(iii) a true and complete copy of its bylaws, certified by its
Secretary or an Assistant Secretary;
(iv) a certificate from its Secretary or an Assistant Secretary
certifying that its articles of incorporation have not been amended since
the date of the certificate described in subsection (ii) above, and that
nothing has occurred since the date of issuance of the certificate of
existence specified in subsection (i) above that would adversely affect its
existence;
(v) with respect to FirstBancorporation only, a true and complete
copy of the resolutions of its board of directors and shareholders
authorizing the execution, delivery and performance of this Agreement, and
all instruments and documents to be delivered in connection herewith, and
the transactions contemplated hereby, certified by its Secretary or an
Assistant Secretary;
(vi) with respect to FirstBancorporation only, a certificate from its
Secretary or an Assistant Secretary certifying the incumbency and
signatures of its officers who will execute documents at the Closing or who
have executed this Agreement; and
(vii) such other documents, agreements or certificates as
reasonably requested by FNC.
(k) ▇▇▇▇▇▇ ▇. ▇▇▇▇ shall have entered into the Consulting Agreement.
ARTICLE X
TERMINATION
10.1 TERMINATION. The obligations of the parties hereunder may be
terminated and the transactions contemplated hereby abandoned at any time
prior to the Closing Date:
(a) By mutual written consent of the boards of directors of
FirstBancorporation and FNC;
(b) By the board of directors of either FNC or FirstBancorporation,
if there shall be any Law or regulation that makes consummation of this
Agreement illegal or otherwise prohibited or if any judgment, injunction,
order or decree enjoining FirstBancorporation or its shareholders, or FNC
or its shareholders, from consummating this Agreement is entered and such
judgment, injunction, order or decree shall become final and non-appealable;
(c) By the board of directors of either FNC or FirstBancorporation,
if the conditions to the obligation to effect the transactions contemplated
hereby of the party seeking termination shall not have been fulfilled or
waived by October 31, 1999, and if the party seeking termination is in
material compliance with all of its obligations under this Agreement;
(d) By the board of directors of either FNC or FirstBancorporation,
if a condition to the obligation to effect the transactions contemplated
hereby of the party seeking termination shall have become incapable of
fulfillment (notwithstanding the efforts of the party seeking to terminate
as set forth in SECTION 7.3(e)) and has not been waived;
(e) By the board of directors of FNC, if (i) the board of directors
of FirstBancorporation (A) does not recommend this Agreement or the Merger
to its shareholders; (B) withdraws or modifies such recommendation in a
manner materially adverse to FNC; (C) shall have recommended to the
shareholders of FirstBancorporation any Acquisition Proposal or resolved to
do so; or (D) shall have resolved or publicly announced or disclosed to any
Person its intention to do any of the foregoing (provided, however, that in
the case of subclauses (A) and (B), except where such action is based on a
breach by FNC of its representations and warranties hereunder or a failure
(or anticipated failure) to satisfy the conditions to the obligations of
FirstBancorporation set forth in SECTIONS 9.1 or 9.2 of this Agreement);
(ii) a tender or exchange offer for 20% or more of the outstanding shares
of FirstBancorporation Stock is commenced or a registration statement with
respect thereto shall have been filed and the board of directors of
FirstBancorporation, within 10 Business Days after such tender or exchange
offer is commenced, either fails to recommend against acceptance of such
tender or exchange offer by its shareholders or takes no position with
respect to the acceptance of such tender or exchange offer by its
shareholders, or (iii) any Person or group of Persons acting in concert as
a partnership or other group shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise,
have become, after the date hereof, the "beneficial owner" (within the
meaning of such term under Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of 20% or more of outstanding shares of
FirstBancorporation Stock and the shareholders of FirstBancorporation shall
fail to adopt or approve the Merger at the Shareholders Meeting held by
FirstBancorporation;
(f) By the board of directors of FirstBancorporation, if the board of
directors of FirstBancorporation shall have determined to recommend an
Acquisition Proposal to its shareholders after determining, pursuant to
SECTION7.1(b), that such Acquisition Proposal constitutes a Superior
Proposal, and FirstBancorporation gives FNC at least three Business Days
prior notice of its intention to effect such termination pursuant to this
SECTION 10.1(f), and FirstBancorporation makes the payment required
pursuant to SECTION 10.2(d) of this Agreement;
(g) By the board of directors of either FNC or FirstBancorporation, if the
shareholders of a party fail to adopt or approve this Agreement, and to the
extent applicable, the transactions contemplated herein, as required by
applicable law; provided any termination or right of termination under
SECTION 10.1(e), (f) or (h) shall take precedence over a termination under
this SECTION 10.1(g), even where notice of termination under
SECTION 10.1(e), (f) or (h) is given after notice of termination under this
SECTION 10.1(g); or
(h) By the board of directors of either FNC or FirstBancorporation,
if the board of directors of FNC (i) does not recommend this Agreement or
the Merger to its shareholders or (ii) withdraws or modifies such
recommendation in a manner materially adverse to FirstBancorporation, and
in each such case such action is not based on a breach by
FirstBancorporation of its representations and warranties hereunder or a
failure (or anticipated failure) to satisfy the conditions to the
obligations of FNC set forth in SECTIONS 9.1 and 9.3 of this Agreement.
10.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of a
termination contemplated hereby by any party pursuant to SECTION 10.1, the
party seeking to terminate this Agreement shall give prompt written notice
thereof to the other party, and the transactions contemplated hereby shall
be abandoned, without further action by any party hereto. In such event:
(a) The parties hereto shall continue to be bound by their obligations of
confidentiality set forth in SECTION 8.4, and all copies of the information
provided by FirstBancorporation and FNC hereunder will be returned to
FirstBancorporation and FNC, respectively, or destroyed immediately upon
its request therefor.
(b) All filings, applications and other submissions relating to the
transactions contemplated hereby shall, to the extent practicable, be
withdrawn from the Person to which made.
(c) Unless this Agreement is terminated pursuant to SECTION 10.1(e),
10.1(f) or 10.1(h), the terminating party shall be entitled to seek any
remedy to which such party may be entitled at law or in equity for the
willful violation or willful breach of any agreement, covenant,
representation or warranty contained in this Agreement.
(d) If this Agreement is terminated (i) by FNC pursuant to SECTION
10.1(e), or (ii) by FirstBancorporation pursuant to SECTION 10.1(f),
FirstBancorporation shall pay to FNC by wire transfer in immediately
available funds within one Business Day of such termination, a termination
fee of $960,000 in cash, which the parties agree is a reasonable estimate
of the out-of-pocket expenses of FNC for attorneys, accountants and
financial advisors paid by FNC in connection with the proposed Merger, the
cost of management time and overhead devoted to pursuing the proposed
Merger, and FNC's loss of opportunity to pursue other transactions by
pursuing the proposed Merger. If this Agreement is terminated by FNC or
FirstBancorporation pursuant to SECTION 10.1(h), FNC shall pay to
FirstBancorporation by wire transfer in immediately available funds within
one Business Day of such termination, a termination fee of $960,000 in
cash, which the parties agree is a reasonable estimate of the out-of-pocket
expenses of FirstBancorporation for attorneys, accountants and financial
advisors paid by FirstBancorporation in connection with the proposed
Merger, the cost of management time and overhead devoted to pursuing the
Merger, and FirstBancorporation's loss of opportunity to pursue other
transactions by pursuing the Merger.
(e) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to SECTION 10.1, no party to this Agreement shall
have any liability or further obligation to any other party hereunder
except as set forth in SECTION 10.2(a)-(d), provided, however, if a party
is entitled to relief under SECTION 10.2(d), such relief shall be its sole
and exclusive remedy.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, (i) FNC shall pay all costs and expenses incurred by it
and the FNC Subsidiaries in connection with this Agreement and the
transactions contemplated hereby and (ii) FirstBancorporation shall pay all
costs and expenses incurred by it and the Subsidiaries in connection with
this Agreement and the Merger. Without limiting the effect of the
foregoing, FirstBancorporation and FNC shall each pay their respective
share of the cost of preparing and printing the Joint Proxy
Statement/Prospectus and soliciting the approval of their respective
shareholders in respect of the Merger.
11.2 SURVIVAL OF REPRESENTATIONS. The representations and warranties made
by the parties hereto will not survive the Closing, and no party shall make
or be entitled to make any claim based upon such representations and
warranties after the Closing Date; provided, however, that the parties'
agreements contained in SECTIONS 7.2(c), 7.2(d) and 7.2(e)(ii), (iii) (iv)
and (v) shall survive the Closing Date and shall be enforceable directly by
each person benefited or intended to be benefited by such sections. No
warranty or representation shall be deemed to be waived or otherwise
diminished as a result of any due diligence investigation by the party to
whom the warranty or representation was made or as a result of any actual
or constructive knowledge by such party with respect to any facts,
circumstances or claims or by the actual or constructive knowledge of such
person that any warranty or representation is false at the time of signing
or Closing.
11.3 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of FirstBancorporation
and FNC approved by their respective boards of directors; provided after
the Shareholder Meetings, or either of them, this Agreement may not be
amended if it would violate the SCBCA.
11.4 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in
this Agreement, any failure by FNC or FirstBancorporation to comply with
any obligation, representation, warranty, covenant, agreement or condition
herein may be waived by the other party or parties only by a written
instrument signed by the party or parties granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or
on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set
forth in this SECTION 11.4.
11.5 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered by hand or by facsimile
transmission (with confirmed receipt), one Business Day after sending by a
reputable national over-night courier service or three Business Days after
mailing when mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties in the manner provided below:
(a) Any notice to FirstBancorporation shall be delivered to the
following addresses:
FirstBancorporation, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Breyer & Associates, PC
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any notice to FNC shall be delivered to the following addresses:
First National Corporation
▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇ ▇▇▇▇, III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: 704/▇▇▇-▇▇▇▇
Facsimile: 704/378-4000
Any party may change the address to which notice is to be given by notice
given in the manner set forth above.
11.6 ASSIGNMENT; THIRD PARTY BENEFICIARIES. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives,
successors and permitted assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other party, except that
FNC may assign its rights and obligations under this Agreement to any
Affiliate of FNC. If such assignment is made, the assignee shall be
entitled to all the rights and shall assume all the obligations of FNC
hereunder, but FNC shall not be released from liability for the performance
of the obligations of such assignee under this Agreement. Except as set
forth in SECTION 7.2(c), 7.2(d) and 7.2(e)(ii), (iii), (iv) and (v), this
Agreement shall not be deemed to confer upon any third party beneficiaries
or other Persons, including any employees of FirstBancorporation, any
rights or remedies hereunder.
11.7 SEPARABLE PROVISIONS. If any provision of this Agreement shall
be held invalid or unenforceable, the remainder nevertheless shall remain
in full force and effect.
11.8 GOVERNING LAW. The execution, interpretation and performance of
this Agreement shall be governed by the internal laws and judicial
decisions of the State of South Carolina.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of
the agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.11 ENTIRE AGREEMENT. This Agreement, including the Schedules
and any exhibits hereto, embodies the entire agreement and understanding of
the parties with respect of the subject matter of this Agreement. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to the transactions contemplated hereby and subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
FIRST NATIONAL CORPORATION
By: /s/ C. ▇▇▇▇ ▇▇▇▇, III
C. ▇▇▇▇ ▇▇▇▇, III
President
FIRSTBANCORPORATION, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
President