AGREEMENT AND PLAN OF REORGANIZATION
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THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made and entered into as of this 21st day of January, 1999, by and
between ADAIRSVILLE BANCSHARES, INC., a Georgia business corporation
(hereinafter "Adairsville," and unless the context otherwise requires,
the term "Adairsville" shall include both Adairsville Bancshares, Inc.
and its subsidiary Bank of Adairsville ("Adairsville Bank")), and
UNITED COMMUNITY BANKS, INC., a Georgia business corporation
(hereinafter "United," and unless the context otherwise requires, the
term "United" shall include United Community Banks, Inc. and its
subsidiaries.
R E C I T A L S:
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WHEREAS, the respective boards of directors of Adairsville
and United deem it advisable and in the best interests of each such
entity and their respective shareholders that Adairsville be acquired
by United and that such acquisition be accomplished by a merger of
Adairsville and Adairsville Interim Corporation, a Georgia business
corporation and a wholly-owned subsidiary of United ("Interim"),
pursuant to which Interim will merge with and into Adairsville with
each of the issued and outstanding shares of common stock, $4 par
value per share, of Adairsville ("Adairsville Stock") being converted
into the right to receive $18.50 in cash, all upon the terms and
conditions hereinafter set forth and as set forth in the Agreement and
Plan of Merger attached hereto as Exhibit A and incorporated herein by
reference (the "Merger Agreement");
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, and other good
and valuable consideration, the receipt and adequacy of which as
legally sufficient consideration are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
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CLOSING
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The transactions contemplated herein shall be consummated
(the "Closing") at the offices of Adairsville Bank in Adairsville,
Georgia, or some other mutually agreeable location, on the first
business day following the later to occur of (i) the receipt of all
approvals from any governmental authorities having jurisdiction over
the transactions contemplated by this Agreement and the Merger
Agreement, and the expiration of any waiting or similar period
required by applicable law and (ii) the satisfaction of all other
conditions to consummation of the Merger (the "Closing Date"), or at
such other time and place as may be mutually satisfactory to the
parties hereto.
ARTICLE II
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MERGER
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Pursuant to the terms and conditions provided herein, on the
Closing Date Adairsville and Interim shall be merged in accordance
with and in the manner set forth in the Merger Agreement. The
surviving corporation following the Merger will operate under the
Articles of Incorporation of Adairsville and will be a wholly-owned
subsidiary of United. Upon the terms and conditions of this Agreement
and the Merger Agreement, United shall make available on or before the
Closing Date (as defined in the Merger Agreement) for delivery to the
holders of Adairsville Stock sufficient funds to provide for cash
payments of $18.50 per share (the "Purchase Price"); provided that if
the Closing Date is ninety days after the date hereof (the "Threshold
Date"), then the consideration per share payable shall be increased by
the amount of the net earnings per share of Adairsville between
January 1, 1999 and the Closing Date. Net earnings for the purpose of
this Article shall be reduced by the amount of any non-operating
earnings and not reduced by any reserves or charges made pursuant to
Section 3.13 hereof.
ARTICLE III
OTHER AGREEMENTS
3.1 Meeting of Shareholders of Adairsville. Adairsville
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shall take all actions in accordance with the laws of Georgia and its
Articles of Incorporation and Bylaws to call a special meeting of its
shareholders (the "Special Meeting") to be held not more than sixty
(60) days from the date hereof for the purpose of submitting the
Merger Agreement to such shareholders for their approval. In
connection with the Special Meeting, Adairsville shall prepare and
submit to its shareholders a notice of meeting and information
statement (the "Adairsville Information Materials").
3.2 Absence of Brokers. Except for $10,000 payable by
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Adairsville to Dr. Bob Swasky, each party hereto represents and
warrants to the other that no broker, finder or other financial
consultant has acted on its behalf in connection with this Agreement
or the transactions contemplated hereby. Each party agrees to
indemnify the other and hold and save it harmless from any claim or
demand for commissions or other compensation by any broker, finder,
financial consultant or similar agent claiming to have been employed
by or on behalf of such party.
3.3 Access to Properties, Books, Etc. Adairsville shall
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allow United and its authorized representatives reasonable access
during normal business hours from and after the date hereof and prior
to the Closing Date to all of the respective properties, books,
contracts, commitments and records of Adairsville and its subsidiaries
and shall furnish United and its authorized representatives such
information concerning its affairs and the affairs of its subsidiaries
as United may reasonably request provided that such request shall be
reasonably related to the transactions contemplated by this Agreement
and shall not interfere unreasonably with normal operations.
Adairsville shall require its personnel to assist United in making any
such investigation and shall cause the counsel (subject to attorney-
client privilege), accountants, employees and other representatives of
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Adairsville to be available to United for such purposes. Such
investigation will be conducted in a manner designed to be the least
disruptive of the affairs of Adairsville as possible. During such
investigation, United and its authorized representatives shall have
the right, subject to the confidentiality provisions of this
Agreement, to make copies of such records, files, tax returns and
other materials as it may deem advisable and shall advise Adairsville
of those items of which copies are made. No investigation made
heretofore or hereafter by either party and its authorized
representatives shall affect the representations and warranties of
either such party hereunder.
3.4 Confidentiality. The parties agree that the
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Confidentiality Agreement between Adairsville and United dated
December 15, 1998 (the "Confidentiality Agreement") shall survive
termination, for any reason whatsoever, of this Agreement and remain
in full force and effect in accordance with its terms.
3.5 Full Cooperation. The parties shall cooperate fully
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with each other in connection with any acts or actions required to be
taken as part of their respective obligations under this Agreement.
3.6 Expenses. All of the expenses incurred by United in
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connection with the authorization, preparation, execution and
performance of this Agreement and the Merger Agreement including,
without limitation, all fees and expenses of its agents,
representatives, counsel and accountants and the fees and expenses
related to filing of all regulatory applications with state and
federal authorities in connection with the transactions contemplated
hereby and thereby, shall be paid by United. All expenses incurred by
Adairsville in connection with the authorization, preparation,
execution and performance of this Agreement and the Merger Agreement,
including, without limitation, all fees and expenses of its agents,
representatives, counsel and accountants for Adairsville and the cost
of reproducing and mailing the Adairsville Information Materials,
shall be paid by Adairsville.
3.7 Preservation of Goodwill. Adairsville shall use
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reasonable efforts to preserve its business organization and the
business organization of its subsidiaries consistent with past
practices, to keep available the services of its present employees and
of the present employees of its subsidiaries, and to preserve the
goodwill of customers and others having business relations with
Adairsville or its subsidiaries.
3.8 Approvals and Consents. Each party hereto represents
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and warrants to and covenants with the other that it will use its best
efforts, and will cause its officers, directors, employees and agents
and its subsidiaries and any subsidiary's officers, directors,
employees and agents to use their best efforts, to obtain as soon as
is reasonably practicable all approvals and consents of state and
federal departments or agencies required or deemed necessary for
consummation of the transactions contemplated by this Agreement and
the Merger Agreement. In particular, within 30 days of the date of
this Agreement, United shall file all applications required to obtain
all consents and approvals of bank regulatory authorities for the
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transactions contemplated by this Agreement. United shall provide
drafts of the public sections of applications to Adairsville prior to
filing the same, and shall promptly provide Adairsville with copies of
all correspondence to and from regulatory authorities with respect to
the transactions contemplated by this Agreement.
3.9 Agreement by Certain Adairsville Shareholders.
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Contemporaneously with the execution of this Agreement, each of the
shareholders of Adairsville whose signatures are set forth on Exhibit
B will execute and deliver to United an agreement, the form of which
is attached hereto as Exhibit B, pursuant to which each of them agrees
to vote the Adairsville Stock owned or controlled by them in favor of
the Merger.
3.10 Press Releases. Prior to the Closing Date, Adairsville
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and United shall agree with each other as to the form and substance of
any press release or other public disclosure materially related to
this Agreement or any other transaction contemplated hereby; provided,
however, that nothing in this Section 3.10 shall be deemed to prohibit
any Party from making any disclosure which its counsel deems necessary
or advisable in order to satisfy such Party's disclosure obligations
imposed by law.
3.11 Employees of Adairsville Bank. For purposes of any
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length of service requirements, waiting periods, vesting periods or
benefits based on length of service in any benefit plan of Adairsville
Bank for which an employee may be eligible after the Closing, United
shall ensure that service by such employee with Adairsville Bank shall
be deemed to have been service with United.
3.12 "Run-off" Liability Insurance Coverage. Adairsville
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shall acquire for the benefit of its officers and directors "run-off"
liability insurance coverage to survive the Closing Date, which
coverage shall be satisfactory to Adairsville. Alternatively, United
shall obtain coverage for the officers and directors of Adairsville
under its officer and director liability policy satisfactory to
Adairsville.
3.13 Letter re Accounting Issues.
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(a) Within fifteen (15) days period prior to the Closing
Date, at the written request of United, Adairsville shall establish
and take such reserves and accruals as United shall request to conform
Adairsville's loan, accrual and reserve policies to United's policies,
shall establish and take such accruals, reserves and charges in order
to implement such policies and to recognize, for financial accounting
purposes, such expenses of the Merger and restructuring charges
related to or to be incurred in connection with the Merger, in each
case at such times as are mutually agreeable to United and
Adairsville; provided, however, that Adairsville shall not be required
to take any such action that is not consistent with GAAP.
(b) No accrual or other adjustment made by Adairsville
pursuant to the provisions of this Section 3.13 shall constitute an
acknowledgment by Adairsville or create any implication, for any
purpose, that such accrual or adjustment was necessary for any purpose
other than to comply with the provisions of this Section 3.13.
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(c) No accrual or other adjustment made by Adairsville
pursuant to the provisions of this Section 3.13 shall be considered in
determining the existence of, or comprise the basis for, a material
adverse change as contemplated by Section 10.1 of this Agreement.
3.14 ▇▇▇▇▇▇ Bonus. Notwithstanding anything to the contrary
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contained herein, in the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the President of
Adairsville Bank, shall be in the employ of Adairsville Bank as of the
Closing Date, then Adairsville, or Adairsville Bank, shall be entitled
to pay to ▇▇▇▇▇▇, and shall pay to ▇▇▇▇▇▇, a bonus in the amount of
twenty thousand dollars ($20,000). If Adairsville or Adairsville Bank
shall not have paid such bonus prior to the Closing Date, United shall
be responsible for the payment of such amount to ▇▇▇▇▇▇.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF ADAIRSVILLE
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As an inducement to United to enter into this Agreement and
to consummate the transactions contemplated hereby, Adairsville repre-
sents, warrants, covenants and agrees as follows:
4.1 Adairsville Disclosure Memorandum. By February 11,
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1999, Adairsville will deliver to United a memorandum (the
"Adairsville Disclosure Memorandum") containing certain information
regarding Adairsville as indicated at various places in this
Agreement. All information set forth in the Adairsville Disclosure
Memorandum or in documents incorporated by reference in the
Adairsville Disclosure Memorandum is true, correct and complete, does
not omit to state any fact necessary in order to make the statements
therein not misleading, and shall be deemed for all purposes of this
Agreement to constitute part of the representations and warranties of
Adairsville under this Article IV. The information contained in the
Adairsville Disclosure Memorandum shall be deemed to be part of and
qualify all representations and warranties contained in this Article
IV and the covenants in Article V to the extent applicable. All
information in each of the documents and other writings furnished to
United pursuant to this Agreement or the Adairsville Disclosure
Memorandum is or will be true, correct and complete and does not and
will not omit to state any material fact necessary in order to make
the statements therein not misleading. Adairsville shall promptly
provide United with written notification of any event, occurrence or
other information necessary to maintain the Adairsville Disclosure
Memorandum and all other documents and writings furnished to United
pursuant to this Agreement as true, correct and complete in all
material respects at all times prior to and including the Closing.
Adairsville agrees that upon receipt of the Adairsville Disclosure
Memorandum, United shall have until February 18, 1999 to review the
Adairsville Disclosure Memorandum and to terminate this Agreement if
for any reason in its sole discretion United believes that proceeding
with the Merger in light of the contents of such memorandum would be
detrimental to United.
4.2 Corporate and Financial.
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4.2.1 Authority. Subject to the approval of
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various state and federal regulators and Adairsville Shareholders, the
execution, delivery and performance of this Agreement and the other
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transactions contemplated or required in connection herewith will not,
with or without the giving of notice or the passage of time, or both,
(a) violate any provision of federal or state law applicable to
Adairsville, the violation of which could be reasonably expected to
have a material adverse effect on the business, operations,
properties, assets, financial condition or prospects of Adairsville;
(b) violate any provision of the articles of incorporation or bylaws
of Adairsville; (c) conflict with or result in a breach of any
provision of, or termination of, or constitute a default under any
instrument, license, agreement, or commitment to which Adairsville is
a party, which, singularly or in the aggregate, could reasonably be
expected to have a material adverse effect on the business,
operations, properties, assets, financial condition or prospects of
Adairsville; or (d) constitute a violation of any order, judgment or
decree to which Adairsville is a party, or by which Adairsville or any
of its assets or properties are bound. Assuming this Agreement
constitutes the valid and binding obligation of United, this Agreement
constitutes the valid and binding obligation of Adairsville, and is
enforceable in accordance with its terms, except as limited by laws
affecting creditors' rights generally and by the discretion of courts
to compel specific performance.
4.2.2 Corporate Status. Adairsville is a business
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corporation duly organized, validly existing and in good standing
under the laws of the state of Georgia and has no direct or indirect
subsidiaries other than Adairsville Bank. Adairsville Bank is a
banking corporation duly organized and validly existing under the laws
of the State of Georgia. Adairsville and Adairsville Bank have all of
the requisite corporate power and authority and are entitled to own or
lease their respective properties and assets and to carry on their
respective businesses as and in the places where such properties or
assets are now owned, leased or operated and such businesses are now
conducted.
4.2.3 Capital Structure. (a) Adairsville has an
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authorized capital stock consisting of 1,000,000 shares, $4 par value
of common stock, of which 381,116 shares of common stock are issued
and outstanding as of the date hereof. Adairsville Bank has an
authorized capital stock consisting solely of 4,000 shares of common
stock, par value $100.00 ("Adairsville Bank Stock"), of which 4,000
shares are issued and outstanding as of the date hereof. All of the
outstanding shares of Adairsville Stock and Adairsville Bank stock are
duly and validly issued, fully paid and non-assessable and were
offered, issued and sold in compliance with all applicable federal and
state securities laws. No person has any right of rescission or claim
for damages under federal or state securities laws with respect to the
issuance of any shares of Adairsville Stock or Adairsville Bank Stock
previously issued. None of the shares of Adairsville Stock or
Adairsville Bank Stock has been issued in violation of any preemptive
or other rights of its shareholders. All of the issued and
outstanding shares of Adairsville Bank Stock are owned by Adairsville.
(b) Except as set forth in the Adairsville Disclosure
Memorandum, Adairsville does not have outstanding any securities which
are either by their terms or by contract convertible or exchangeable
into shares of Adairsville Stock, or any other securities or debt, of
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Adairsville, or any preemptive or similar rights to subscribe for or
to purchase, or any options or warrants or agreements or
understandings for the purchase or the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character
relating to, its capital stock or securities convertible into shares
of Adairsville Stock. Adairsville is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(c) Except as set forth in the Disclosure Memorandum,
there is no agreement, arrangement or understanding to which
Adairsville is a party restricting or otherwise relating to the
transfer of any shares of capital stock of Adairsville.
(d) All shares of Adairsville Stock or other capital
stock, or any other securities or debt, of Adairsville, which have
been purchased or redeemed by Adairsville have been purchased or
redeemed in accordance with all applicable federal, state and local
laws, rules, and regulations, including, without limitation, all
federal and state securities laws and rules and regulations of any
securities exchange or system on which such stock, securities or debt
are, or at such time were, traded, and no such purchase or redemption
has resulted or will, with the giving of notice or lapse of time, or
both, result in a default or acceleration of the maturity of, or
otherwise modify, any agreement, note, mortgage, bond, security
agreement, loan agreement or other contract or commitment of
Adairsville.
4.2.4 Corporate Records. The stock records and minute
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books of Adairsville, whether heretofore or hereafter furnished or
made available to United by Adairsville, (a) fully and accurately
reflect all issuances, transfers and redemptions of the Common Stock,
(b) correctly show the record addresses and the number of shares of
such stock issued and outstanding on the date hereof held by the
shareholders of Adairsville, (c) correctly show all corporate action
taken by the directors and shareholders of Adairsville (including
actions taken by consent without a meeting) and (d) contain true and
correct copies or originals of the respective articles of incorpo-
ration and all amendments thereto, bylaws as amended and currently in
force, and the minutes of all meetings or consent actions of its
directors and shareholders. No resolutions, regulations or bylaws
have been passed, enacted, consented to or adopted by such directors
or shareholders except those contained in the minute books. All
corporate records have been maintained in accordance with all
applicable statutory requirements and are complete and accurate in all
material respects.
4.2.5 Tax Returns; Taxes. (a) Adairsville has duly
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filed (i) all required federal and state tax returns and reports, and
(ii) all required returns and reports of other governmental units
having jurisdiction with respect to taxes imposed upon its income,
properties, revenues, franchises, operations or other assets or taxes
imposed which might create a material lien or encumbrance on any of
such assets or affect materially and adversely its business or
operations. Such returns or reports are, and when filed will be,
true, complete and correct, and Adairsville has paid, to the extent
such taxes or other governmental charges have become due, all taxes
and other governmental charges set forth in such returns or reports.
All federal, state and local taxes and other governmental charges paid
or payable by Adairsville have been paid, or have been accrued or
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reserved on its books in accordance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior periods.
Adequate reserves for the payment of taxes have been established on
the books of Adairsville for all periods through the date hereof,
whether or not due and payable and whether or not disputed. Until the
Closing Date, Adairsville shall continue to provide adequate reserves
for the payment of expected tax liabilities in accordance with GAAP
applied on a basis consistent with prior periods. Adairsville has not
received any notice of a tax deficiency or assessment of additional
taxes of any kind and, to the knowledge of the officers of Adairsville
(collectively, "Management"), there is no threatened claim against
Adairsville, or any basis for any such claim, for payment of any
additional federal, state, local or foreign taxes for any period prior
to the date of this Agreement in excess of the accruals or reserves
with respect to any such claim shown in the 1998 Adairsville Financial
Statements described in Section 4.2.6 below or disclosed in the notes
with respect thereto. There are no waivers or agreements by
Adairsville for the extension of time for the assessment of any taxes.
The federal income tax returns of Adairsville have not been examined
by the Internal Revenue Service for any period since January 1, 1994.
(b) Except as set forth in the Adairsville Disclosure
Memorandum, proper and accurate amounts have been withheld by
Adairsville from its employees for all periods in full and complete
compliance with the tax withholding provisions of applicable federal,
state and local tax laws, and proper and accurate federal, state and
local tax returns have been filed by Adairsville for all periods for
which returns were due with respect to withholding, social security
and unemployment taxes, and the amounts shown thereon to be due and
payable have been paid in full.
4.2.6 Financial Statements. Adairsville has delivered
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to United true, correct and complete copies of unaudited financial
statements of Adairsville for the 11 month period ended November 30,
1998, including a balance sheet and statement of income (the unaudited
financial statements for the 11 month period ended November 30, 1998
being referred to as the "1998 Adairsville Financial Statements").
The 1998 Adairsville Financial Statements have been prepared in
accordance with GAAP consistently applied and present fairly the
assets, liabilities and financial condition of Adairsville as of the
dates indicated therein and the results of its operations for the
period then ended except that such financial statements do not include
the footnote disclosure required by GAAP.
4.2.7 Regulatory Reports. Adairsville has made
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available to United for review and inspection the year-end Report of
Condition and Income as filed by Adairsville Bank with the Board of
Governors of the Federal System (the "Federal Reserve") for each of
the two years ended December 31, 1997 and 1996, together with all such
other reports filed for the same three-year period with the Department
of Banking and Finance of the State of Georgia (the "Department of
Banking"), and other applicable regulatory agencies and the Form F.R.
Y-6 filed by Adairsville with the Federal Reserve for each of the
years ended December 31, 1997 and 1996 (collectively, the "Adairsville
Reports"). All of the Adairsville Reports, as amended, have been
prepared in accordance with applicable rules and regulations applied
on a basis consistent with prior periods and contain in all material
respects all information required to be presented therein in
accordance with such rules and regulations.
4.2.8 Accounts. The Adairsville Disclosure Memorandum
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contains a list of each and every bank and other institution in which
Adairsville maintains an account or safety deposit box, the account
numbers, and the names of all persons who are presently authorized to
draw thereon, have access thereto or give instructions regarding
distribution of funds or assets therein.
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4.2.9 Notes and Obligations. Except as set forth in the
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Adairsville Disclosure Memorandum or as provided for in the loss
reserve, all notes receivable or other obligations owned by
Adairsville or due to it shown in the 1998 Adairsville Financial
Statements and any such notes receivable and obligations on the date
hereof and on the Closing Date are and will be genuine, legal, valid,
and to Adairsville's knowledge, collectible obligations of the
respective makers thereof and are not and will not be subject to any
offset or counterclaim. All such notes and obligations are evidenced
by written agreements, true and correct copies of which will be made
available to United for examination prior to the Closing Date. All
such notes and obligations were entered into by Adairsville in the
ordinary course of its business and, to Adairsville's knowledge, in
compliance with all applicable laws and regulations.
4.2.10 Liabilities. Adairsville has no debt, liability
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or obligation of any kind required to be shown pursuant to GAAP on the
1998 Adairsville Financial Statements, whether accrued, absolute,
known or unknown, contingent or otherwise, including, but not limited
to (a) liability or obligation on account of any federal, state or
local taxes or penalty, interest or fines with respect to such taxes,
(b) liability arising from or by virtue of the distribution, delivery
or other transfer or disposition of goods, personal property or
services of any type, kind or variety, (c) unfunded liabilities with
respect to any pension, profit sharing or employee stock ownership
plan, whether operated by Adairsville or any other entity covering
employees of Adairsville, or (d) environmental liabilities, except (i)
those reflected in the 1998 Adairsville Financial Statements, and (ii)
as disclosed in the Adairsville Disclosure Memorandum.
4.2.11 Absence of Changes. Except as specifically
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provided for in this Agreement or specifically set forth in the
Adairsville Disclosure Memorandum, since November 30, 1998:
(a) there has been no change in the business, assets,
liabilities, results of operations or financial condition of
Adairsville, or in any of its relationships with customers, employees,
lessors or others, other than changes in the ordinary course of
business, none of which individually or in the aggregate has had, or
which the Adairsville Management believes may have, a material adverse
effect on such businesses or properties;
(b) there has been no material damage, destruction or loss
to the assets, properties or business of Adairsville, whether or not
covered by insurance, which has had, or which the Adairsville
Management believes may have, an adverse effect thereon;
(c) the business of Adairsville has been operated in the
ordinary course, and not otherwise;
(d) the properties and assets of Adairsville used in its
business have been maintained in good order, repair and condition,
ordinary wear and tear excepted;
(e) the books, accounts and records of Adairsville have
been maintained in the usual, regular and ordinary manner;
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(f) there has been no declaration, setting aside or payment
of any dividend or other distribution on or in respect of the capital
stock of Adairsville;
(g) there has been no increase in the compensation or in
the rate of compensation or commissions payable or to become payable
by Adairsville to any director or executive officer, or to any
employee earning $35,000 or more per annum, or any general increase in
the compensation or in the rate of compensation payable or to become
payable to employees of Adairsville earning less than $35,000 per
annum ("general increase" for the purpose hereof meaning any increase
generally applicable to a class or group of employees, but not
including increases granted to individual employees for merit, length
of service, change in position or responsibility or other reasons
applicable to specific employees and not generally to a class or group
thereof), or any director, officer, or employee hired at a salary in
excess of $35,000 per annum, or any increase in any payment of or
commitment to pay any bonus, profit sharing or other extraordinary
compensation to any employee;
(h) there has been no change in the articles of
incorporation or bylaws of Adairsville;
(i) there has been no labor dispute, unfair labor practice
charge or employment discrimination charge, nor, to the knowledge of
Adairsville, any organizational effort by any union, or institution or
threatened institution, of any effort, complaint or other proceeding
in connection therewith, involving Adairsville, or affecting its
operations;
(j) there has been no issuance, sale, repurchase,
acquisition, or redemption by Adairsville of any of its capital stock,
bonds, notes, debt or other securities, and there has been no
modification or amendment of the rights of the holders of any
outstanding capital stock, bonds, notes, debt or other securities
thereof;
(k) there has been no mortgage, lien or other encumbrance
or security interest (other than liens for current taxes not yet due
or purchase money security interests arising in the ordinary course of
business) created on or in (including without limitation, any deposit
for security consisting of) any asset or assets of Adairsville or
assumed by it with respect to any asset or assets;
(l) there has been no indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise)
incurred by Adairsville which would be required to be reflected on a
balance sheet of Adairsville prepared as of the date hereof in
accordance with GAAP applied on a consistent basis, except as incurred
in the ordinary course of business;
(m) no obligation or liability of Adairsville has been
discharged or satisfied, other than in the ordinary course of
business;
(n) there have been no sales, transfers or other
dispositions of any asset or assets of Adairsville, other than sales
in the ordinary course of business; and
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(o) there has been no amendment, termination or waiver of
any right of Adairsville under any contract or agreement or
governmental license, permit or permission which has had or may have
an adverse effect on its business or properties.
4.2.12 Litigation and Proceedings. Except as set forth
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on the Adairsville Disclosure Memorandum, there are no actions,
decrees, suits, counterclaims, claims, proceedings or governmental
actions or investigations, pending or, to the knowledge of
Adairsville, threatened against, by or affecting Adairsville, or any
officer, director, employee or agent in such person's capacity as an
officer, director, employee or agent of Adairsville or relating to the
business or affairs of Adairsville, in any court or before any
arbitrator or governmental agency, and no judgment, award, order or
decree of any nature has been rendered against or with respect thereto
by any agency, arbitrator, court, commission or other authority, nor
does Adairsville have any unasserted contingent liabilities which
might have an adverse effect on its assets or on the operation of its
businesses or which might prevent or impede the consummation of the
transactions contemplated by this Agreement.
4.3 Business Operations.
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4.3.1 Customers. Adairsville has no knowledge of any
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presently existing facts which could reasonably be expected to result
in the loss of any material borrower or depositor or in Adairsville's
inability to collect amounts due therefrom or to return funds
deposited thereby, except as set forth on the Adairsville Disclosure
Memorandum.
4.3.2 Permits; Compliance with Law. (a) Adairsville has
----------------------------
all permits, licenses, approvals, authorizations and registrations
under all federal, state, local and foreign laws required for
Adairsville to carry on its business as presently conducted, and all
of such permits, licenses, approvals, authorizations and registrations
are in full force and effect, and no suspension or cancellation of any
of them is pending or, to the knowledge of Adairsville, threatened.
(b) Except as set forth in the Disclosure Memorandum,
Adairsville has complied with all laws, regulations, and orders
applicable to it or its business, except for any non-compliance which
would not have a material adverse effect on Adairsville. The
Adairsville Disclosure Memorandum contains a list of any known
violations of such laws, regulations, ordinances or rules by any
present officer, director, or employee of Adairsville which occurred
since December 31, 1993, and which resulted in any order, proceeding,
judgment or decree which would be required to be disclosed pursuant to
Item 401(f) of Regulation S-K promulgated by the Securities and
Exchange Commission if Adairsville had been subject to the reporting
requirements under the 1933 Act or the Securities Exchange Act of
1934. Except as set forth in the Disclosure Memorandum, no past
violation of any such law, regulation, ordinance or rule has occurred
which could impair the right or ability of Adairsville to conduct its
business.
(c) Except as set forth in the Adairsville Disclosure
Memorandum, no notice or warning from any governmental authority with
respect to any failure or alleged failure of Adairsville to comply in
any respect with any law, regulation or order has been received, nor
-11-
is any such notice or warning proposed or, to the knowledge of
Adairsville, threatened.
4.3.3 Environmental. (a) Except as set forth in the
-------------
Adairsville Disclosure Memorandum, Adairsville
(i) has not caused or permitted, and has no knowledge
of, any claim regarding the environmental condition of any
properties or facilities currently owned or leased by
Adairsville or adjacent to any properties so owned or leased
or the generation, manufacture, use, or handling or the
release or presence of, any hazardous substances or
hazardous wastes, including petroleum, on, in, under or from
any properties or facilities currently owned or leased by
Adairsville or adjacent to any properties so owned or
leased; and
(ii) has complied in all material respects with, and
has kept all records and made all filings or reports
required by, and is otherwise in compliance with all
applicable federal, state and local laws, regulations,
orders, permits and licenses relating to the generation,
treatment, manufacture, use, handling, release or presence
of any hazardous substances or hazardous wastes, including
petroleum and asbestos, on, in, under or from any properties
or facilities currently owned or leased by Adairsville.
(b) Except as set forth in the Adairsville Disclosure
Memorandum, neither Adairsville nor any of its officers, directors,
employees or agents, in the course of such individual's employment by
Adairsville, has given advice with respect to, or participated in any
respect in, the management or operation of any entity or concern whose
business relates in any way to the generation, storage, handling,
disposal, transfer, production, use or processing of hazardous
substances or hazardous wastes, including petroleum, nor to
Adairsville's knowledge has Adairsville foreclosed on any property on
which there is a threatened release of any hazardous substances or
hazardous wastes, including petroleum, or on which there has been such
a release and full remediation has not been completed, or any property
on which contained (non-released) hazardous substances or hazardous
wastes, including petroleum, are or were located.
(c) Except as set forth in the Adairsville Disclosure
Memorandum, neither Adairsville, nor any of its officers, directors,
employees, or agents, is aware of, has been told of, or has observed,
the presence of any hazardous substance or hazardous wastes, including
petroleum, on, in, under, or around property on which Adairsville
holds a legal or security interest, in violation of, or creating
liability under, federal, state, or local environmental statutes,
regulations, or ordinances.
(d) The term hazardous substances or hazardous waste does
not include those substances which are normally and reasonably used in
connection with the occupancy or operation of office buildings (such
as cleaning fluids, and supplies normally used in the day to day
operation of business offices).
-12-
4.3.4 Insurance. The Adairsville Disclosure Memorandum
---------
contains a complete list and description (including the expiration
date, premium amount and coverage thereunder) of all policies of
insurance and bonds presently maintained by, or providing coverage
for, Adairsville or any of its officers, directors and employees, all
of which are, and will be maintained through the Closing Date (or a
reasonable substitute obtained), in full force and effect, together
with a complete list of all pending claims under any of such policies
or bonds. All terms, obligations and provisions of each of such
policies and bonds have been complied with, all premiums due thereon
have been paid, and no notice of cancellation with respect thereto has
been received. Adairsville will not as of the Closing Date have any
liability for premiums or for retrospective premium adjustments for
any period prior to the Closing Date. Adairsville has heretofore
made, or will hereafter make, available to United a true, correct and
complete copy of each insurance policy and bond in effect since
January 1, 1994 with respect to the business and affairs of
Adairsville.
4.4 Properties and Assets.
---------------------
4.4.1 Contracts and Commitments. Other than loans,
-------------------------
mortgages and other security instruments or devices entered into
within the ordinary course of business, the Adairsville Disclosure
Memorandum contains a list identifying and briefly describing all
written contracts, purchase orders, agreements, security deeds,
guaranties or commitments to which Adairsville is a party or by which
it may be bound involving the payment or receipt, actual or con-
tingent, of more than $50,000 or having a term or requiring per-
formance over a period of more than one (1) year. Each such contract,
agreement, guaranty and commitment of Adairsville is in full force and
effect and is valid and enforceable in accordance with its terms, and
constitutes a legal and binding obligation of the respective parties
thereto and is not the subject of any notice of default, termination,
partial termination or of any ongoing, pending, completed or
threatened investigation, inquiry or other proceeding or action that
may give rise to any notice of default, termination or partial
termination. Adairsville has complied in all material respects with
the provisions of such contracts, agreements, guaranties and commit-
ments. A true and complete copy of each such document has been or
will be made available to United for examination.
4.4.2 Licenses; Intellectual Property. Adairsville has
-------------------------------
no patents, trademarks, trade names, service marks, or copyrights.
Except as described in the Adairsville Disclosure Memorandum,
Adairsville is not a party, either as licensor or licensee, to any
agreement for any patent, process, trademark, service ▇▇▇▇, trade
name, copyright, trade secret or other confidential information and
there are no rights of third parties with respect to any trademark,
service ▇▇▇▇, trade secrets, confidential information, trade name,
patent, patent application, copyright, invention, device or process
owned or used by Adairsville or presently expected to be used by it in
the future. Adairsville has complied with all applicable laws
relating to the filing or registration of "fictitious names" or trade
names.
4.4.3 Personal Property. Adairsville has good and
-----------------
marketable title to all of its personalty, tangible and intangible,
reflected in the 1998 Adairsville Financial Statements (except as
since sold or otherwise disposed of by it in the ordinary course of
business), free and clear of all encumbrances, liens or charges of any
kind or character, except (i) those described in the Adairsville
Disclosure Memorandum and (ii) liens for taxes not due and payable.
-13-
4.4.4 Adairsville Leases. (a) All leases (the
------------------
"Adairsville Leases") pursuant to which Adairsville is lessor or
lessee of any real or personal property (such property, the "Leased
Property") are valid and enforceable in accordance with their terms;
there is not under any of the Adairsville Leases any default or, to
the knowledge of Adairsville, any claimed default by Adairsville, or
event of default or event which with notice or lapse of time, or both,
would constitute a default by Adairsville and in respect of which
adequate steps have not been taken to prevent a default on its part
from occurring.
(b) The copies of the Adairsville Leases heretofore or
hereafter furnished or made available by Adairsville to United are
true, correct and complete, and the Adairsville Leases have not been
modified in any respect other than pursuant to amendments, copies of
which have been concurrently delivered or made available to United,
and are in full force and effect in accordance with their terms.
(c) Except as set forth in the Adairsville Disclosure
Memorandum, there are no contractual obligations, agreements in
principle or present plans for Adairsville to enter into new leases of
real property or to renew or amend existing Adairsville Leases prior
to the Closing Date.
4.4.5 Real Property. (a) Adairsville does not own any
-------------
interest in any real property (other than as lessee) except as set
forth in the Adairsville Disclosure Memorandum (such properties being
referred to herein as "Adairsville Realty"). Except as disclosed in
the Adairsville Disclosure Memorandum, Adairsville has good title to
the Adairsville Realty and the titles to the Adairsville Realty are
covered by title insurance policies providing coverage in the amount
of the original purchase price, true, correct and complete copies of
which have been or will be furnished to United with the Adairsville
Disclosure Memorandum. Adairsville has not encumbered the Adairsville
Realty since the effective dates of the respective title insurance
policies.
(b) Except as set forth in the Adairsville Disclosure
Memorandum, the interests of Adairsville in the Adairsville Realty and
in and under each of the Adairsville Leases are free and clear of any
and all liens and encumbrances and are subject to no present claim,
contest, dispute, action or, to the knowledge of Adairsville,
threatened action at law or in equity.
(c) The present and past use and operations of, and
improvements upon, the Adairsville Realty and all real properties
leased by Adairsville (the "Adairsville Leased Real Properties") are
in compliance in all material respects with all applicable building,
fire, zoning and other applicable laws, ordinances and regulations and
with all deed restrictions of record, no notice of any violation or
alleged violation thereof has been received, and to the knowledge of
Adairsville there are no proposed changes therein that would affect
the Adairsville Realty, the Adairsville Leased Real Properties or
their uses.
(d) Except as set forth in the Adairsville Disclosure
Memorandum, no rent has been paid in advance and no security deposit
has been paid by, nor is any brokerage commission payable by or to,
Adairsville with respect to any Lease pursuant to which it is lessor
or lessee.
-14-
(e) Adairsville is not aware of any proposed or pending
change in the zoning of, or of any proposed or pending condemnation
proceeding with respect to, any of the Adairsville Realty or the
Adairsville Leased Real Properties which may adversely affect the
Adairsville Realty or the Adairsville Leased Real Properties or the
current or currently contemplated use thereof.
(f) The buildings and structures owned, leased or used by
Adairsville are, taken as a whole, in good operating order (except for
ordinary wear and tear), usable in the ordinary course of business,
and are sufficient and adequate to carry on the business and affairs
of Adairsville.
4.5 Employees and Benefits.
----------------------
4.5.1 Compensation Structure. The Disclosure Memo-
----------------------
randum contains a true and complete list of the names, titles,
responsibilities and compensation arrangements of each person whose
earned compensation (including without limitation all salary, wages,
bonuses and fringe benefits other than those fringe benefits made
available to all employees on a non-discriminatory basis), regardless
of whether actually payable in such year, from Adairsville for the
current fiscal year will equal or exceed $35,000. Adairsville has
heretofore made available or shall make available to United copies of
all written agreements, correspondence (other than outstanding offers
of employment to prospective employees whose compensation levels will
not exceed $35,000 in cash), memoranda and other written materials
currently in effect which have been provided to such employees
relating to their compensation.
4.5.2 Directors or Officers of Other Corporations.
-------------------------------------------
Except as set forth in the Disclosure Memorandum, no director, offi-
cer, or employee of Adairsville serves, or in the past five years has
served, as a director or officer of any other corporation on behalf of
or as a designee of Adairsville or any of its subsidiaries.
4.5.3 Employee Benefits. (a) Except as set forth
-----------------
in the Disclosure Memorandum, Adairsville does not have or maintain a
pension plan, profit sharing plan, group insurance plan, employee
welfare benefit plan (as such term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")), severance plan, bonus plan, stock option plan or deferred
compensation plan for any of its current or former employees.
(b) Each "employee benefit plan" as defined in Section
3(3) of ERISA, maintained by or on behalf of Adairsville (including
any plans which are "multi-employer plans" under Section 3(37)(A) of
ERISA ("Multi-employer Plans") and any defined benefit plan (as
defined in Section 3(35) of ERISA) terminated by Adairsville within
the five plan-years ending immediately before the Closing Date), which
covers or covered any employees of Adairsville, of any subsidiary or
of any predecessors ("Plan"), is listed in the Disclosure Memorandum,
-15-
and copies of all the Plans and Plan trusts (if applicable), Summary
Plan Descriptions, Actuarial Reports and valuations (if any), and
Annual Reports (and attachments thereto) on Form 5500, 5500-C or 5500-
R, as the case may be (if required pursuant to ERISA) for the most
recent three years with respect to the Plans, Internal Revenue Service
determination letters and any other related documents requested by
United or its counsel have been, or prior to the Closing Date will be,
provided to United.
(c) Except as set forth in the Disclosure Memorandum,
with respect to each Plan: no litigation or administrative or other
proceeding is pending or, to the knowledge of Sellers, threatened; the
Plan has been restated or amended so as to comply with all applicable
requirements of law, including all applicable requirements of ERISA,
the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder by the Internal Revenue Service and
United States Department of Labor, other than changes in such laws for
which amendments are not yet required; to the knowledge of Sellers,
neither the Plan nor any trustee, administrator or fiduciary thereof
has at any time been involved in any transaction relating to the Plan
which would constitute a breach of fiduciary duty under ERISA or a
"prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code, unless such transaction is specifically
permitted under Sections 407 or 408 of ERISA, Section 4975 of the Code
or a class or administrative exemption issued by the Department of
Labor.
(d) Except as set forth in the Disclosure Memorandum,
each Plan has been administered in compliance in all material respects
with applicable law and the terms of the Plan.
(e) Except as disclosed in the Disclosure Memorandum
and except for obligations under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), Adairsville has no
obligation to provide, or material liability for, health care, life
insurance or other benefits after termination of active employment.
As of the Closing Date, Adairsville will have provided adequate
reserves, or insurance or qualified trust funds, for all claims
incurred through the Closing Date, including adequate reserves to
provide for any post-retirement health care, life insurance or other
benefits with respect to periods of employment prior to the Closing
Date, based on an actuarial valuation satisfactory to the actuaries of
Adairsville representing a projection of claims expected to be
incurred for such retirees during its period of coverage under such
Plan.
(f) Except as described in the Disclosure Memorandum,
to the knowledge of Management, no fact or circumstance exists which
could constitute grounds in the future for the Pension Benefit
Guaranty Corporation ("PBGC") (or any successor to the PBGC) to take
any action whatsoever under Section 4042 of ERISA in connection with
any plan which an Affiliate (as defined below) of Adairsville main-
tains within the meaning of Section 4062 or 4064 of ERISA, and, in
either case, the PBGC has not previously taken any such action which
has, or reasonably might, result in any liability of an Affiliate or
Adairsville to the PBGC, which would have a material adverse effect on
the business of Adairsville. The term "Affiliate" for purposes of
this Section means any trade or business (whether incorporated or
unincorporated) which is a member of a group described in Sections
414(b) or 414(c) of the Code of which Adairsville is also a member.
-16-
(g) Only current and former employees of Adairsville
participate in the Plans.
4.5.4 Labor-Related Matters. Except as described
---------------------
in the Disclosure Memorandum, Adairsville is not, and has not been, a
party to any collective bargaining agreement or agreement of any kind
with any union or labor organization or to any agreement with any of
its employees which is not terminable at will or upon ninety (90) days
notice at the election of, and without cost or penalty to,
Adairsville. Adairsville has not received at any time in the past
five (5) years, any demand for recognition from any union, and no
attempt has been made, or will have been made as of the Closing Date,
to organize any of its employees. Adairsville has complied in all
material respects with all obligations under the National Labor
Relations Act, as amended, the Age Discrimination in Employment Act,
as amended, and all other federal, state and local labor laws and
regulations applicable to employees. There are no unfair labor
practice charges pending or threatened against Adairsville, and there
are, and in the past three (3) years there have been, no charges,
complaints, claims or proceedings, no slowdowns or strikes pending or
threatened against, or involving, as the case may be, Adairsville with
respect to any alleged violation of any legal duty (including but not
limited to any wage and hour claims, employment discrimination claims
or claims arising out of any employment relationship) by Adairsville
as to any of its employees or as to any person seeking employment
therefrom, and no such violations exist.
4.5.5 Related Party Transactions. Except for (a)
--------------------------
loans and extensions of credit made on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for comparable transactions by Adairsville with other persons who
are not affiliated with Adairsville, and which do not involve more
than the normal risk of repayment or present other unfavorable
features, (b) deposits, all of which are on terms and conditions
identical to those made available to all customers of Adairsville at
the time such deposits were entered into, and (c) transactions
specifically described in the Disclosure Memorandum, there are no
contracts with or commitments to present or former 5% or greater
shareholders, directors, officers, or employees involving the
expenditure after November 30, 1998 of more than $60,000 as to any one
individual, including with respect to any business directly or
indirectly controlled by any such person, or $100,000 for all such
contracts or commitments in the aggregate for all such individuals
(other than contracts or commitments relating to services to be
performed by any officer, director or employee as a currently-employed
employee of Adairsville).
4.6 Other Matters.
-------------
4.6.1 Regulatory Reports. Adairsville will make
------------------
available to United for review and inspection all applications,
reports or other documents filed by it for each of its past three full
fiscal years with any regulatory or governmental agencies. All of
such applications, reports and other documents have been prepared in
accordance with applicable rules and regulations of the regulatory
agencies with which they were filed.
4.6.2 Approvals, Consents and Filings. Except for the
-------------------------------
approval of the Federal Reserve and the Department of Banking, or as
set forth in the Adairsville Disclosure Memorandum, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) require any consent,
approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, or (b) violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to Adairsville, or any of Adairsville's assets.
-17-
4.6.3 Default. (a) Except for those consents described
-------
in or set forth pursuant to Section 4.6.2 above, neither the execution
of this Agreement nor consummation of the transactions contemplated
herein (i) constitutes a breach of or default under any contract or
commitment to which Adairsville is a party or by which Adairsville or
its properties or assets are bound, (ii) does or will result in the
creation or imposition of any security interest, lien, encumbrance,
charge, equity or restriction of any nature whatsoever in favor of any
third party upon any assets of Adairsville, or (iii) constitutes an
event permitting termination of any agreement or the acceleration of
any indebtedness of Adairsville.
(b) Adairsville is not in default under its articles of
incorporation or bylaws or under any term or provision of any security
deed, mortgage, indenture or security agreement or of any other
contract or instrument to which Adairsville is a party or by which it
or any of its property is bound.
4.6.4 Representations and Warranties. No representation
------------------------------
or warranty contained in the Adairsville Disclosure Memorandum, this
Article IV or in any certificate delivered by or at the direction of
Adairsville pursuant hereto or in connection with the transactions
contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit
any statement necessary in order to make any statement not misleading.
Copies of all documents that have been or will be furnished to United
in connection with this Agreement or pursuant hereto are or shall be
true, correct and complete.
ARTICLE V
---------
CONDUCT OF BUSINESS OF ADAIRSVILLE PENDING CLOSING
--------------------------------------------------
Except as expressly otherwise provided herein, Adairsville
covenants and agrees that, without the prior written consent of
United, between the date hereof and the Closing Date:
5.1 Conduct of Business. Adairsville will conduct its
-------------------
business only in the ordinary course, without the creation of any
indebtedness for borrowed money (other than deposit and similar
accounts and customary credit arrangements between banks in the
ordinary course of business).
5.2 Maintenance of Properties. Adairsville will maintain
-------------------------
its properties and assets in good operating condition, ordinary wear
and tear excepted.
-18-
5.3 Insurance. Adairsville will maintain and keep in full
---------
force and effect all of the insurance referred to in Section 4.3.4
hereof or other insurance equivalent thereto in all material respects.
5.4 Capital Structure. No change will be made in the
-----------------
authorized or issued capital stock or other securities of Adairsville,
and Adairsville will not issue or grant any right or option to
purchase or otherwise acquire any of the capital stock or other
securities of Adairsville or Adairsville Bank.
5.5 Dividends. No dividend, distribution or payment will
---------
be declared or made in respect to the Adairsville Stock and
Adairsville will not, directly or indirectly, redeem, purchase or
otherwise acquire any of its capital stock.
5.6 Amendment of Articles; Corporate Existence.
------------------------------------------
Adairsville will not amend its articles of incorporation or bylaws,
and Adairsville will maintain its corporate existence and powers.
5.7 No Acquisitions. Adairsville shall not acquire by
---------------
merging or consolidating with, or by purchasing a substantial portion
of the assets of, or by any other manner, any business or any
corporation, partnership, association or other entity or division
thereof or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to it.
5.8 No Dispositions. Adairsville will not sell, mortgage,
---------------
lease, buy or otherwise acquire, transfer or dispose of any
Adairsville Realty or interest therein (except for sales in the
ordinary course of business) and Adairsville will not, except in the
ordinary course of business, sell or transfer, mortgage, pledge or
subject to any lien, charge or other encumbrance any other tangible or
intangible asset.
5.9 Banking Arrangements. No change will be made in the
--------------------
banking and safe deposit arrangements referred to in Section 4.2.8
hereof.
5.10 Contracts. Except for renewals of existing contracts
---------
in effect as of the date hereof, or entering into a contract for the
purpose of substituting a vendor under any such existing contract,
Adairsville will not enter into any contract of the kind described in
Section 4.4.1 hereof.
5.11 Books and Records. The books and records of
-----------------
Adairsville will be maintained in the usual, regular and ordinary
course.
5.12 Advice of Changes. Adairsville shall promptly advise
-----------------
United orally and in writing of any change or event having, or which
the Adairsville Management believes could have, a material adverse
effect on the assets, liabilities, business, operations or financial
condition of Adairsville.
-19-
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF UNITED
----------------------------------------
As an inducement to Adairsville to enter into this Agreement
and to consummate the transactions contemplated hereby, United repre-
sents, warrants, covenants and agrees as follows:
6.1 United Disclosure Memorandum. United has heretofore
----------------------------
delivered to Adairsville a memorandum (the "United Disclosure
Memorandum") containing certain information regarding United as
indicated at various places in this Agreement. All information set
forth in the United Disclosure Memorandum or in documents incorporated
by reference in the United Disclosure Memorandum is true, correct and
complete, does not omit to state any fact necessary in order to make
the statements therein not misleading, and shall be deemed for all
purposes of this Agreement to constitute part of the representations
and warranties of United under this Article VI. The information
contained in the United Disclosure Memorandum shall be deemed to be
part of and qualify all representations and warranties contained in
this Article VI and the covenants in Article VII to the extent
applicable. All information in each of the documents and other
writings furnished to Adairsville pursuant to this Agreement or the
United Disclosure Memorandum is or will be true, correct and complete
and does not and will not omit to state any fact necessary in order to
make the statements therein not misleading. United shall promptly
provide Adairsville with written notification of any event, occurrence
or other information necessary to maintain the United Disclosure
Memorandum and all other documents and writings furnished to
Adairsville pursuant to this Agreement as true, correct and complete
in all material respects at all times prior to and including the
Closing.
6.2 Authority. Subject to the approval of various state and
---------
federal regulators, the execution, delivery and performance of this
Agreement and the other transactions contemplated or required in
connection herewith will not, with or without the giving of notice or
the passage of time, or both, (a) violate any provision of federal or
state law applicable to United or Interim, the violation of which
could be reasonably expected to have a material adverse effect on the
business, operations, properties, assets, financial condition or
prospects of United; (b) violate any provision of the articles of
incorporation or bylaws of United or Interim; (c) conflict with or
result in a breach of any provision of, or termination of, or
constitute a default under any instrument, license, agreement, or
commitment to which United is a party, which, singly or in the
aggregate, could reasonably be expected to have a material adverse
effect on the business, operations, properties, assets, financial
condition or prospects of United; or (d) constitute a violation of any
order, judgment or decree to which United is a party, or by which
United or any of its assets or properties are bound. Assuming this
Agreement constitutes the valid and binding obligation of Adairsville,
this Agreement constitutes the valid and binding obligation of United,
and is enforceable in accordance with its terms, except as limited by
laws affecting creditors' rights generally and by the discretion of
courts to compel specific performance.
6.3 Corporate Status. United and Interim are business
----------------
corporations duly organized, validly existing and in good standing
under the laws of the State of Georgia.
-20-
6.4 Litigation and Proceedings. Except as set forth on the
--------------------------
United Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or
investigations, pending or, to the knowledge of United, threatened
against, by or affecting United, or any officer, director, employee or
agent in such person's capacity as an officer, director, employee or
agent of United or relating to the business or affairs of United, in
any court or before any arbitrator or governmental agency, and no
judgment, award, order or decree of any nature has been rendered
against or with respect thereto by any agency, arbitrator, court,
commission or other authority, nor does United have any unasserted
contingent liabilities which might have an adverse effect on its
assets or on the operation of its businesses or which might prevent or
impede the consummation of the transactions contemplated by this
Agreement.
6.5 Approvals, Consents and Filings. Except for the approval of
-------------------------------
the Federal Reserve and the Department of Banking, or as set forth in
the United Disclosure Memorandum, neither the execution and delivery
of this Agreement nor the consummation of the transactions
contemplated hereby will (a) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, or (b) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to United,
or any of United's assets.
6.6 Default. (a) Except for those consents described in or set
-------
forth pursuant to Section 6.5 above, neither the execution of this
Agreement nor consummation of the transactions contemplated herein (i)
constitutes a breach of or default under any contract or commitment to
which United is a party or by which United or its properties or assets
are bound, (ii) does or will result in the creation or imposition of
any security interest, lien, encumbrance, charge, equity or
restriction of any nature whatsoever in favor of any third party upon
any assets of United, or (iii) constitutes an event permitting
termination of any agreement or the acceleration of any indebtedness
of United.
(b) United is not in default under its articles of
incorporation or bylaws or under any term or provision of any security
deed, mortgage, indenture or security agreement or of any other
contract or instrument to which United is a party or by which it or
any of its property is bound.
6.7 Regulatory Approval. United is not aware of any reasonable
-------------------
basis that would preclude it from obtaining regulatory approval for
the Merger.
6.8 Representations and Warranties. No representation or
------------------------------
warranty contained in the United Disclosure Memorandum, this Article
VI or in any certificate delivered by or at the direction of United
pursuant hereto or in connection with the transactions contemplated
hereby contains or shall contain any untrue statement, nor shall such
representations and warranties taken as a whole omit any statement
necessary in order to make any statement not misleading. Copies of
all documents that have been or will be furnished to Adairsville in
connection with this Agreement or pursuant hereto are or shall be
true, correct and complete.
-21-
ARTICLE VII
-----------
CONDITIONS TO OBLIGATIONS OF UNITED
-----------------------------------
All of the obligations of United under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of
the following conditions, any one or more of which may be waived by
United:
7.1 Veracity of Representations and Warranties. The
------------------------------------------
representations and warranties of Adairsville contained herein, in the
Disclosure Memorandum or in any certificate delivered pursuant to the
provisions hereof, or in connection herewith, shall be true in all
material respects as of the date when made and shall be deemed to be
made again at and as of the Closing Date and shall be true in all
material respects at and as of such time, except as a result of
changes or events expressly permitted or contemplated herein.
7.2 Performance of Agreements. Adairsville shall have
-------------------------
performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or on
the Closing Date.
7.3 Certificates, Resolutions, Opinion. Adairsville shall
----------------------------------
have delivered to United:
(a) a certificate executed by the Vice Chairman and
Secretary of Adairsville, dated as of the Closing Date, and
certifying in such detail as United may reasonably request to the
fulfillment of the conditions specified in Sections 7.1 and 7.2
hereof;
(b) duly adopted resolutions of the Board of Directors and
shareholders of Adairsville certified by the Secretary thereof,
dated the Closing Date, (i) authorizing and approving the
execution of this Agreement (with respect to the directors of
Adairsville) and the Merger Agreement (with respect to the
directors and shareholders of Adairsville) and the consummation of
the transactions contemplated herein and therein in accordance
with their respective terms and (ii) authorizing all other
necessary and proper corporate action to enable Adairsville to
comply with the terms hereof and thereof;
(c) certificates of the valid existence of Adairsville and
the Adairsville Bank under the laws of the State of Georgia,
executed by the Secretary of State and the Department of Banking,
respectively, and dated not more than five (5) business days prior
to the Closing Date;
(d) certificates from the appropriate public officials of
the State of Georgia, dated not more than five (5) business days
prior to the Closing Date, certifying that Adairsville has filed
all corporate tax returns required by the laws of such state and
has paid all taxes shown thereon to be due; and
-22-
(e) an opinion of Jenkens & ▇▇▇▇▇▇▇▇▇, P.C., counsel for
Adairsville, dated the Closing Date, in the form attached hereto
as Exhibit C.
7.4 Shareholder Approval. The Merger Agreement shall have
--------------------
been approved by the vote of the holders of at least two-thirds of
Adairsville Stock.
7.5 Regulatory Approvals. United shall have received from
--------------------
any and all governmental authorities, bodies or agencies having
jurisdiction over the transactions contemplated by this Agreement and
the Merger Agreement, including, but not limited to the Federal
Reserve and the Department of Banking, such consents, authorizations
and approvals as are necessary for the consummation thereof and all
applicable waiting or similar periods required by law shall have
expired. Such consents, authorizations and approvals shall be without
conditions other than such conditions as are ordinarily imposed in
connection with transactions of the type contemplated hereby and which
do not, in the reasonable judgment of United, and in the exercise of
the fiduciary duties of the Board of Directors of United, make it
inadvisable to consummate the Merger.
7.6 Certificate of Merger. The Secretary of State of the
---------------------
State of Georgia shall have issued a certificate of merger with regard
to the Merger in accordance with the provisions of the Georgia
Business Corporation Code.
7.7 Resignations of Directors. United shall have received
-------------------------
the resignations of all of the Directors of Adairsville and
Adairsville Bank effective as of the Closing Date.
7.8 No Adverse Changes. There shall have been no material
------------------
adverse change in the properties, business or financial condition of
Adairsville, in the aggregate, from that reflected in the 1998
Financial Statements of Adairsville included in the Adairsville
financial statements referred to in Section 4.2.6 of this Agreement,
and Adairsville shall not have suffered any substantial loss or damage
to its properties or assets whether or not insured that would affect
or impair its ability to conduct its business. It is understood that
a material adverse change will not include a change with respect to,
or affect on, Adairsville resulting from a change in law, rule,
regulation or GAAP or from any other matter affecting federally-
insured depository institutions generally (including, without
limitation, their holding companies), including, without limitation,
changes in general economic conditions and changes in prevailing
interest or deposit rates; provided, any such changes do not impact
Adairsville more adversely than other similarly situated financial
institutions.
ARTICLE VIII
------------
CONDITIONS TO OBLIGATIONS OF ADAIRSVILLE
----------------------------------------
All of the obligations of Adairsville under this Agreement
are subject to the fulfillment prior to or at the Closing Date of each
of the following conditions, any one or more of which may be waived by
it:
-23-
8.1 Veracity of Representations and Warranties. The
------------------------------------------
representations and warranties of United contained herein or in any
certificate, schedule or other document delivered pursuant to the
provisions hereof, or in connection herewith, shall be true in all
material respects as of the date when made and shall be deemed to be
made again at and as of the Closing Date and shall be true in all
material respects at and as of such time, except as a result of
changes or events expressly permitted or contemplated herein.
8.2 Performance of Agreements. United shall have performed
-------------------------
and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the
Closing Date.
8.3 Certificates, Resolutions, Opinion. United shall have
----------------------------------
delivered to Adairsville:
(a) a certificate executed by the President and Secretary
of United, dated the Closing Date, certifying in such detail as
Adairsville may reasonably request to the fulfillment of the
conditions specified in Sections 8.1 and 8.2 hereof; and
(b) duly adopted resolutions of the board of directors of
United, certified by the Secretary thereof, dated the Closing
Date, (i) authorizing and approving the execution and delivery of
this Agreement and the Merger Agreement on behalf of United, and
the consummation of the transactions contemplated herein and
therein in accordance with their respective terms, and (ii)
authorizing all other necessary and proper corporate actions to
enable United to comply with the terms hereof and thereof;
(c) duly adopted resolutions of the Board of Directors and
sole shareholder of Interim certified by the Secretary thereof,
dated the Closing Date, (i) authorizing and approving the
execution of the Merger Agreement and the consummation of the
transactions contemplated therein in accordance with its terms and
(ii) authorizing all other necessary and proper corporate action
to enable Interim to comply with the terms thereof;
(d) an opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for
United, dated the Closing Date, in the form attached hereto as
Exhibit D.
8.4 Shareholder Approval. The Merger Agreement shall have
--------------------
been approved by the vote of the holders of at least two-thirds of
Adairsville Stock.
8.5 Regulatory Approvals. Any and all governmental
--------------------
authorities, bodies or agencies having jurisdiction over the
transactions contemplated by this Agreement and the Merger Agreement,
including, but not limited to the Federal Reserve and the Department
of Banking, shall have granted such consents, authorizations and
approvals as are necessary for the consummation hereof and thereof,
and all applicable waiting or similar periods required by law shall
have expired. Such consents, authorizations and approvals shall be
-24-
without conditions other than such conditions as are ordinarily
imposed in connection with transactions of the type contemplated
hereby and which do not, in the reasonable judgment of Adairsville,
and in the exercise of the fiduciary duties of the Board of Directors
of Adairsville, make it inadvisable to consummate the Merger.
8.6 Certificate of Merger. The Secretary of State of the
---------------------
State of Georgia shall have issued a certificate of merger with regard
to the Merger in accordance with the provisions of the Georgia
Business Corporation Code.
8.7 Receipt of Fairness Opinion. Adairsville shall have
---------------------------
received an opinion of Dr. Bob Swasky (or another qualified person or
entity satisfactory to Adairsville and United), that the consideration
to be received by the shareholders of Adairsville pursuant to the
Merger is adequate.
8.8 Third Party Escrow Account. United shall have
--------------------------
transferred by wire all of the funds required to be paid as
consideration to Adairsville stockholders pursuant to Article II of
this Agreement to an independent third party escrow agent, which may
be a law firm chosen by United, under an escrow agreement in form and
substance reasonably satisfactory to Adairsville which will provide
that the escrow agent shall distribute the funds to Adairsville
shareholders solely upon receipt of notification by either United or
Adairsville of the effectiveness of the merger and receipt of
certificates formerly representing shares of Adairsville Stock duly
endorsed for transfer.
ARTICLE IX
----------
WARRANTIES, NOTICES, ETC.
-------------------------
9.1 Warranties. All statements contained in any
----------
certificate delivered by or on behalf of Adairsville or United
pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed representations and warranties hereunder by
them. Unless the context otherwise requires, the representations and
warranties required of Adairsville shall be required to be made, and
shall be considered made, on behalf of both Adairsville and its
subsidiary Adairsville Bank, and the representations and warranties
required of United, shall be required to be made, and shall be
considered made, on behalf of United and the United Subsidiaries.
9.2 Survival of Representations. All representations,
---------------------------
warranties, covenants, and agreements made by either party hereto in
or pursuant to this Agreement or in any exhibit or certificate
delivered pursuant hereto shall be deemed to have been material and to
have been relied upon by the party to which made, but, except as set
forth hereafter or specifically stated in this Agreement, such
representations, warranties, covenants, and agreements shall expire
and be of no further force and effect upon the consummation of the
Merger; provided, however, that the following shall survive
consummation of the Merger and the transactions contemplated hereby:
(a) the opinions of counsel referred to in Sections 7.3(e)
and 8.3(d) of this Agreement;
-25-
(b) any fraudulent misrepresentation of any material fact
made by either party hereto in or pursuant to this Agreement or in
any instrument, document or certificate delivered pursuant hereto;
and
(c) the covenant with respect to the confidentiality of
certain information contained in Section 3.4 hereof.
9.3 Notices. All notices or other communications required
-------
or permitted to be given or made hereunder shall be in writing and
delivered personally or sent by pre-paid, first class certified or
registered mail, return receipt requested, or by facsimile
transmission, to the intended recipient thereof at its address or
facsimile number set out below. Any such notice or communication
shall be deemed to have been duly given immediately (if given or made
in person or by facsimile confirmed by mailing a copy thereof to the
recipient in accordance with this Paragraph 9.3 on the date of such
facsimile), or five days after mailing (if given or made by mail), and
in proving same it shall be sufficient to show that the envelope
containing the same was delivered to the delivery service and duly
addressed, or that receipt of a facsimile was confirmed by the
recipient as provided above. Either party may change the address to
which notices or other communications to such party shall be delivered
or mailed by giving notice thereof to the other party hereto in the
manner provided herein.
(a) To Adairsville: Adairsville Bancshares, Inc.
▇▇▇▇ ▇▇▇. ▇▇▇
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CEO
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Jenkens & ▇▇▇▇▇▇▇▇▇, a Professional
Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(b) To United: United Community Banks, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-26-
With copies to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Suite 2800
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.4 Entire Agreement. This Agreement, the Merger Agreement
----------------
and the Confidentiality Agreement supersede all prior discussions and
agreements between Adairsville and United with respect to the Merger
and the other matters contained herein and therein, and this
Agreement, the Merger Agreement and the Confidentiality Agreement
contain the sole and entire agreement between Adairsville and United
with respect to the transactions contemplated herein and therein.
9.5 Waiver; Amendment. Prior to or on the Closing Date,
-----------------
United shall have the right to waive any default in the performance of
any term of this Agreement by Adairsville, to waive or extend the time
for the fulfillment by Adairsville of any or all of Adairsville'
obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of United under this
Agreement, except any condition which, if not satisfied, would result
in the violation of any law or applicable governmental regulation.
Prior to or on the Closing Date, Adairsville shall have the right to
waive any default in the performance of any term of this Agreement by
United, to waive or extend the time for the fulfillment by United of
any or all of United's obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of
Adairsville under this Agreement, except any condition which, if not
satisfied, would result in the violation of any law or applicable
governmental regulation. This Agreement may be amended by a
subsequent writing signed by the parties hereto, provided, however,
that the provisions of Sections 7.5 and 8.5 requiring regulatory
approval shall not be amended by the parties hereto without regulatory
approval.
9.6 Enforcement of Agreement. The parties hereto agree
------------------------
that irreparable damage would occur in the event that any of the
provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof in any court of the United States or any
state having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
ARTICLE X
---------
TERMINATION
-----------
This Agreement may be terminated at any time prior to or on
the Closing Date upon written notice to the other party as follows,
and, upon any such termination of this Agreement, neither party hereto
shall have any liability to the other, except that the provisions of
Sections 3.4, 3.6 and 3.10 hereof shall survive the termination of
this Agreement for any reason.
-27-
10.1 Material Adverse Change. By United, if, after the date
-----------------------
hereof, a material adverse change in the financial condition or
business of Adairsville shall have occurred which change would
reasonably be expected to have a material adverse affect on the market
price of Adairsville Stock, or if Adairsville shall have suffered a
material loss or damage to any of its properties or assets, which
change, loss or damage materially affects or impairs its ability to
conduct its business. It is understood that a material adverse change
will not include a change with respect to, or affect on, Adairsville
resulting from a change in law, rule, regulation or GAAP or from any
other matter affecting federally-insured depository institutions
generally (including, without limitation, their holding companies),
including, without limitation, changes in general economic conditions
and changes in prevailing interest or deposit rates; provided, any
such changes do not impact Adairsville more adversely than other
similarly situated financial institutions.
10.2 Noncompliance. (a) By United, if the terms, covenants
-------------
or conditions of this Agreement to be complied with or performed by
Adairsville before the Closing shall not have been substantially
complied with or performed at or before the Closing Date and such
noncompliance or nonperformance shall not have been waived by United.
(b) By Adairsville, if the terms, covenants or conditions of this
Agreement to be complied with or performed by United before the
Closing shall not have been substantially complied with or performed
at or before the Closing Date and such noncompliance or nonperformance
shall not have been waived by Adairsville.
10.3 Failure to Disclose. By United, if it learns of any
-------------------
fact or condition not disclosed in this Agreement, the Adairsville
Disclosure Memorandum, or the 1998 Adairsville Financial Statements,
which was required to be disclosed by Adairsville pursuant to the
provisions of this Agreement at or prior to the date of execution
hereof with respect to the business, properties, assets or earnings of
Adairsville which materially and adversely affects such business,
properties, assets or earnings or the ownership, value or continuance
thereof. It is understood that a material adverse change will not
include a change with respect to, or affect on, Adairsville resulting
from a change in law, rule, regulation or GAAP or from any other
matter affecting federally-insured depository institutions generally
(including, without limitation, their holding companies), including,
without limitation, changes in general economic conditions and changes
in prevailing interest or deposit rates; provided, any such changes do
not impact Adairsville more adversely than other similarly situated
financial institutions.
10.4 Adverse Proceedings. By either party, if any action,
-------------------
suit or proceeding shall have been instituted or threatened against
either party to this Agreement to restrain or prohibit, or to obtain
substantial damages in respect of, this Agreement or the consummation
of the transactions contemplated herein, which, in the good faith
opinion of Adairsville or United makes consummation of the
transactions herein contemplated inadvisable.
10.5 Termination Date. This Agreement shall automatically
----------------
terminate, without the requirement of notice on behalf of either
party, if the Closing Date shall not have occurred on or before June 30,
1999.
-28-
10.6 Shareholders Vote. By either party, if the Merger
-----------------
Agreement is not approved by the vote of the holders of Adairsville
Stock as required by applicable law.
10.7 Environmental Liability of Adairsville. By United, if
--------------------------------------
it learns of any potential material liability of Adairsville arising
from noncompliance with any federal, state or local environmental law
by Adairsville, or any potential material liability of Adairsville
arising from any environmental condition of the properties or assets
of Adairsville, including any properties or assets in which
Adairsville holds a security interest.
ARTICLE XI
----------
COUNTERPARTS, HEADINGS, ETC.
----------------------------
This Agreement may be executed simultaneously in any number
of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. The headings
herein set out are for convenience of reference only and shall not be
deemed a part of this Agreement. A pronoun in one gender includes and
applies to the other genders as well.
-29-
ARTICLE XII
-----------
BINDING EFFECT
--------------
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement may not be assigned by
either party without the prior written consent of the other.
ARTICLE XIII
------------
GOVERNING LAW
-------------
The validity and effect of this Agreement and the Merger
Agreement and the rights and obligations of the parties hereto and
thereto shall be governed by and construed and enforced in accordance
with the laws of the State of Georgia.
IN WITNESS WHEREOF, Adairsville and United have caused this
Agreement to be executed by their respective duly authorized corporate
officers and their respective corporate seals to be affixed hereto as
of the day and year first above written.
ADAIRSVILLE BANCSHARES, INC.
(CORPORATE SEAL) By: /s/ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
Chairman
Attest:
/s/ E. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
E. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Vice Chairman
UNITED COMMUNITY BANKS, INC.
(CORPORATE SEAL) By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
President
Attest:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
-30-
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made
and entered into as of this _____ day of January , 1999, by and
between ADAIRSVILLE INTERIM CORPORATION ("Interim"), and ADAIRSVILLE
BANCSHARES, INC. ("Adairsville"), both Georgia corporations (said
corporations are hereinafter collectively referred to as the
"Constituent Corporations").
R E C I T A L S:
WHEREAS, the authorized capital stock of Adairsville
consists of 1,000,000 shares of Common Stock, $4 par value per share,
of which 381,116 shares are issued and ("Adairsville Stock"); and
WHEREAS, the respective Boards of Directors of the
Constituent Corporations deem it advisable and in the best interests
of each such corporation and its shareholders that Interim merge with
Adairsville, with Adairsville being the surviving corporation; and
WHEREAS, the respective Boards of Directors of the
Constituent Corporations, by resolutions duly adopted, have
unanimously approved and adopted this Agreement; and
WHEREAS, the Board of Directors of Adairsville and Interim,
by resolutions duly adopted, have directed that this Agreement be
submitted to the shareholders of Adairsville and the sole shareholder
of Interim for their approval; and
WHEREAS, United Community Banks, Inc. ("United"), the sole
shareholder of Interim, pursuant to the Agreement and Plan of
Reorganization of even date herewith between Adairsville and United
(the "Acquisition Agreement") has agreed to pay the shareholders of
Adairsville $18.50 per share in cash, according to the terms and
conditions contained herein, on or after the Closing Date (as defined
herein) of the merger provided for herein.
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements herein contained, and other good and valuable
consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto have agreed
and do hereby agree, as follows:
1. MERGER.
------
Pursuant to and with the effects provided in the applicable
provisions of Article 11 of the Georgia Business Corporation Code, as
amended (Chapter 2 of Title 14 of the Official Code of Georgia),
Interim (hereinafter sometimes referred to as the "Merged
Corporation") shall be merged with and into Adairsville (the
"Merger"). Adairsville shall be the surviving corporation (the
"Surviving Corporation") and shall continue under the name
"Adairsville Bancshares, Inc.". On the Closing Date (as defined
herein) of the Merger, the individual existence of the Merged
Corporation shall cease and terminate.
2. ACTIONS TO BE TAKEN.
-------------------
The acts and things required to be done by the Georgia
Business Corporation Code in order to make this Agreement effective,
including the submission of this Agreement to the shareholders of the
Constituent Corporations and the filing of the Certificate of Merger
relating hereto in the manner provided in said Code, shall be attended
to and done by the proper officers of the Constituent Corporations
with the assistance of counsel as soon as practicable.
3. CLOSING DATE.
------------
The Merger shall be effective upon the approval of this
Agreement by the shareholders of the Constituent Corporations and the
filing of the Certificate of Merger relating hereto in the manner
provided in the Georgia Business Corporation Code (the "Closing
Date").
4. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
-----------------------------------------------------
CORPORATION.
-----------
(a) The Articles of Incorporation of Adairsville, as
heretofore amended, shall on the Closing Date be the Articles of
Incorporation of the Surviving Corporation.
(b) Until altered, amended or repealed, as therein
provided, the Bylaws of Adairsville as in effect on the Closing Date
shall be the Bylaws of the Surviving Corporation.
5. DIRECTORS.
---------
Upon the Merger contemplated herein becoming effective, the
directors of the Surviving Corporation shall be the individuals set
forth on Attachment 1 hereto. Said persons shall hold office until
the next annual meeting of the shareholders of the Surviving
Corporation and until their successors are elected in accordance with
the By-Laws of the Surviving Corporation. If on the Closing Date any
vacancy shall exist on the Board of Directors of the Surviving
Corporation, such vacancy shall be filled in the manner specified in
the By-Laws of the Surviving Corporation.
6. MANNER AND BASIS OF CONVERTING SHARES OF CAPITAL STOCK;
-------------------------------------------------------
CAPITAL STRUCTURE OF THE SURVIVING CORPORATION.
----------------------------------------------
The manner and basis of converting the shares of capital
stock of each of the Constituent Corporations into shares of the
Surviving Corporation or into cash or other property shall be as
follows:
(a) Upon the Closing Date each of the shares of Adairsville
Stock outstanding on the Closing Date shall be converted into $18.50
in cash (the "Purchase Price"); provided that if the Closing Date is
-2-
ninety days after the date hereof (the "Threshold Date"), then the
consideration per share payable shall be increased by the amount of
the net earnings per share of Adairsville between January 1, 1999 and
the Closing Date. Net earnings for the purpose of this Section 6(a)
shall be reduced by the amount of any non-operating earnings and not
reduced by any reserves or charges made pursuant to Section 3.13 of
the Acquisition Agreement.
(b) On or after the Closing Date, each holder as of the
Closing Date of any of the shares of Adairsville Stock, upon
presentation and surrender of the certificates representing such
shares to the transfer agent or agents designated by United, shall be
entitled to receive in exchange therefor a check in settlement for
cash payable for the Adairsville Stock. Until such surrender, each
such outstanding certificate which prior to the Closing Date
represented Adairsville Stock shall be deemed for all corporate
purposes, except as set forth below, to evidence the right to receive
the cash into which the same shall have been converted. Unless and
until any such certificate shall be so evidenced, the holder of such
certificate shall not have the right to receive any interest or any
cash into which the shares have been converted.
(c) Upon the Closing Date, the shares of Interim Stock
issued and outstanding immediately prior to the Closing Date shall be
converted into 381,116 shares, $4 par value per share, of Common Stock
of the Surviving Corporation.
7. TERMINATION OF SEPARATE EXISTENCE.
---------------------------------
Upon the Closing Date, the separate existence of the Merged
Corporation shall cease and the Surviving Corporation shall possess
all of the rights, privileges, immunities, powers and franchises, as
well of a public nature as of a private nature, of each of the
Constituent Corporations; and all property, real, personal and mixed,
and all debts due on whatever account, and all other choses in action,
and all and every other interest of or belonging to or due to each of
the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further
act or deed, and the title to any real estate or any interest therein,
vested in either of the Constituent Corporations shall not revert or
be in any way impaired by reason of the Merger. The Surviving
Corporation shall thenceforth be responsible and liable for all the
liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim existing or action or proceeding, civil or
criminal, pending by or against either of said Constituent
Corporations may be prosecuted as if the Merger had not taken place,
or the Surviving Corporation may be substituted in its place, and any
judgment rendered against either of the Constituent Corporations may
thenceforth be enforced against the Surviving Corporation; and neither
the rights of creditors nor any liens upon the property of either of
the Constituent Corporations shall be impaired by the Merger.
8. FURTHER ASSIGNMENTS.
-------------------
If at any time the Surviving Corporation shall consider or
be advised that any further assignments or assurances in law or any
other things are necessary or desirable to vest in said corporation,
according to the terms hereof, the title to any property or rights of
the Merged Corporation, the proper officers and directors of the
Merged Corporation shall and will execute and make all such proper
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assignments and assurances and do all things necessary and proper to
vest title in such property or rights in the Surviving Corporation,
and otherwise to carry out the purposes of this Agreement.
9. CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER.
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This Agreement is subject to, and consummation of the Merger
is conditioned upon, the fulfillment as of the Closing Date of each of
the following conditions:
(a) Approval of this Agreement by the affirmative vote of
the holders of two-thirds of the outstanding voting shares of
Adairsville Stock and the sole shareholder of Interim; and
(b) All the terms, covenants, agreements, obligations and
conditions of the Acquisition Agreement to be complied with, satisfied
and performed on or prior to the Closing Date (as defined therein),
shall have been complied with, satisfied and performed in all material
respects unless accomplishment of such covenants, agreements,
obligations and conditions has been waived by the party benefited
thereby.
9. TERMINATION.
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This Agreement may be terminated and the Merger abandoned in
accordance with the terms of the Acquisition Agreement, at any time
before or after adoption of this Agreement by the directors of either
of the Constituent Corporations, notwithstanding favorable action on
the Merger by the shareholders of the Constituent Corporations, but
not later than the issuance of the certificate of merger by the
Secretary of State of Georgia with respect to the Merger in accordance
with the provisions of the Georgia Business Corporation Code.
10. COUNTERPARTS; TITLE; HEADINGS.
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This Agreement may be executed simultaneously in any number
of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. The title of this
Agreement and the headings herein set out are for the convenience of
reference only and shall not be deemed a part of this Agreement.
11. AMENDMENTS; ADDITIONAL AGREEMENTS.
---------------------------------
At any time before or after approval and adoption by the
shareholders of Adairsville, this Agreement may be modified, amended
or supplemented by additional agreements, articles or certificates as
may be determined in the judgment of the respective Boards of
Directors of the Constituent Corporations to be necessary, desirable
or expedient to further the purposes of this Agreement, to clarify the
intention of the parties, to add to or modify the covenants, terms or
conditions contained herein or to effectuate or facilitate any
governmental approval of the Merger or this Agreement, or otherwise to
effectuate or facilitate the consummation of the transactions
contemplated hereby; provided, however, that no such modification,
amendment or supplement shall reduce to any extent the consideration
into which shares of Adairsville Stock shall be converted in the
Merger pursuant to Section 5 hereof.
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IN WITNESS WHEREOF, the Constituent Corporations have each
caused this Agreement to be executed on their respective behalfs and
their respective corporate seals to be affixed hereto as of the day
and year first above written.
ADAIRSVILLE INTERIM
CORPORATION
(CORPORATE SEAL)
By:___________________________
ATTEST: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
ADAIRSVILLE BANCSHARES, INC.
(CORPORATE SEAL)
By:___________________________
▇▇▇ ▇▇▇▇▇▇
ATTEST: Chairman
______________________________
E. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Vice Chairman
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ATTACHMENT 1
Directors
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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EXHIBIT B
United Community Banks, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
In connection with the proposed merger (the "Merger") of
Adairsville Interim Corporation ("Interim") with and into Adairsville
Bancshares, Inc. ("Adairsville"), pursuant to the Agreement and Plan
of Reorganization between United and Adairsville (the "Reorganization
Agreement") and the Agreement and Plan of Merger between Interim and
Adairsville, the undersigned hereby agrees to vote any and all shares
of the capital stock of Adairsville owned or controlled by her, him or
it in favor of the Merger.
Sincerely,
Estate of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
By:___________________________
Executor
______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Summerville/Trion Bancshares, Inc.
By:___________________________
Name:
Title:
______________________________
T. ▇▇▇ ▇▇▇▇▇▇
______________________________
▇▇▇ ▇▇▇▇▇▇
______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT C
(1) Adairsville was duly organized as a corporation, and is
existing and in good standing, under the laws of the State of Georgia.
(2) Adairsville has the corporate power to execute and deliver
the Agreement and Plan of Reorganization Agreement (the
"Reorganization Agreement") and the Agreement and Plan of Merger (the
"Merger Agreement"), to perform its obligations thereunder, to own and
use its Assets and to conduct its business.
(3) Adairsville has duly authorized the execution and delivery
of the Reorganization Agreement and the Merger Agreement and all
performance by Adairsville thereunder, and has duly executed and
delivered the Reorganization Agreement and the Merger Agreement.
(4) No consent, approval, authorization or other action filed
by, or filing with, any governmental authority of the United States or
the State of Georgia is required for Adairsville's execution and
delivery of the Reorganization Agreement and the Merger Agreement and
consummation of the Transaction, which consent, approval or
authorization has not been previously received.
(5) The Reorganization Agreement and the Merger Agreement are
enforceable against Adairsville.
(6) The authorized capital stock of Adairsville consists of
1,000,000 shares of Common Stock, $4 par value per share, of which
381,116 shares are issued and outstanding. All of the issued and
outstanding shares of capital stock of Adairsville has been duly
authorized and validly issued and are fully paid and non-assessable
and, to such counsel's knowledge, there are no outstanding options,
warrants, rights, calls, commitments, conversion rights, plans or
other agreements providing for the purchase or issuance of any
authorized but unissued shares of such capital stock.
EXHIBIT D
(1) United and Interim were duly organized as a corporations,
and are existing and in good standing, under the laws of the State of
Georgia.
(2) United has the corporate power to execute and deliver the
Agreement and Plan of Reorganization Agreement (the "Reorganization
Agreement") and Interim has the Corporate power and authority to
execute the Agreement and Plan of Merger (the "Merger Agreement"), and
each have the power to perform their respective obligations
thereunder, to own and use its Assets and to conduct its business.
(3) United has duly authorized the execution and delivery of the
Reorganization Agreement has duly authorized all performance by United
thereunder, and has duly executed and delivered the Reorganization
Agreement.
(4) Interim has duly authorized the execution and delivery of
the Merger Agreement and all performance by Interim thereunder, and
has duly executed and delivered the Merger Agreement.
(5) No consent, approval, authorization or other action filed
by, or filing with, any governmental authority of the United States or
the State of Georgia is required for United's execution and delivery
of the Reorganization Agreement and Interim's execution and delivery
of the Merger Agreement and consummation of the Transaction, which
consent, approval or authorization has not been previously received.
(6) The Reorganization Agreement and the Merger Agreement are
enforceable against United and Interim, respectively.
