EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COMMUNITY FIRST BANKING COMPANY,
COMMUNITY FIRST BANK,
FIRST DEPOSIT BANCSHARES, INC.,
AND
▇▇▇▇▇▇▇ FEDERAL BANK, FSB
Dated as of January 18, 2001
TABLE OF CONTENTS
LIST OF EXHIBITS.................................................................... IV
AGREEMENT AND PLAN OF MERGER........................................................ 1
ARTICLE 1. TRANSACTIONS AND TERMS OF THE MERGER................................... 1
1.1 Merger.................................................................. 1
1.2 Time and Place of Closing............................................... 2
1.3 Time and Place of Closing............................................... 2
1.4 Merger Consideration.................................................... 2
ARTICLE 2. TERMS OF MERGER........................................................ 2
2.1 Articles of Incorporation............................................... 2
2.2 Bylaws.................................................................. 2
2.3 Directors and Officers.................................................. 2
ARTICLE 3. MANNER OF CONVERTING SHARES............................................ 3
3.1 Conversion of Shares.................................................... 3
3.2 Anti-Dilution Provisions................................................ 6
3.3 Shares Held by First Deposit or CFB..................................... 6
3.4 Dissenting Shareholders................................................. 6
3.5 Fractional Shares....................................................... 7
3.6 Stock Options, Warrants and Other Similar Rights........................ 7
ARTICLE 4. EXCHANGE OF SHARES..................................................... 7
4.1 Exchange Procedures..................................................... 7
4.2 Rights of Former Shareholders of First Deposit.......................... 8
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF FIRST DEPOSIT AND ▇▇▇▇▇▇▇............ 9
5.1 Organization, Standing, and Power........................................ 9
5.2 Authority of First Deposit and ▇▇▇▇▇▇▇; No Breach By Agreement........... 10
5.3 Capital Stock............................................................ 11
5.4 First Deposit Subsidiaries............................................... 11
5.5 Financial Statements..................................................... 12
5.6 Absence of Undisclosed Liabilities....................................... 12
5.7 Absence of Certain Changes or Events..................................... 12
5.8 Tax Matters.............................................................. 14
5.9 Allowance for Possible Loan Losses....................................... 14
5.10 Assets................................................................. 14
5.11 Intellectual Property.................................................. 15
5.12 Environmental Matters.................................................. 15
5.13 Compliance with Laws................................................... 16
5.14 Labor Relations........................................................ 16
5.15 Employee Benefit Plans................................................. 17
5.16 Material Contracts..................................................... 18
5.17 Legal Proceedings...................................................... 19
5.18 Reports................................................................ 19
5.19 Statements True and Correct............................................ 19
5.20 Tax and Regulatory Matters............................................. 20
5.21 Charter Provisions..................................................... 20
5.22 Board Recommendation................................................... 20
5.23 Insurance Coverage and Claims.......................................... 20
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5.24 The ESOP...................................................................... 21
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF CFB AND THE BANK.............................. 22
6.1 Organization, Standing, and Power............................................. 22
6.2 Authority of CFB and the Bank; No Breach By Agreement......................... 22
6.3 Capital Stock................................................................. 23
6.4 CFB Subsidiaries.............................................................. 23
6.5 Financial Statements.......................................................... 24
6.6 Absence of Undisclosed Liabilities............................................ 24
6.7 Absence of Certain Changes or Events.......................................... 25
6.8 Tax Matters................................................................... 25
6.9 Allowance for Possible Loan Losses............................................ 26
6.10 Assets........................................................................ 27
6.11 Intellectual Property......................................................... 27
5.12 Environmental Matters......................................................... 28
6.13 Compliance with Laws.......................................................... 28
6.14 Labor Relations............................................................... 29
6.15 Employee Benefit Plans........................................................ 29
6.16 Material Contracts............................................................ 31
6.17 Legal Proceedings............................................................. 31
6.18 Reports....................................................................... 32
6.19 Statements True and Correct................................................... 32
6.20 Tax and Regulatory Matters.................................................... 32
6.21 Charter Provisions............................................................ 32
6.22 Board Recommendation.......................................................... 33
6.23 Insurance Coverage and Claims................................................. 33
ARTICLE 7. CONDUCT OF BUSINESS PENDING CONSUMMATION........................................ 33
7.1 Affirmative Covenants of First Deposit........................................ 33
7.2 Negative Covenants of First Deposit........................................... 33
7.3 Affirmative Covenants of CFB.................................................. 36
7.4 Negative Covenants of CFB..................................................... 36
7.5 Adverse Changes in Condition.................................................. 36
7.6 Reports....................................................................... 36
ARTICLE 8. ADDITIONAL AGREEMENTS........................................................... 37
8.1 Registration Statement........................................................ 37
8.2 Nasdaq Listing................................................................ 37
8.3 Shareholder Approval.......................................................... 37
8.4 Applications.................................................................. 37
8.5 Filings with State Offices.................................................... 38
8.6 Agreement as to Efforts to Consummate......................................... 38
8.7 Investigation and Confidentiality............................................. 38
8.8 Press Releases................................................................ 39
8.9 Certain Actions............................................................... 39
8.10 Tax Treatment................................................................. 39
8.11 Charter Provisions............................................................ 39
8.12 Agreements of Affiliates...................................................... 40
8.13 Employee Benefits and Contracts............................................... 40
8.14 Directors' and Officers' Protection........................................... 41
8.15 Merger Procedures Applicable to ESOP.......................................... 41
8.16 Information to ESOP Participants and Benficiaries............................. 42
ARTICLE 9. CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............................... 43
9.1 Conditions to Obligations of Each Party....................................... 43
9.2 Conditions to Obligations of CFB.............................................. 44
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9.3 Conditions to Obligations of First Deposit.................................. 45
ARTICLE 10. TERMINATION.............................................................. 47
10.1 Termination............................................................ 47
10.2 Effect of Termination.................................................. 47
10.3 Non-Survival of Representations and Covenants.......................... 48
ARTICLE 11. MISCELLANEOUS............................................................ 48
11.1 Definitions............................................................ 48
11.2 Expenses............................................................... 56
11.3 Brokers and Finders.................................................... 56
11.4 Entire Agreement....................................................... 56
11.5 Amendments............................................................. 57
11.6 Waivers................................................................ 57
11.7 Assignment............................................................. 57
11.8 Notices................................................................ 58
11.9 Governing Law.......................................................... 58
11.10 Counterparts........................................................... 58
11.11 Captions, Articles and Sections........................................ 58
11.12 Interpretations........................................................ 59
11.13 Enforcement of Agreement............................................... 59
11.14 Severability........................................................... 59
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LIST OF EXHIBITS
Exhibit
Number Description
------ -----------
1. Form of Agreement of Affiliates of First Deposit Bancshares, Inc. ((S)
8.12, (S) 9.2(e)).
2. Matters as to which ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ PLLC will opine.
((S) 9.2(d)).
3. Form of Claims Letter ((S) 9.2(f)).
4. Matters as to which Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP will opine.
((S) 9.3(d)).
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of January 18, 2001, by and among COMMUNITY FIRST BANKING COMPANY
("CFB"), a Georgia corporation located in Carrollton, Georgia; COMMUNITY FIRST
BANK (the "Bank"), a Georgia bank located in Carrollton, Georgia; FIRST DEPOSIT
BANCSHARES, INC.("First Deposit"), a Georgia corporation located in
Douglasville, Georgia; and ▇▇▇▇▇▇▇ FEDERAL BANK, FSB, a federal savings bank
located Douglasville, Georgia.
Preamble
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The respective Boards of Directors of CFB, the Bank, First Deposit and
▇▇▇▇▇▇▇ are of the opinion that the transactions described herein are in the
best interests of the Parties to this Agreement and their respective
shareholders. CFB is the sole shareholder of the Bank. First Deposit is the sole
shareholder of ▇▇▇▇▇▇▇, which has filed a pending application with the Georgia
Department of Banking and Finance (the "Department") to convert from a Federal
savings bank charter to a state bank charter (the "Conversion Application").
This Agreement provides for the acquisition of First Deposit by CFB, pursuant to
the merger of First Deposit and ▇▇▇▇▇▇▇ with and into the Bank. At the effective
time of such merger, the outstanding shares of the capital stock of First
Deposit shall be converted into the right to receive shares of the common stock
of CFB and cash. As a result, shareholders of First Deposit shall become
shareholders of CFB, subject to the provisions of Section 3.1(c) hereof, and CFB
shall conduct the business and operations of First Deposit and the Bank shall
conduct the business and operations of ▇▇▇▇▇▇▇. The transactions described in
this Agreement are subject to (a) approval of the shareholders of First Deposit;
(b) approval of the Department; (c) approval of the Board of Governors of the
Federal Reserve; and (d) satisfaction of certain other conditions described in
this Agreement. It is the intention of the Parties to this Agreement that the
merger, for federal income tax purposes, shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code.
Certain terms used in this Agreement are defined in Section 11.1 hereof.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the Parties agree
as follows:
ARTICLE 1.
TRANSACTIONS AND TERMS OF THE MERGER
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1.1 Merger. Subject to the terms and conditions of this Agreement, at the
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Effective Time, First Deposit and ▇▇▇▇▇▇▇ will merge with and into the Bank in
accordance with the provisions of Section 7-1-530 of the Financial Institutions
Code of Georgia and with the effect provided in Section 7-1-536 of the Financial
Institutions Code of Georgia (the "Merger"). The Bank shall be the Surviving
Bank resulting from the Merger and shall continue to be governed by the Laws of
the State of Georgia. The Merger shall be consummated pursuant to the terms of
this Agreement, which has been approved and adopted by the respective Boards of
Directors of CFB, the Bank, First Deposit and ▇▇▇▇▇▇▇, as set forth herein.
1.2 Time and Place of Closing. The closing of the transactions
-------------------------
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The Closing shall
be held at such location as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
--------------
Agreement shall become effective on the date and at the time the Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Georgia (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on the fifth business day following
the last to occur of (i) the effective date (including expiration of any
applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the earliest date on which the shareholders of First Deposit and CFB have
approved this Agreement to the extent such approval is required by applicable
Law; provided, however, that the date of the Effective Time shall not extend
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past the termination date set forth in Section 10.1(e) hereof.
1.4 Merger Consideration. The merger consideration will be payable in
--------------------
$14,835,331 cash, including payments made pursuant to and subject to possible
adjustment as provided in Section 3.6, and 723,675 shares of CFB Common Stock,
in accordance with the provisions of Section 3.1 of this Agreement.
ARTICLE 2.
TERMS OF MERGER
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2.1 Articles of Incorporation. The Articles of Incorporation of the Bank
-------------------------
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Bank until duly amended or repealed.
2.2 Bylaws. The Bylaws of the Bank in effect immediately prior to the
------
Effective Time shall be the Bylaws of the Surviving Bank until duly amended or
repealed.
2.3 Directors and Officers.
----------------------
(a) The directors of the CFB shall be (i) the directors of CFB
immediately prior to the Effective Time and (ii) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, together with
such additional persons as may thereafter be elected. Such persons shall serve
as the directors of the Surviving Corporation from and after the Effective Time
in accordance with the Bylaws of the Surviving Corporation. The directors of the
Surviving Bank shall be the directors of the Bank immediately prior to the
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Effective Time. Such persons shall serve as the directors of the Surviving Bank
from and after the Effective Time in accordance with the Bylaws of the Surviving
Bank.
(b) The executive officers of the Surviving Bank shall be (i) the
executive officers of the Bank immediately prior to the Effective Time and (ii)
such additional persons as may thereafter be elected. Such persons shall serve
as the executive officers of the Surviving Bank from and after the Effective
Time in accordance with the Bylaws of the Surviving Bank.
ARTICLE 3.
MANNER OF CONVERTING SHARES
---------------------------
3.1 Conversion of Shares. Subject to the provisions of this Article 3, at
--------------------
the Effective Time, by virtue of the Merger and without any action on the part
of First Deposit, or the shareholders of the foregoing, the shares of First
Deposit shall be converted as follows:
(a) Each share of capital stock of CFB issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Subject to the allocation provisions of Section 3.1(d), at the
Effective Time, the holders of First Deposit Common Stock outstanding at the
Effective Time (excluding shares held by any First Deposit Entity or any CFB
Entity, in each case other than in a fiduciary capacity or as a result of debts
previously contracted, and excluding shares held by shareholders who perfect
their statutory dissenters' rights as provided in Section 3.4) shall be entitled
to receive, and CFB shall pay or issue and deliver, in the aggregate, (i) a
number of shares of CFB Common Stock for each share of First Deposit Common
Stock based on the Exchange Ratio of 0.94512 (the "Per Share Stock
Consideration"), or (ii) an amount equal to $19.375 in cash for each such share
of First Deposit Common Stock (the "Per Share Cash Consideration"). The
foregoing consideration, collectively and in the aggregate, shall be referred to
herein as the "Merger Consideration."
(c) Subject to the allocation provisions of Section 3.1(d) below,
each holder of a share of First Deposit Common Stock may elect to receive the
Per Share Stock Consideration or the Per Share Cash Consideration for each such
share of First Deposit Common Stock; provided, however, that the aggregate
number of shares of CFB Common Stock with respect to which the Per Share Stock
Consideration shall be paid as the Merger Consideration shall be 723,675 shares
of CFB Common Stock. Such amount of the CFB Common Stock paid as Merger
Consideration shall be referred to in this Agreement as the "Total Stock Merger
Consideration," and such amount of cash paid as Merger Consideration shall be
referred to as the "Total Cash Merger Consideration."
(d) Election and Allocation Procedures.
(1) Election.
--------
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(i) An election form ("Election Form"), together with the
other transmittal materials described in Section 4.1, shall be mailed
as soon as reasonably practicable after the Effective Time to each
holder of First Deposit Common Stock of record at the Effective Time.
Such date of mailing shall be referred to hereinafter as the "Mailing
Date." Each Election Form shall permit a holder (or the beneficial
owner through appropriate and customary documentation and instruction)
of First Deposit Common Stock to elect to receive the Per Share Cash
Consideration with respect to all or any of such holder's First
Deposit Common Stock (shares as to which the election is made, "Cash
Election Shares"). The "Cash Election Amount" shall be equal to the
Per Share Cash Consideration multiplied by the total number of Cash
Election Shares. All shares of First Deposit Common Stock other than
the Cash Election Shares and the No Election Shares (as defined below)
shall be referred to herein as the "Stock Election Shares."
(ii) Any share of First Deposit Common Stock with respect to
which the holder (or the beneficial owner, as the case may be) shall
not have submitted to the Exchange Agent an effective, properly
completed Election Form on or before a date after the Closing Date to
be agreed upon by the parties hereto (which date will be set forth on
the Election Form), but in any event not earlier than 30 days after
the Mailing Date (such deadline, the "Election Deadline"), shall be
converted either into the Per Share Stock Consideration or the Per
Share Cash Consideration as set forth in Section 3.1(d)(2) (such
shares, the "No Election Shares"), with the exception that No Election
Shares held by a holder of less than 100 shares of First Deposit
Common Stock shall be deemed to be Cash Election Shares.
(iii) Any such election shall have been properly made only
if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form
shall be deemed properly completed only if accompanied by one or more
certificates (or customary affidavits and indemnification regarding
the loss or destruction of such certificates or the guaranteed
delivery of such certificates) representing all First Deposit Common
Stock covered by such Election Form, together with duly executed
transmittal materials included with the Election Form. Any Election
Form may be revoked or changed by the person submitting such Election
Form (or the beneficial owner of the shares covered by such Election
Form through appropriate and customary documentation and instruction)
at or prior to the Election Deadline. In the event an Election Form is
revoked prior to the Election Deadline and no other valid election is
made, the shares of First Deposit Common Stock represented by such
Election Form shall be No Election Shares. Subject to the terms of
this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard immaterial
defects in the Election Forms, and any good faith decisions of the
Exchange Agent regarding such matters shall be binding and conclusive.
Neither CFB nor the Exchange Agent
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shall be under any obligation to notify any person of any defect in an
Election Form.
(2) Allocation.
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As soon as reasonably practicable after the Effective Time, CFB
shall cause the Exchange Agent to allocate the Total Cash Merger
Consideration and Total Stock Merger Consideration among the holders
of First Deposit Common Stock, which shall be effected by the Exchange
Agent as follows:
(i) If the Total Cash Merger Consideration is greater than
the Cash Election Amount, then:
(A) each Cash Election Share shall be converted into
the right to receive an amount of cash equal to the Per Share
Cash Consideration;
(B) the Exchange Agent will select, on a pro rata
basis, first from among the holders of No Election Shares and
then, if necessary, from among the holders of Stock Election
Shares, a sufficient number of such shares ("Cash Designee
Shares") such that the sum of Cash Designee Shares and Cash
Election Shares multiplied by the Per Share Cash Consideration
equals as closely as practicable the Total Cash Merger
Consideration. Each Cash Designee Share shall be converted into
the right to receive the Per Share Cash Consideration; and
(C) each remaining unconverted share of First Deposit
Common Stock (after application of subsections (A) and (B) above)
shall be converted into the right to receive the Per Share Stock
Consideration.
(ii) If the Total Cash Merger Consideration is less than the
Cash Election Amount then:
(A) each Stock Election Share and each No Election
Share (other than any No Election Shares held by holders of less
than 100 shares of First Deposit Common Stock, which shares are
automatically deemed Cash Election Shares) shall be converted
into the right to receive the Per Share Stock Consideration;
(B) the Exchange Agent will select, on a pro rata
basis from among the holders of Cash Election Shares (other than
holders of No Election Shares holding less than 100 shares of
First Deposit Common Stock), a sufficient number of such shares
("Stock Designee Shares") such that the number of such Stock
Designee Shares multiplied by the Per Share Cash Consideration
equals as closely as practicable the difference between the Cash
Election Amount and the Total Cash Merger
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Consideration. The Stock Designee Shares shall be converted into
the right to receive the Per Share Stock Consideration; and
(C) each remaining unconverted share of First Deposit
Common Stock (after application of subsections (A) and (B) above)
shall be converted into the right to receive an amount of cash
equal to the Per Share Cash Consideration.
(iii) In the event that the Exchange Agent is required
pursuant to this Section 3.1(d) to designate from among all Stock
Election Shares the Cash Designee Shares to receive the Per Share Cash
Consideration, each holder of Stock Election Shares shall be allocated
a pro rata portion of the total Cash Designee Shares. Such pro ration
shall reflect the proportion that the number of Stock Election Shares
of each holder of Stock Election Shares bears to the total number of
Stock Election Shares.
(iv) In the event the Exchange Agent is required pursuant
to this Section 3.1(d) to designate from among all holders of Cash
Election Shares the Stock Designee Shares to receive the Per Share
Stock Consideration, each holder of Cash Election Shares (other than
holders of No Election Shares holding less than 100 shares of First
Deposit Common Stock) shall be allocated a pro rata portion of the
total Stock Designee Shares. Such pro ration shall reflect the
proportion that the number of Cash Election Shares of each holder of
Cash Election Shares bears to the total number of Cash Election
Shares.
3.2 Anti-Dilution Provisions. In the event CFB changes the number of
------------------------
shares of CFB Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) is prior to the
Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 Shares Held by First Deposit or CFB. Each of the shares of First
-----------------------------------
Deposit Common Stock held by any First Deposit Entity or by any CFB Entity, in
each case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 Dissenting Shareholders. Any holder of shares of First Deposit Common
-----------------------
Stock who perfects his dissenters' rights in accordance with and as contemplated
by Article 13, Part 2 of Title 14 of the GBCC, shall be entitled to receive the
value of such shares in cash as determined pursuant to such provision of law;
provided, that no such payment shall be made to any dissenting shareholder
--------
unless and until such dissenting shareholder has complied with the applicable
provisions of the GBCC and surrendered to CFB the certificates or certificates
representing the shares for which payment is being made. In the event that after
the Effective Time, a dissenting shareholder of First Deposit fails to perfect,
or effectively withdraws or loses, his right to appraisal of and payment for his
shares, CFB shall issue and deliver the consideration
6
to which such holder of shares of First Deposit Common Stock is entitled under
this Article 3 (without interest) upon surrender by such holder of the
certificate or certificates representing shares of First Deposit Common Stock
held by him. If and to the extent required by applicable Law, First Deposit will
establish (or cause to be established) an escrow account with an amount
sufficient to satisfy the maximum aggregate payment that may be required to be
paid to dissenting shareholders. Upon satisfaction of all claims of dissenting
shareholders, the remaining escrowed amount, reduced by payment of the fees and
expenses of the escrow agent, will be returned to CFB.
3.5 Fractional Shares. Notwithstanding any other provision of this
-----------------
Agreement, each holder of shares of First Deposit Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of CFB Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of CFB
Common Stock multiplied by the market value of one share of CFB Common Stock at
the Effective Time. The market value of one share of CFB Common Stock at the
Effective Time shall be the last sale price of such common stock on the Nasdaq
National Market (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by CFB) on the last trading day
preceding the Effective Time. No such holder will be entitled to dividends,
voting rights, or any other rights as a shareholder in respect of any fractional
shares.
3.6 Stock Options, Warrants and Other Similar Rights. Immediately prior
------------------------------------------------
to the Effective Time, CFB shall pay in exchange for each outstanding stock
option, pursuant to which a Person is or may be entitled to be issued any shares
of First Deposit Common Stock, an amount in cash equal to $7.50, such that from
and after the Effective Time, there shall be no outstanding stock options,
warrants, conversion rights or other rights of any nature pursuant to which a
Person is or may be entitled to be issued any shares of stock of CFB or to be
paid any sum of money or other valuable consideration in exchange therefor. In
effecting the termination and cancellation of such rights, First Deposit shall
obtain from any Person or Persons such consents, waivers, approvals and
authorizations as it deems necessary or advisable. CFB shall increase the amount
of cash merger consideration provided in Section 1.4 in the amount of $11.875
for each stock option that is exercised between the date of this Agreement and
the Effective Time.
ARTICLE 4.
EXCHANGE OF SHARES
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4.1 Exchange Procedures. Promptly after the Effective Time, CFB shall
-------------------
cause the exchange agent selected by CFB (the "Exchange Agent") to mail to each
holder of record of a certificate or certificates which represented shares of
First Deposit Common Stock immediately prior to the Effective Time (the
"Certificates") an Election Form, as required under Section 3.1(d), and other
appropriate transmittal materials and instructions (which shall specify that
delivery shall be effected, and risk of loss and title to such Certificates
shall pass, only upon proper delivery of such Certificates to the Exchange
Agent). The Certificate or Certificates of First Deposit Common Stock so
delivered shall be duly endorsed as the Exchange Agent may require. In the event
of a transfer of ownership of shares of First Deposit Common Stock
7
represented by Certificates that are not registered in the transfer records of
First Deposit, the consideration provided in Section 3.1 may be issued to a
transferee if the Certificates representing such shares are delivered to the
Exchange Agent, accompanied by all documents required to evidence such transfer
and by evidence satisfactory to the Exchange Agent that any applicable stock
transfer taxes have been paid. If any Certificate shall have been lost, stolen,
mislaid or destroyed, upon receipt of (i) an affidavit of that fact from the
holder claiming such Certificate to be lost, mislaid, stolen or destroyed, (ii)
such bond, security or indemnity as CFB and the Exchange Agent may reasonably
require, and (iii) any other documents necessary to evidence and effect the bona
fide exchange thereof, the Exchange Agent shall issue to such holder the
consideration into which the shares represented by such lost, stolen, mislaid or
destroyed Certificate shall have been converted. The Exchange Agent may
establish such other reasonable and customary rules and procedures in connection
with its duties as it may deem appropriate. After the Effective Time, each
holder of shares of First Deposit Common Stock (other than shares to be canceled
pursuant to Section 3.3 or as to which statutory dissenters' rights have been
perfected as provided in Section 3.4) issued and outstanding at the Effective
Time shall surrender the Certificate or Certificates representing such shares to
the Exchange Agent and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2. CFB shall not be obligated to deliver
the consideration to which any former holder of First Deposit Common Stock is
entitled as a result of the Merger until such holder surrenders such holder's
Certificate or Certificates for exchange as provided in this Section 4.1. Any
other provision of this Agreement notwithstanding, neither CFB nor the Exchange
Agent shall be liable to a holder of First Deposit Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat or similar Law. Approval of this
Agreement by the shareholders of First Deposit shall constitute ratification of
the appointment of the Exchange Agent.
4.2 Rights of Former Shareholders of First Deposit. At the Effective
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Time, the stock transfer books of First Deposit shall be closed as to holders of
First Deposit Common Stock immediately prior to the Effective Time and no
transfer of First Deposit Common Stock by any such holder shall thereafter be
made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 4.1, each Certificate theretofore representing shares of
First Deposit Common Stock (other than shares to be canceled pursuant to
Sections 3.3 and 3.4) shall from and after the Effective Time represent for all
purposes only the right to receive the consideration provided in Section 3.1 in
exchange therefor, subject, however, to CFB's obligation to pay any dividends or
make any other distributions with a record date prior to the Effective Time
which have been declared or made by First Deposit in respect of such shares of
First Deposit Common Stock in accordance with the terms of this Agreement and
which remain unpaid at the Effective Time. To the extent permitted by Law,
former shareholders of record of First Deposit shall be entitled to vote after
the Effective Time at any meeting of CFB shareholders the number of whole shares
of CFB Common Stock into which their respective shares of First Deposit Common
Stock are converted, regardless of whether such holders have exchanged their
Certificates for certificates representing CFB Common Stock in accordance with
the provisions of this Agreement. Whenever a dividend or other distribution is
declared by CFB on the CFB Common Stock, the record date for which is at or
after the Effective Time, the
8
declaration shall include dividends or other distributions on all shares of CFB
Common Stock issuable pursuant to this Agreement, but no dividend or other
distribution payable to the holders of record of CFB Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
Certificate until such holder surrenders such Certificate for exchange as
provided in Section 4.1. However, upon surrender of such Certificate, both the
CFB Common Stock certificate (together with all such undelivered dividends or
other distributions without interest) and any undelivered dividends and cash
payments payable hereunder (without interest) shall be delivered and paid with
respect to each share represented by such Certificate. No interest shall be
payable with respect to any cash to be paid under Section 3.1 of this Agreement
except to the extent required in connection with the exercise of dissenters'
rights.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF FIRST DEPOSIT AND ▇▇▇▇▇▇▇
-----------------------------------------------------------
First Deposit and ▇▇▇▇▇▇▇ hereby represent and warrant to CFB and the Bank
as follows:
5.1 Organization, Standing, and Power. First Deposit is a corporation
---------------------------------
duly organized, validly existing, and in good standing under the Laws of the
State of Georgia, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets.
▇▇▇▇▇▇▇ is a federal savings bank which has filed an application with the
Department to convert to a state bank charter. First Deposit is duly qualified
or licensed to transact business as a foreign corporation in good standing in
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a First Deposit Material Adverse Effect. The minute books and other
organizational documents for First Deposit and ▇▇▇▇▇▇▇ have been made available
to CFB for its review and, except as disclosed in Section 5.1 of the First
Deposit Disclosure Memorandum, are true and complete in all material respects as
in effect as of the date of this Agreement and accurately reflect in all
material respects all amendments thereto and all proceedings of the Board of
Directors and shareholders thereof.
5.2 Authority of First Deposit and ▇▇▇▇▇▇▇; No Breach By Agreement.
--------------------------------------------------------------
(a) First Deposit and ▇▇▇▇▇▇▇ have the corporate power and authority
necessary to execute, deliver, and perform their obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of First Deposit and ▇▇▇▇▇▇▇, subject to the approval of this Agreement by
the holders of a majority of the outstanding voting stock of First Deposit and
▇▇▇▇▇▇▇. Subject to such requisite shareholder approval, this Agreement
represents a legal, valid, and binding obligation of First Deposit and ▇▇▇▇▇▇▇,
enforceable against First Deposit and ▇▇▇▇▇▇▇ in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of creditors' rights
generally and except that the availability of
9
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by First
Deposit and ▇▇▇▇▇▇▇, nor the consummation by First Deposit and ▇▇▇▇▇▇▇ of the
transactions contemplated hereby, nor compliance by First Deposit and ▇▇▇▇▇▇▇
with any of the provisions hereof, will (i) conflict with or result in a breach
of any provision of First Deposit's Articles of Incorporation or Bylaws, or the
Charter, Articles of Incorporation, or Bylaws of any First Deposit Subsidiary or
any resolution adopted by the board of directors or the shareholders of any
First Deposit Entity, or (ii) except as disclosed in Section 5.2 of the First
Deposit Disclosure Memorandum, constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any First Deposit Entity under, any Contract or Permit of any First
Deposit Entity, where such Default or Lien, or any failure to obtain such
Consent, is reasonably likely to have, individually or in the aggregate, a First
Deposit Material Adverse Effect, or (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b), constitute or result in a Default under
or require any Consent pursuant to, any Law or Order applicable to any First
Deposit Entity or any of their respective material Assets (including any CFB
Entity or any First Deposit Entity becoming subject to or liable for the payment
of any Tax or any of the Assets owned by any CFB Entity or any First Deposit
Entity being reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the provisions of
applicable federal banking laws, and other than Consents required from
Regulatory Authorities, and other than notices to or filings with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a First Deposit Material Adverse Effect,
no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by First Deposit of the Merger and the other
transactions contemplated in this Agreement.
5.3 Capital Stock.
-------------
(a) As of the date of this Agreement, the authorized capital stock of
First Deposit consists of 10,000,000 shares of First Deposit Common Stock, of
which 1,502,550 shares are issued and outstanding and 10,000,000 shares of
preferred stock, no shares of which are issued and outstanding. All of the
issued and outstanding shares of capital stock of First Deposit are duly and
validly issued and outstanding and are fully paid and nonassessable under the
GBCC. None of the outstanding shares of capital stock of First Deposit has been
issued in violation of any preemptive rights of the current or past shareholders
of First Deposit.
(b) Except as set forth in Section 5.3(a), or as disclosed in Section
5.3(b) of the First Deposit Disclosure Memorandum, there are no shares of
capital stock or other equity securities of First Deposit outstanding and no
outstanding Equity Rights relating to the capital stock of First Deposit.
10
5.4 First Deposit Subsidiaries. First Deposit has disclosed in Section
--------------------------
5.4 of the First Deposit Disclosure Memorandum all of the First Deposit
Subsidiaries that are corporations (identifying its jurisdiction of
incorporation, each jurisdiction in which the character of its Assets or the
nature or conduct of its business requires it to be qualified and/or licensed to
transact business, and the number of shares owned and percentage ownership
interest represented by such share ownership) and all of the First Deposit
Subsidiaries that are general or limited partnerships, limited liability
companies, or other non-corporate entities (identifying the Law under which such
entity is organized, each jurisdiction in which the character of its Assets or
the nature or conduct of its business requires it to be qualified and/or
licensed to transact business, and the amount and nature of the ownership
interest therein). Except as disclosed in Section 5.4 of the First Deposit
Disclosure Memorandum, First Deposit or one of its wholly-owned Subsidiaries
owns all of the issued and outstanding shares of capital stock (or other equity
interests) of each First Deposit Subsidiary. No capital stock (or other equity
interest) of any First Deposit Subsidiary is or may become required to be issued
(other than to another First Deposit Entity) by reason of any Equity Rights, and
there are no Contracts by which any First Deposit Subsidiary is bound to issue
(other than to another First Deposit Entity) additional shares of its capital
stock (or other equity interests) or Equity Rights or by which any First Deposit
Entity is or may be bound to transfer any shares of the capital stock (or other
equity interests) of any First Deposit Subsidiary (other than to another First
Deposit Entity). There are no Contracts relating to the rights of any First
Deposit Entity to vote or to dispose of any shares of the capital stock (or
other equity interests) of any First Deposit Subsidiary. All of the shares of
capital stock (or other equity interests) of each First Deposit Subsidiary held
by a First Deposit Entity are fully paid and (except pursuant to 12 U.S.C.
Section 55 in the case of national banks and comparable, applicable State Law,
if any, in the case of State depository institutions) nonassessable and are
owned by the First Deposit Entity free and clear of any Lien. Except as
disclosed in Section 5.4 of the First Deposit Disclosure Memorandum, each First
Deposit Subsidiary is either a bank, savings association or a corporation, and
is duly organized, validly existing, and in good standing under the Laws of the
jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease, and operate its Assets and
to carry on its business as now conducted. Each First Deposit Subsidiary is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a First Deposit Material Adverse Effect. Each First Deposit
Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder. The minute book and other organizational documents for each First
Deposit Subsidiary have been made available to CFB for its review, and, except
as disclosed in Section 5.4 of the First Deposit Disclosure Memorandum, are true
and complete in all material respects as in effect as of the date of this
Agreement and accurately reflect in all material respects all amendments thereto
and all proceedings of the Board of Directors and shareholders thereof.
5.5 Financial Statements . Each of the First Deposit Financial Statements
--------------------
(including, in each case, any related notes) was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial
11
statements), and fairly presented in all material respects the consolidated
financial position of First Deposit and its Subsidiaries as at the respective
dates and the consolidated results of operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
5.6 Absence of Undisclosed Liabilities. No First Deposit Entity has any
----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a First Deposit Material Adverse Effect, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of First Deposit
as of September 30, 2000, included in the First Deposit Financial Statements or
reflected in the notes thereto. No First Deposit Entity has incurred or paid any
Liability since September 30, 2000, except for such Liabilities incurred or paid
(i) in the ordinary course of business consistent with past business practice
and which are not reasonably likely to have, individually or in the aggregate, a
First Deposit Material Adverse Effect or (ii) in connection with the
transactions contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since September 30, 2000, except
------------------------------------
as disclosed in the First Deposit Financial Statements delivered prior to the
date of this Agreement or as disclosed in Section 5.7 of the First Deposit
Disclosure Memorandum, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a First Deposit Material Adverse Effect, and (ii) First Deposit
Entities have not taken any action, or failed to take any action, prior to the
date of this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any of
the covenants and agreements of First Deposit provided in Article 7.
5.8 Tax Matters.
-----------
(a) All Tax Returns required to be filed by or on behalf of any First
Deposit Entities have been timely filed or requests for extensions have been
timely filed, granted, and, to the Knowledge of First Deposit, have not expired
for such periods, except to the extent that all such failures to file, taken
together, are not reasonably likely to have a First Deposit Material Adverse
Effect, and all Tax Returns filed are complete and accurate in all material
respects. All Taxes shown on filed Tax Returns have been paid. There is no audit
examination, deficiency, or refund Litigation with respect to any Taxes that is
reasonably likely to result in a determination that would have, individually or
in the aggregate, a First Deposit Material Adverse Effect, except as reserved
against in the First Deposit Financial Statements delivered prior to the date of
this Agreement or as disclosed in Section 5.8 of the First Deposit Disclosure
Memorandum. All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid. There are no Liens
with respect to Taxes upon any of the Assets of First Deposit Entities, except
for any such Liens which are not reasonably likely to have a First Deposit
Material Adverse Effect or with respect to which the Taxes are not yet due and
payable.
(b) None of the First Deposit Entities has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes
12
that relate to years currently under examination by the Internal Revenue Service
or other applicable taxing authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due for any of the
First Deposit Entities for the period or periods through and including the date
of the respective First Deposit Financial Statements that has been made and is
reflected on such First Deposit Financial Statements is sufficient to cover all
such Taxes.
(d) Deferred Taxes of First Deposit Entities have been provided for
in accordance with GAAP.
(e) Except as disclosed in Section 5.8 of the First Deposit
Disclosure Memorandum, none of the First Deposit Entities is a party to any Tax
allocation or sharing agreement and none of First Deposit Entities has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was First Deposit) or has any
Liability for Taxes of any Person (other than First Deposit and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law) as a transferee or successor or by
Contract or otherwise.
(f) Each of the First Deposit Entities is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a First Deposit Material Adverse Effect.
(g) Except as disclosed in Section 5.8 of the First Deposit
Disclosure Memorandum, none of the First Deposit Entities has made any payments,
is obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Sections 28OG or 162(m) of the Internal Revenue Code.
(h) Exclusive of the Merger, there has not been an ownership change,
as defined in Internal Revenue Code Section 382(g), of First Deposit Entities
that occurred during or after any Taxable Period in which First Deposit Entities
incurred a net operating loss that carries over to any Taxable Period ending
after December 31, 2000.
(i) No First Deposit Entity has or has had in any foreign country a
permanent establishment, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
(j) All material elections with respect to Taxes affecting First
Deposit Entities have been or will be timely made.
13
5.9 Allowance for Possible Loan Losses. The allowance for possible loan or
----------------------------------
credit losses (the "Allowance") shown on the consolidated balance sheets of
First Deposit included in the most recent First Deposit Financial Statements
dated prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of First Deposit included in the First Deposit
Financial Statements as of dates subsequent to the execution of this Agreement
will be, as of the dates thereof, adequate (within the meaning of GAAP and
applicable regulatory requirements or guidelines) to provide for all known or
reasonably anticipated losses relating to or inherent in the loan and lease
portfolios (including accrued interest receivables) of First Deposit Entities
and other extensions of credit (including letters of credit and commitments to
make loans or extend credit) by First Deposit Entities as of the dates thereof,
except where the failure of such Allowance to be so adequate is not reasonably
likely to have a First Deposit Material Adverse Effect.
5.10 Assets.
------
(a) Except as disclosed in Section 5.10 of the First Deposit
Disclosure Memorandum or as disclosed or reserved against in the First Deposit
Financial Statements delivered prior to the date of this Agreement, First
Deposit Entities have good and marketable title, free and clear of all Liens, to
all of their respective Assets, except for any such Liens or other defects of
title which are not reasonably likely to have a First Deposit Material Adverse
Effect. All tangible properties used in the businesses of the First Deposit
Entities are usable in the ordinary course of business consistent with First
Deposit's past practices.
(b) All Assets which are material to First Deposit's business on a
consolidated basis, held under leases or subleases by any of the First Deposit
Entities, are held under valid Contracts enforceable against First Deposit in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and, assuming the enforceability of such Contract against the
third party thereto, each such Contract is in full force and effect.
(c) First Deposit Entities currently maintain the insurance policies
described in Section 5.10(c) of the First Deposit Disclosure Memorandum. None of
the First Deposit Entities has received written notice from any insurance
carrier that (i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no claims for amounts exceeding in any individual case $25,000 pending under
such policies of insurance and no written notices of claims in excess of such
amounts have been given by any First Deposit Entity under such policies.
(d) The Assets of the First Deposit Entities include all material
Assets required to operate the business of the First Deposit Entities as
presently conducted.
14
5.11 Intellectual Property. Each First Deposit Entity owns or has a
---------------------
license to use all of the Intellectual Property used by such First Deposit
Entity in the ordinary course of its business. Each First Deposit Entity is the
owner of or has a license to any Intellectual Property sold or licensed to a
third party by such First Deposit Entity in connection with such First Deposit
Entity's business operations, and such First Deposit Entity has the right to
convey by sale or license any Intellectual Property so conveyed. No First
Deposit Entity is in material Default under any of its Intellectual Property
licenses. No proceedings have been instituted, or are pending or, to the
Knowledge of First Deposit, threatened, which challenge the rights of any First
Deposit Entity with respect to Intellectual Property used, sold or licensed by
such First Deposit Entity in the course of its business, nor has any person
claimed or alleged any rights to such Intellectual Property. To the Knowledge of
First Deposit, the conduct of the business of the First Deposit Entities does
not infringe any Intellectual Property of any other person. Except as disclosed
in Section 5.11 of the First Deposit Disclosure Memorandum, no First Deposit
Entity is obligated to pay any recurring royalties to any Person with respect to
any such Intellectual Property.
5.12 Environmental Matters.
---------------------
(a) Except as disclosed in Section 5.12 of the First Deposit
Disclosure Memorandum, to the Knowledge of First Deposit, each First Deposit
Entity, its Participation Facilities, and its Operating Properties are, and have
been, in compliance with all Environmental Laws, except for violations which are
not reasonably likely to have, individually or in the aggregate, a First Deposit
Material Adverse Effect.
(b) There is no Litigation pending or, to the Knowledge of First
Deposit, threatened, before any court, governmental agency, or authority or
other forum in which any First Deposit Entity or any of its Operating Properties
or Participation Facilities (or First Deposit in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant (i) for alleged noncompliance (including
by any predecessor) with any Environmental Law or (ii) relating to the emission,
migration, release, discharge, spillage, or disposal into the environment of any
Hazardous Material, whether or not occurring at, on, under, adjacent to, or
affecting (or potentially affecting) a site owned, leased, or operated by any
First Deposit Entity or any of its Operating Properties or Participation
Facilities or any neighboring property, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or in the
aggregate, a First Deposit Material Adverse Effect, nor, to the Knowledge of
First Deposit, is there any reasonable basis for any Litigation of a type
described in this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a First Deposit Material Adverse Effect.
(c) Except as disclosed in Section 5.12 of the First Deposit
Disclosure Memorandum, during the period of (i) any First Deposit Entity's
ownership or operation of any of their respective current Assets, or (ii) any
First Deposit Entity's participation in the management of any Participation
Facility or any Operating Property, to the Knowledge of First Deposit, there
have been no emissions, migrations, releases, discharges, spillages, or
disposals of Hazardous Material in, on, at, under, adjacent to, or affecting (or
potentially affecting) such properties or any neighboring properties, except
such as are not reasonably likely to have,
15
individually or in the aggregate, a First Deposit Material Adverse Effect.
Except as disclosed in Section 5.12 of the First Deposit Disclosure Memorandum,
prior to the period of (i) any First Deposit Entity's ownership or operation of
any of their respective current properties, (ii) any First Deposit Entity's
participation in the management of any Participation Facility or any Operating
Property, to the Knowledge of First Deposit, there were no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, or affecting any
such property, Participation Facility or Operating Property, except such as are
not reasonably likely to have, individually or in the aggregate, a First Deposit
Material Adverse Effect.
5.13 Compliance with Laws. Each First Deposit Entity has in effect all
--------------------
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
First Deposit Material Adverse Effect, and, to the Knowledge of First Deposit,
there has occurred no Default under any such Permit, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a First
Deposit Material Adverse Effect. Except as disclosed in Section 5.13 of the
First Deposit Disclosure Memorandum, none of the First Deposit Entities:
(a) is in Default under any of the provisions of its Articles of
Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits applicable to
its business or employees conducting its business, except for Defaults which are
not reasonably likely to have, individually or in the aggregate, a First Deposit
Material Adverse Effect; or
(c) since January 1, 1998, has received any written notification or
written communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any First Deposit Entity is not in compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
First Deposit Material Adverse Effect, (ii) threatening to revoke any Permits,
the revocation of which is reasonably likely to have, individually or in the
aggregate, a First Deposit Material Adverse Effect, or (iii) requiring any First
Deposit Entity to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment, or memorandum of understanding,
or to adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business or in any material manner relates to its
capital adequacy, its credit or reserve policies, its management, or the payment
of dividends. Copies of all material reports, correspondence, notices and other
documents relating to any inspection, audit, monitoring or other form of review
or enforcement action by a Regulatory Authority have been made available to CFB.
5.14 Labor Relations. No First Deposit Entity is the subject of any
---------------
Litigation asserting that it or any other First Deposit Entity has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other First Deposit Entity
to bargain with any labor organization as to wages or conditions of employment,
nor is any First Deposit Entity party to any collective bargaining
16
agreement, nor is there any strike or other labor dispute involving any First
Deposit Entity, pending or threatened, or to the Knowledge of First Deposit, is
there any activity involving any First Deposit Entity's employees seeking to
certify a collective bargaining unit or engaging in any other organization
activity.
5.15 Employee Benefit Plans.
----------------------
(a) First Deposit has disclosed in Section 5.15 of the First Deposit
Disclosure Memorandum, and has delivered or made available to CFB prior to the
execution of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any First Deposit Entity or ERISA
Affiliate (as defined in subparagraph (c) below) thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, "First Deposit Benefit Plans"). Each First Deposit
Benefit Plan which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "First Deposit
ERISA Plan." No First Deposit ERISA Plan is or has been a multiemployer plan
within the meaning of Section 3(37) of ERISA.
(b) All First Deposit Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a First Deposit Material Adverse Effect.
Except as disclosed in Section 5.15 of the First Deposit Disclosure Memorandum,
each First Deposit ERISA Plan which is intended to be qualified under Section
401(a) of the Internal Revenue Code has received a favorable determination
letter from the Internal Revenue Service, and First Deposit has no Knowledge of
any circumstances likely to result in revocation of any such favorable
determination letter. To the Knowledge of First Deposit, no First Deposit Entity
has engaged in a transaction with respect to any First Deposit Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any First Deposit Entity to a Tax imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts
which are reasonably likely to have, individually or in the aggregate, a First
Deposit Material Adverse Effect.
(c) No First Deposit Entity or any entity which is considered one
employer with First Deposit under Section 4001 of ERISA or Section 414 of the
Internal Revenue Code or Section 302 of ERISA (an "ERISA Affiliate") currently
sponsors, maintains or makes contributions to (or has ever in the past
sponsored, maintained or made contributions to) a "defined benefit plan" (as
defined in Section 414(j) of the Internal Revenue Code). No First Deposit ERISA
Plan is subject to the minimum funding requirements of Section 412 of the
Internal Revenue Code or the requirements of Title IV of ERISA.
17
(d) Except as disclosed in Section 5.15 of the First Deposit
Disclosure Memorandum, no First Deposit Entity has any Liability for retiree
health and life benefits under any of the First Deposit Benefit Plans and there
are no restrictions on the rights of such First Deposit Entity to amend or
terminate any such retiree health or benefit Plan without incurring any
Liability thereunder, which Liability is reasonably likely to have a First
Deposit Material Adverse Effect.
(e) Except as disclosed in Section 5.15 of the First Deposit
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any First Deposit
Entity from any First Deposit Entity under any First Deposit Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any First Deposit
Benefit Plan, or (iii) result in any acceleration of the time of payment or
vesting of any such benefit, where such payment, increase, or acceleration is
reasonably likely to have, individually or in the aggregate, a First Deposit
Material Adverse Effect.
(f) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any First Deposit Entity and their respective beneficiaries
have been fully reflected on the First Deposit Financial Statements to the
extent required by and in accordance with GAAP.
(g) To the best of First Deposit's knowledge and belief, none of its
employees, officers or other participants, or their respective dependents, have
any long-term disability or condition which, in the reasonable judgment of First
Deposit, would materially adversely affect the claims experience and/or costs of
any employee benefit plan or insurance.
5.16 Material Contracts. Except as disclosed in Section 5.16 of the First
------------------
Deposit Disclosure Memorandum or otherwise reflected in the First Deposit
Financial Statements, none of the First Deposit Entities, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (ii) any Contract
relating to the borrowing of money by any First Deposit Entity or the guarantee
by any First Deposit Entity of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, Federal Home Loan Bank advances and trade payables and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), (iii) any Contract which prohibits or restricts any First Deposit
Entity from engaging in any business activities in any geographic area, line of
business or otherwise in competition with any other Person, (iv) any Contract
between or among the First Deposit Entities, (v) any Contract relating to the
provision of data processing, network communication, or other technical services
to or by any First Deposit Entity, (vi) any exchange traded or over-the-counter
swap, forward, future, option, cap, floor, or collar financial Contract, or any
other interest rate or foreign currency protection Contract not included on its
balance sheet which is a financial derivative Contract, and (vii) any other
Contract or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K
18
filed by First Deposit with the SEC as of the date of this Agreement (together
with all Contracts referred to in Sections 5.10 and 5.15(a), the "First Deposit
Contracts"). With respect to each First Deposit Contract and except as disclosed
in Section 5.16 of the First Deposit Disclosure Memorandum: (i) assuming the
enforceability of such Contract against the third party thereto, each such
Contract is in full force and effect; (ii) no First Deposit Entity is in Default
thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a First Deposit Material Adverse Effect; (iii)
no First Deposit Entity has repudiated or waived any material provision of any
such Contract; and (iv) no other party to any such Contract is, to the Knowledge
of First Deposit, in Default in any respect, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a First Deposit
Material Adverse Effect, or has repudiated or waived any material provision
thereunder. Except as disclosed in Section 5.16 of the First Deposit Disclosure
Memorandum, no officer, director or employee of any First Deposit Entity is
party to any Contract which restricts or prohibits such officer, director or
employee from engaging in activities competitive with any Person, including any
First Deposit Entity. All of the indebtedness of any First Deposit Entity for
money borrowed (excluding deposits obtained in the ordinary course of business)
is prepayable at any time by such First Deposit Entity without penalty or
premium.
5.17 Legal Proceedings. There is no Litigation instituted or pending or,
-----------------
to the Knowledge of First Deposit, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any First Deposit Entity, or
against any director, employee or employee benefit plan (acting in such
capacity) of any First Deposit Entity, or against any Asset, interest, or right
of any of them, that is reasonably likely to have, individually or in the
aggregate, a First Deposit Material Adverse Effect, nor are there any Orders of
any Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any First Deposit Entity, that are reasonably likely to
have, individually or in the aggregate, a First Deposit Material Adverse Effect.
Section 5.17 of the First Deposit Disclosure Memorandum contains a summary of
all Litigation as of the date of this Agreement to which any First Deposit
Entity is a party and which names a First Deposit Entity as a defendant or
cross-defendant or for which, to the Knowledge of First Deposit, any First
Deposit Entity has any potential Liability.
5.18 Reports. Since January 1, 1998, or the date of organization if later,
-------
each First Deposit Entity has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with Regulatory Authorities, except for such filings which the
failure to so file is not reasonably likely to have, individually or in the
aggregate, a First Deposit Material Adverse Effect. As of their respective
dates, each of such reports and documents, including the financial statements,
exhibits, and schedules thereto, complied in all material respects with all
applicable Laws. As of its respective date, each such report and document did
not, in all material respects, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
5.19 Statements True and Correct. No statement, certificate, instrument,
---------------------------
or other writing furnished or to be furnished by any First Deposit Entity to CFB
pursuant to this
19
Agreement or any other document, agreement, or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any First Deposit Entity for inclusion
in the registration statement to be filed by CFB with the SEC in accordance with
Section 8.1 will, when such registration statement becomes effective, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein not misleading. All documents that
any First Deposit Entity is responsible for filing with any Regulatory Authority
in connection with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable Law. No documents to
be filed by a First Deposit Entity with any Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.20 Tax and Regulatory Matters. No First Deposit Entity has taken or
--------------------------
agreed to take any action or has any Knowledge of any fact or circumstance that
is reasonably likely to (i) prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
5.21 Charter Provisions. Each First Deposit Entity has taken all action so
------------------
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Charter, Articles of
Incorporation, Bylaws or other governing instruments of any First Deposit Entity
or restrict or impair the ability of CFB or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of any
First Deposit Entity that may be directly or indirectly acquired or controlled
by them.
5.22 Board Recommendation
--------------------
The Board of Directors of First Deposit, at a meeting duly called and held,
has by unanimous vote of those directors present (who constituted all of the
directors then in office) (i) determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of the
shareholders and (ii) resolved to recommend that the holders of the shares of
First Deposit Common Stock approve this Agreement.
5.23 Insurance Coverage and Claims. First Deposit has a directors' and
-----------------------------
officers' liability insurance polity in effect. There are no outstanding claims
filed or to be filed by any First Deposit Entity or director, officer or
employee of any First Deposit Entity under First Deposit's directors' and
officers' liability insurance or fidelity bond, nor has there been any
occurrence or incident that would require the filing of a Suspicious Activity
Report with any regulatory authority.
20
5.24 The ESOP.
--------
(a) Since its establishment by First Deposit, through and including
the Closing Date, the ESOP and its related trust have continuously met, and will
meet without exception as of the Closing Date, all applicable requirements of
qualification and exemption from taxation under Sections 401(a) and 501(a) of
the Internal Revenue Code, respectively, the breach or violation of which are
reasonably likely to have, individually or in the aggregate, a First Deposit
Material Adverse Effect. Since its establishment by First Deposit, through and
including the Closing Date, the ESOP and its related trust have continuously
complied with all of the requirements of Section 4975 of the Internal Revenue
Code and of ERISA.
(b) The ESOP constitutes an "employee stock ownership plan," as
defined in Section 4975(e)(7) of the Internal Revenue Code and the Treasury
Regulations promulgated thereunder, and as defined in Section 407(d)(6) of
ERISA.
(c) All employer securities of First Deposit held by the ESOP
constitute "qualifying employer securities," within the meaning of Section
4975(e)(8) of the Internal Revenue Code and Section 407(d)(5) of ERISA.
(d) None of the employer securities held by the ESOP is subject to
the limitations of Sections 1042(b)(2) or 1042(b)(4) of the Internal Revenue
Code, nor are allocations of such securities limited under Section 409(n) of the
Internal Revenue Code, nor will the Merger nor the related transactions
contemplated by this Agreement create any excise taxation under Section 4978(a)
of the Internal Revenue Code. Except as set forth in Section 5.24 of the First
Deposit Disclosure Memorandum, on the Closing Date, all employer securities held
by the ESOP on that date shall have been allocated to the accounts of
participants and beneficiaries.
(e) Those shares of First Deposit Common Stock held by the ESOP that
have not been allocated to the accounts of participants and beneficiaries are
the subject of a valid and enforceable security interest in favor of First
Deposit.
(f) No opinion, correspondence or other communication, whether
written or otherwise, has been received by First Deposit or any of its agents,
affiliates, associates, officers or directors, or any fiduciary of the ESOP,
from the United States Department of Labor, the Internal Revenue Service or any
other federal or state governmental or regulatory agency, body or authority, to
the effect that constituted a violation of or resulted in any liability under
ERISA or the Internal Revenue Code.
(g) The ESOP participants and beneficiaries are entitled to direct
the Trustee as to the exercise of all voting rights attributable to the shares
of First Deposit Common Stock then allocated to their respective ESOP accounts
with respect to the Merger, and such direction shall be accomplished in a form
and manner that meets the requirements of ERISA and applicable state and federal
laws and consistent with the ESOP Documents, as amended as necessary to satisfy
the provisions of this Agreement, including this Subsection (g).
21
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF CFB AND THE BANK
--------------------------------------------------
CFB and the Bank hereby represents and warrants to First Deposit and
▇▇▇▇▇▇▇ as follows:
6.1 Organization, Standing, and Power. CFB is a corporation and the Bank
---------------------------------
is a bank duly organized, validly existing, and in good standing under the Laws
of the State of Georgia, and both have the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its
material Assets. CFB is duly qualified or licensed to transact business as a
foreign corporation in good standing in the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a CFB Material
Adverse Effect. The minute book and other organizational documents for CFB and
the Bank have been made available to First Deposit for its review and, except as
disclosed in Section 6.1 of the CFB Disclosure Memorandum, are true and complete
in all material respects as in effect as of the date of this Agreement and
accurately reflect in all material respects all amendments thereto and all
proceedings of the Board of Directors and shareholders thereof.
6.2 Authority of CFB and the Bank; No Breach By Agreement.
-----------------------------------------------------
(a) CFB and the Bank have the corporate power and authority necessary
to execute, deliver, and perform their obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of CFB and the
Bank, subject to the approval of this Agreement by the holders of a majority of
the outstanding voting stock of CFB. Subject to such requisite shareholder
approval, this Agreement represents a legal, valid, and binding obligation of
CFB and the Bank, enforceable against CFB and the Bank in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).
22
(b) Neither the execution and delivery of this Agreement by CFB and
the Bank, nor the consummation by CFB and the Bank of the transactions
contemplated hereby, nor compliance by CFB and the Bank with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of CFB's Articles of Incorporation or Bylaws, or the Charter, Articles of
Incorporation, or Bylaws of any CFB Subsidiary or any resolution adopted by the
board of directors or the shareholders of any CFB Entity, or (ii) except as
disclosed in Section 6.2 of the CFB Disclosure Memorandum, constitute or result
in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any CFB Entity under, any Contract or
Permit of any CFB Entity, where such Default or Lien, or any failure to obtain
such Consent, is reasonably likely to have, individually or in the aggregate, a
CFB Material Adverse Effect, or (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b), constitute or result in a Default under
or require any Consent pursuant to, any Law or Order applicable to any CFB
Entity or any of their respective material Assets (including any First Deposit
Entity or any CFB Entity becoming subject to or liable for the payment of any
Tax or any of the Assets owned by any First Deposit Entity or any CFB Entity
being reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the provisions of
applicable federal banking laws, and other than Consents required from
Regulatory Authorities, and other than notices to or filings with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a CFB Material Adverse Effect, no notice
to, filing with, or Consent of, any public body or authority is necessary for
the consummation by CFB of the Merger and the other transactions contemplated in
this Agreement.
6.3 Capital Stock.
-------------
(a) As of the date of this Agreement, the authorized capital stock of
CFB consists of 10,000,000 shares of CFB Common Stock, of which 3,282,054 shares
are issued and outstanding and 2,944,789 are outstanding as treasury shares. All
of the issued and outstanding shares of capital stock of CFB are duly and
validly issued and outstanding and are fully paid and nonassessable under the
GBCC. None of the outstanding shares of capital stock of CFB has been issued in
violation of any preemptive rights of the current or past shareholders of CFB.
(b) Except as set forth in Section 6.3(a), or as disclosed in Section
6.3(b) of the CFB Disclosure Memorandum, there are no shares of capital stock or
other equity securities of CFB outstanding and no outstanding Equity Rights
relating to the capital stock of CFB.
6.4 CFB Subsidiaries. CFB has disclosed in Section 6.4 of the CFB
----------------
Disclosure Memorandum all of the CFB Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which the
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the number of shares
owned and percentage ownership interest represented by such share ownership) and
all of the CFB Subsidiaries that are general or limited partnerships, limited
liability companies, or other non-corporate entities (identifying the Law under
which such entity is organized, each
23
jurisdiction in which the character of its Assets or the nature or conduct of
its business requires it to be qualified and/or licensed to transact business,
and the amount and nature of the ownership interest therein). Except as
disclosed in Section 6.4 of the CFB Disclosure Memorandum, CFB or one of its
wholly-owned Subsidiaries owns all of the issued and outstanding shares of
capital stock (or other equity interests) of each CFB Subsidiary. No capital
stock (or other equity interest) of any CFB Subsidiary is or may become required
to be issued (other than to another CFB Entity) by reason of any Equity Rights,
and there are no Contracts by which any CFB Subsidiary is bound to issue (other
than to another CFB Entity) additional shares of its capital stock (or other
equity interests) or Equity Rights or by which any CFB Entity is or may be bound
to transfer any shares of the capital stock (or other equity interests) of any
CFB Subsidiary (other than to another CFB Entity). There are no Contracts
relating to the rights of any CFB Entity to vote or to dispose of any shares of
the capital stock (or other equity interests) of any CFB Subsidiary. All of the
shares of capital stock (or other equity interests) of each CFB Subsidiary held
by a CFB Entity are fully paid and (except pursuant to 12 U.S.C. Section 55 in
the case of national banks and comparable, applicable State Law, if any, in the
case of State depository institutions) nonassessable and are owned by the CFB
Entity free and clear of any Lien. Except as disclosed in Section 6.4 of the CFB
Disclosure Memorandum, each CFB Subsidiary is either a bank, savings association
or a corporation, and is duly organized, validly existing, and in good standing
under the Laws of the jurisdiction in which it is incorporated or organized, and
has the corporate power and authority necessary for it to own, lease, and
operate its Assets and to carry on its business as now conducted. Each CFB
Subsidiary is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a CFB Material
Adverse Effect. Each CFB Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder. The minute book and other organizational
documents for each CFB Subsidiary have been made available to First Deposit for
its review, and, except as disclosed in Section 6.4 of the CFB Disclosure
Memorandum, are true and complete in all material respects as in effect as of
the date of this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the Board of Directors and
shareholders thereof.
6.5 Financial Statements. Each of the CFB Financial Statements (including,
--------------------
in each case, any related notes) was prepared in accordance with GAAP applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes to such financial statements), and fairly presented in all material
respects the consolidated financial position of CFB and its Subsidiaries as at
the respective dates and the consolidated results of operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount or effect.
6.6 Absence of Undisclosed Liabilities. No CFB Entity has any Liabilities
----------------------------------
that are reasonably likely to have, individually or in the aggregate, a CFB
Material Adverse Effect, except Liabilities which are accrued or reserved
against in the consolidated balance sheets of CFB as of September 30, 2000,
included in the CFB Financial Statements or reflected in the
24
notes thereto. No CFB Entity has incurred or paid any Liability since September
30, 2000, except for such Liabilities incurred or paid (i) in the ordinary
course of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a CFB Material
Adverse Effect or (ii) in connection with the transactions contemplated by this
Agreement.
6.7 Absence of Certain Changes or Events. Since September 30, 2000,
------------------------------------
except as disclosed in the CFB Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 6.7 of the CFB Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a CFB
Material Adverse Effect, and (ii) CFB Entities have not taken any action, or
failed to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and agreements of CFB
provided in Article 7.
6.8 Tax Matters.
-----------
(a) All Tax Returns required to be filed by or on behalf of any CFB
Entities have been timely filed or requests for extensions have been timely
filed, granted, and, to the Knowledge of CFB, have not expired for such periods,
except to the extent that all such failures to file, taken together, are not
reasonably likely to have a CFB Material Adverse Effect, and all Tax Returns
filed are complete and accurate in all material respects. All Taxes shown on
filed Tax Returns have been paid. There is no audit examination, deficiency, or
refund Litigation with respect to any Taxes that is reasonably likely to result
in a determination that would have, individually or in the aggregate, a CFB
Material Adverse Effect, except as reserved against in the CFB Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 6.8 of the CFB Disclosure Memorandum. All Taxes and other Liabilities
due with respect to completed and settled examinations or concluded Litigation
have been paid. There are no Liens with respect to Taxes upon any of the Assets
of CFB Entities, except for any such Liens which are not reasonably likely to
have a CFB Material Adverse Effect or with respect to which the Taxes are not
yet due and payable.
(b) None of the CFB Entities has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) The provision for any Taxes due or to become due for any of the
CFB Entities for the period or periods through and including the date of the
respective CFB Financial Statements that has been made and is reflected on such
CFB Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of CFB Entities have been provided for in
accordance with GAAP.
25
(e) Except as disclosed in Section 6.8 of the CFB Disclosure
Memorandum, none of the CFB Entities is a party to any Tax allocation or sharing
agreement and none of CFB Entities has been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was CFB) or has any Liability for Taxes of any Person (other
than CFB and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign Law) as a transferee or
successor or by Contract or otherwise.
(f) Each of the CFB Entities is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms W-
9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a CFB Material Adverse Effect.
(g) Except as disclosed in Section 6.8 of the CFB Disclosure
Memorandum, none of the CFB Entities has made any payments, is obligated to make
any payments, or is a party to any Contract that could obligate it to make any
payments that would be disallowed as a deduction under Sections 28OG or 162(m)
of the Internal Revenue Code.
(h) Exclusive of the Merger, there has not been an ownership change,
as defined in Internal Revenue Code Section 382(g), of CFB Entities that
occurred during or after any Taxable Period in which CFB Entities incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
2000.
(i) No CFB Entity has or has had in any foreign country a permanent
establishment, as defined in any applicable tax treaty or convention between the
United States and such foreign country.
(j) All material elections with respect to Taxes affecting CFB
Entities have been or will be timely made.
6.9 Allowance for Possible Loan Losses. The allowance for possible loan
----------------------------------
or credit losses (the "Allowance") shown on the consolidated balance sheets of
CFB included in the most recent CFB Financial Statements dated prior to the date
of this Agreement was, and the Allowance shown on the consolidated balance
sheets of CFB included in the CFB Financial Statements as of dates subsequent to
the execution of this Agreement will be, as of the dates thereof, adequate
(within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known or reasonably anticipated losses relating
to or inherent in the loan and lease portfolios (including accrued interest
receivables) of CFB Entities and other extensions of credit (including letters
of credit and commitments to make loans or extend credit) by CFB Entities as of
the dates thereof, except where the failure of such Allowance to be so adequate
is not reasonably likely to have a CFB Material Adverse Effect.
26
6.10 Assets.
------
(a) Except as disclosed in Section 6.10 of the CFB Disclosure
Memorandum or as disclosed or reserved against in the CFB Financial Statements
delivered prior to the date of this Agreement, CFB Entities have good and
marketable title, free and clear of all Liens, to all of their respective
Assets, except for any such Liens or other defects of title which are not
reasonably likely to have a CFB Material Adverse Effect. All tangible properties
used in the businesses of the CFB Entities are usable in the ordinary course of
business consistent with CFB's past practices.
(b) All Assets which are material to CFB's business on a consolidated
basis, held under leases or subleases by any of the CFB Entities, are held under
valid Contracts enforceable against CFB in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and, assuming the
enforceability of such Contract against the third party thereto, each such
Contract is in full force and effect.
(c) CFB Entities currently maintain the insurance policies described
in Section 6.10(c) of the CFB Disclosure Memorandum. None of the CFB Entities
has received written notice from any insurance carrier that (i) any policy of
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no claims for amounts
exceeding in any individual case $25,000 pending under such policies of
insurance and no written notices of claims in excess of such amounts have been
given by any CFB Entity under such policies.
(d) The Assets of the CFB Entities include all material Assets
required to operate the business of the CFB Entities as presently conducted.
6.11 Intellectual Property. Each CFB Entity owns or has a license to use
---------------------
all of the Intellectual Property used by such CFB Entity in the ordinary course
of its business. Each CFB Entity is the owner of or has a license to any
Intellectual Property sold or licensed to a third party by such CFB Entity in
connection with such CFB Entity's business operations, and such CFB Entity has
the right to convey by sale or license any Intellectual Property so conveyed. No
CFB Entity is in material Default under any of its Intellectual Property
licenses. No proceedings have been instituted, or are pending or, to the
Knowledge of CFB, threatened, which challenge the rights of any CFB Entity with
respect to Intellectual Property used, sold or licensed by such CFB Entity in
the course of its business, nor has any person claimed or alleged any rights to
such Intellectual Property. To the Knowledge of CFB, the conduct of the business
of the CFB Entities does not infringe any Intellectual Property of any other
person. Except as disclosed in Section 6.11 of the CFB Disclosure Memorandum, no
CFB Entity is obligated to pay any recurring royalties to any Person with
respect to any such Intellectual Property.
27
6.12 Environmental Matters.
---------------------
(a) Except as disclosed in Section 6.12 of the CFB Disclosure
Memorandum, to the Knowledge of CFB, each CFB Entity, its Participation
Facilities, and its Operating Properties are, and have been, in compliance with
all Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a CFB Material Adverse Effect.
(b) There is no Litigation pending or, to the Knowledge of CFB,
threatened, before any court, governmental agency, or authority or other forum
in which any CFB Entity or any of its Operating Properties or Participation
Facilities (or CFB in respect of such Operating Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the emission, migration, release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by any CFB Entity or
any of its Operating Properties or Participation Facilities or any neighboring
property, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a CFB Material
Adverse Effect, nor, to the Knowledge of CFB, is there any reasonable basis for
any Litigation of a type described in this sentence, except such as is not
reasonably likely to have, individually or in the aggregate, a CFB Material
Adverse Effect.
(c) Except as disclosed in Section 6.12 of the CFB Disclosure
Memorandum, during the period of (i) any CFB Entity's ownership or operation of
any of their respective current Assets, or (ii) any CFB Entity's participation
in the management of any Participation Facility or any Operating Property, to
the Knowledge of CFB, there have been no emissions, migrations, releases,
discharges, spillages, or disposals of Hazardous Material in, on, at, under,
adjacent to, or affecting (or potentially affecting) such properties or any
neighboring properties, except such as are not reasonably likely to have,
individually or in the aggregate, a CFB Material Adverse Effect. Except as
disclosed in Section 6.12 of the CFB Disclosure Memorandum, prior to the period
of (i) any CFB Entity's ownership or operation of any of their respective
current properties, (ii) any CFB Entity's participation in the management of any
Participation Facility or any Operating Property, to the Knowledge of CFB, there
were no releases, discharges, spillages, or disposals of Hazardous Material in,
on, under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a CFB Material Adverse Effect.
6.13 Compliance with Laws. Each CFB Entity has in effect all Permits
--------------------
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a CFB Material
Adverse Effect, and, to the Knowledge of CFB, there has occurred no Default
under any such Permit, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a CFB Material Adverse Effect. Except as
disclosed in Section 6.13 of the CFB Disclosure Memorandum, none of the CFB
Entities:
28
(a) is in Default under any of the provisions of its Articles of
Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits applicable to
its business or employees conducting its business, except for Defaults which are
not reasonably likely to have, individually or in the aggregate, a CFB Material
Adverse Effect; or
(c) since January 1, 1998, has received any written notification or
written communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any CFB Entity is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
CFB Material Adverse Effect, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a CFB Material Adverse Effect, or (iii) requiring any CFB Entity to
enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or to adopt
any Board resolution or similar undertaking, which restricts materially the
conduct of its business or in any material manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends. Copies of all material reports, correspondence, notices and other
documents relating to any inspection, audit, monitoring or other form of review
or enforcement action by a Regulatory Authority have been made available to
First Deposit.
6.14 Labor Relations. No CFB Entity is the subject of any Litigation
---------------
asserting that it or any other CFB Entity has committed an unfair labor practice
(within the meaning of the National Labor Relations Act or comparable state law)
or seeking to compel it or any other CFB Entity to bargain with any labor
organization as to wages or conditions of employment, nor is any CFB Entity
party to any collective bargaining agreement, nor is there any strike or other
labor dispute involving any CFB Entity, pending or threatened, or to the
Knowledge of CFB, is there any activity involving any CFB Entity's employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
6.15 Employee Benefit Plans.
----------------------
(a) CFB has disclosed in Section 6.15 of the CFB Disclosure
Memorandum, and has delivered or made available to First Deposit prior to the
execution of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any CFB Entity or ERISA Affiliate
(as defined in subparagraph (c) below) thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, "CFB Benefit Plans"). Each CFB Benefit Plan which is
an "employee pension benefit plan," as that term is defined in
29
Section 3(2) of ERISA, is referred to herein as a "CFB ERISA Plan." No CFB ERISA
Plan is or has been a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) To the Knowledge of CFB, all CFB Benefit Plans are in compliance
with the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a CFB Material Adverse Effect. Except as
disclosed in Section 6.15 of the CFB Disclosure Memorandum, each CFB ERISA Plan
which is intended to be qualified under Section 401(a) of the Internal Revenue
Code has received a favorable determination letter from the Internal Revenue
Service, and CFB has no Knowledge of any circumstances likely to result in
revocation of any such favorable determination letter. To the Knowledge of CFB,
no CFB Entity has engaged in a transaction with respect to any CFB Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any CFB Entity to a Tax imposed by either Section 4975 of
the Internal Revenue Code or Section 502(i) of ERISA in amounts which are
reasonably likely to have, individually or in the aggregate, a CFB Material
Adverse Effect.
(c) No CFB Entity or any entity which is considered one employer with
CFB under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (an "ERISA Affiliate") currently sponsors, maintains, or
makes contributions to a "defined benefit plan" (as defined in Section 414(j) of
the Internal Revenue Code). No CFB ERISA Plan is subject to the minimum funding
requirements of Section 412 of the Internal Revenue Code or the requirements of
Title IV of ERISA.
(d) Except as disclosed in Section 6.15 of the CFB Disclosure
Memorandum, no CFB Entity has any Liability for retiree health and life benefits
under any of the CFB Benefit Plans and there are no restrictions on the rights
of such CFB Entity to amend or terminate any such retiree health or benefit Plan
without incurring any Liability thereunder, which Liability is reasonably likely
to have a CFB Material Adverse Effect.
(e) Except as disclosed in Section 6.15 of the CFB Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any CFB Entity from
any CFB Entity under any CFB Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any CFB Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit, where such
payment, increase, or acceleration is reasonably likely to have, individually or
in the aggregate, a CFB Material Adverse Effect.
(f) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any CFB Entity and their respective beneficiaries have been fully
reflected on the CFB Financial Statements to the extent required by and in
accordance with GAAP.
30
(g) To the best of CFB's knowledge and belief, none of its employees,
officers or other participants, or their respective dependents, have any long-
term disability or condition which, in the reasonable judgment of CFB, would
materially adversely affect the claims experience and/or costs of any employee
benefit plan or insurance maintained by or through any First Deposit Entity.
6.16 Material Contracts. Except as disclosed in Section 6.16 of the CFB
------------------
Disclosure Memorandum or otherwise reflected in the CFB Financial Statements,
none of the CFB Entities, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $50,000, (ii) any Contract relating to the borrowing of money by any
CFB Entity or the guarantee by any CFB Entity of any such obligation (other than
Contracts evidencing deposit liabilities, purchases of federal funds, fully-
secured repurchase agreements, Federal Home Loan Bank advances and trade
payables and Contracts relating to borrowings or guarantees made in the ordinary
course of business), (iii) any Contract which prohibits or restricts any CFB
Entity from engaging in any business activities in any geographic area, line of
business or otherwise in competition with any other Person, (iv) any Contract
between or among the CFB Entities, (v) any Contract relating to the provision of
data processing, network communication, or other technical services to or by any
CFB Entity, (vi) any exchange traded or over-the-counter swap, forward, future,
option, cap, floor, or collar financial Contract, or any other interest rate or
foreign currency protection Contract not included on its balance sheet which is
a financial derivative Contract, and (vii) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a Form 10-K filed by
CFB with the SEC as of the date of this Agreement (together with all Contracts
referred to in Sections 6.10 and 6.15(a), the "CFB Contracts"). With respect to
each CFB Contract and except as disclosed in Section 6.16 of the CFB Disclosure
Memorandum: (i) assuming the enforceability of such Contract against the third
party thereto, each such Contract is in full force and effect; (ii) no CFB
Entity is in Default thereunder, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a CFB Material Adverse Effect;
(iii) no CFB Entity has repudiated or waived any material provision of any such
Contract; and (iv) no other party to any such Contract is, to the Knowledge of
CFB, in Default in any respect, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a CFB Material Adverse Effect,
or has repudiated or waived any material provision thereunder. Except as
disclosed in Section 6.16 of the CFB Disclosure Memorandum, no officer, director
or employee of any CFB Entity is party to any Contract which restricts or
prohibits such officer, director or employee from engaging in activities
competitive with any Person, including any CFB Entity. All of the indebtedness
of any CFB Entity for money borrowed (excluding deposits obtained in the
ordinary course of business) is prepayable at any time by such CFB Entity
without penalty or premium.
6.17 Legal Proceedings. There is no Litigation instituted or pending or, to
-----------------
the Knowledge of CFB, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any CFB Entity, or against any director,
employee or employee benefit plan (acting in such capacity) of any CFB Entity,
or against any Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a CFB Material Adverse Effect,
nor are there any
31
Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any CFB Entity, that are reasonably likely to
have, individually or in the aggregate, a CFB Material Adverse Effect. Section
6.17 of the CFB Disclosure Memorandum contains a summary of all Litigation as of
the date of this Agreement to which any CFB Entity is a party and which names a
CFB Entity as a defendant or cross-defendant or for which, to the Knowledge of
CFB, any CFB Entity has any potential Liability.
6.18 Reports. Since January 1, 1998, or the date of organization if later,
-------
each CFB Entity has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities, except for such filings which the failure to
so file is not reasonably likely to have, individually or in the aggregate, a
CFB Material Adverse Effect. As of their respective dates, each of such reports
and documents, including the financial statements, exhibits, and schedules
thereto, complied in all material respects with all applicable Laws. As of its
respective date, each such report and document did not, in all material
respects, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
6.19 Statements True and Correct. No statement, certificate, instrument, or
---------------------------
other writing furnished or to be furnished by any CFB Entity to First Deposit
pursuant to this Agreement or any other document, agreement, or instrument
referred to herein contains or will contain any untrue statement of material
fact or will omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by any CFB Entity
for inclusion in the registration statement to be filed by First Deposit with
the SEC in accordance with Section 8.1 will, when such registration statement
becomes effective, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein not
misleading. All documents that any CFB Entity is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law. No documents to be filed by a CFB Entity with any Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
6.20 Tax and Regulatory Matters. No CFB Entity has taken or agreed to take
--------------------------
any action or has any Knowledge of any fact or circumstance that is reasonably
likely to (i) prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) or result in the imposition of a condition or restriction of
the type referred to in the last sentence of such Section.
6.21 Charter Provisions. Each CFB Entity has taken all action so that the
------------------
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement do not and will not result in the
grant of any rights to any Person under the Charter, Articles of Incorporation,
Bylaws or other governing instruments of
32
any CFB Entity or restrict or impair the ability of First Deposit or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, shares of any CFB Entity that may be directly or indirectly acquired
or controlled by them.
6.22 Board Recommendation
--------------------
The Board of Directors of CFB, at a meeting duly called and held, has by
unanimous vote of those directors present (who constituted all of the directors
then in office) (i) determined that this Agreement and the transactions
contemplated hereby are fair to and in the best interests of the shareholders
and (ii) resolved to recommend that the holders of the shares of CFB Common
Stock approve this Agreement.
6.23 Insurance Coverage and Claims. CFB has a directors' and officers'
-----------------------------
liability insurance polity in effect. There are no outstanding claims filed or
to be filed by any CFB Entity or director, officer or employee of any CFB Entity
under CFB's directors' and officers' liability insurance or fidelity bond, nor
has there been any occurrence or incident that would require the filing of a
Suspicious Activity Report with any regulatory authority.
ARTICLE 7.
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
7.1 Affirmative Covenants of First Deposit. From the date of this
--------------------------------------
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of CFB shall have been obtained, and
except as may result from the conversion of ▇▇▇▇▇▇▇ from a federal savings
association to a Georgia-chartered commercial bank or as otherwise expressly
contemplated herein, First Deposit shall, and shall cause each of its
Subsidiaries to (a) operate its business only in the usual, regular, and
ordinary course, (b) preserve intact its business organization and Assets and
maintain its rights and franchises, and (c) take no action which would (i)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c), or (ii) materially adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement.
7.2 Negative Covenants of First Deposit. From the date of this Agreement
-----------------------------------
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of CFB shall have been obtained, and except as
may result from the conversion of ▇▇▇▇▇▇▇ from a federal savings association to
a Georgia-chartered commercial bank or as otherwise expressly contemplated
herein, First Deposit covenants and agrees that it will not do or agree or
commit to do, or permit any of its Subsidiaries to do or agree or commit to do,
any of the following:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any First Deposit entity, or
33
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a First Deposit Entity to another
First Deposit Entity) in excess of an aggregate of $100,000 (for First Deposit
Entities on a consolidated basis) except in the ordinary course of the business
of the First Deposit Subsidiaries consistent with past practices (which shall
include, for the First Deposit Subsidiaries that are depository institutions,
creation of deposit liabilities, purchases of federal funds, advances from the
Federal Reserve Bank or Federal Home Loan Bank, and entry into repurchase
agreements fully secured by U.S. government or agency securities), or impose, or
suffer the imposition, on any Asset of any First Deposit Entity of any Lien or
permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as of the date
hereof that are disclosed in Section 7.2(b) of the First Deposit Disclosure
Memorandum); however, in no event shall First Deposit incur any additional debt
or other obligation for borrowed money, nor shall ▇▇▇▇▇▇▇ receive advances from
the Federal Home Loan Bank in an amount in excess of 110% of its aggregate
outstanding advances at December 31, 2000; or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any First Deposit Entity, or declare or pay any dividend or
make any other distribution in respect of First Deposit's capital stock or take
any other action which would cause the cash on hand at First Deposit to be less
than the lesser of $5,000,000 or the amount on hand at December 31, 2000;
provided, however, that First Deposit may (to the extent legally and
-------- -------
contractually permitted to do so) pay a quarterly dividend of up to $0.08 per
share for the fourth quarter of 2000 and for each quarter of 2001 (except for
any quarter during which the Effective Time occurs, provided that the First
Deposit shareholders will receive the CFB dividend for such quarter) on the
shares of First Deposit Common Stock; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, or as disclosed in Section 7.2(d) of the First
Deposit Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of First Deposit Common Stock or any other capital stock of
any First Deposit Entity, or any stock appreciation rights, or any option,
warrant, or other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of any
First Deposit Entity or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of First Deposit Common Stock, or
sell, lease, mortgage or otherwise dispose of or otherwise encumber any Asset
having a book value in excess of $100,000 other than in the ordinary course of
business for reasonable and adequate consideration or any shares of capital
stock of any First Deposit Subsidiary (unless any such shares of stock are sold
or otherwise transferred to another First Deposit Entity); or
34
(f) except for loans made in the ordinary course of its business,
make any material investment, either by purchase of stock or securities,
contributions to capital, Asset transfers, or purchase of any Assets, in any
Person other than a wholly owned First Deposit Subsidiary, or otherwise acquire
direct or indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of control by
a depository institution Subsidiary in its fiduciary capacity, or (iii) the
creation of new wholly owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees
or officers of any First Deposit Entity, except in accordance with past practice
specifically disclosed in Section 7.2(g) of the First Deposit Disclosure
Memorandum or as required by Law; pay any severance or termination pay or any
bonus other than pursuant to written policies or written Contracts in effect on
the date of this Agreement and disclosed in Section 7.2(g) of the First Deposit
Disclosure Memorandum; and enter into or amend any severance agreements with
officers of any First Deposit Entity; grant any increase in fees or other
increases in compensation or other benefits to directors of any First Deposit
Entity except in accordance with past practice disclosed in Section 7.2(g) of
the First Deposit Disclosure Memorandum; or voluntarily accelerate the vesting
of any stock options or other stock-based compensation or employee benefits or
other Equity Rights; or
(h) enter into or amend any employment Contract between any First
Deposit Entity and any Person (unless such amendment is required by Law) that
the First Deposit Entity does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered), at any
time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any First Deposit Entity
or terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any First Deposit Entity other than any such
change that is required by Law or that, in the opinion of counsel, is necessary
or advisable to maintain the tax qualified status of any such plan, or make any
distributions from such employee benefit plans, except as required by Law, the
terms of such plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to conform
to changes in Tax Laws or regulatory accounting requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice or except as set forth in Section 7.2(k) of the First Deposit
Disclosure Memorandum, settle any Litigation involving any Liability of any
First Deposit Entity for material money damages or restrictions upon the
operations of any First Deposit Entity; or
(l) except in the ordinary course of business, enter into, modify,
amend or terminate any material Contract (including any loan Contract with an
unpaid balance exceeding $50,000) or waive, release, compromise or assign any
material rights or claims.
35
7.3 Affirmative Covenants of CFB. From the date of this Agreement until
----------------------------
the earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of First Deposit shall have been obtained, and except
as otherwise expressly contemplated herein, CFB shall and shall cause each of
its Subsidiaries to (a) operate its business only in the usual, regular, and
ordinary course, (b) preserve intact its business organization and Assets and
maintain its rights and franchises, and (c) take no action which would (i)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c), or (ii) materially adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement.
7.4 Negative Covenants of CFB. From the date of this Agreement until the
-------------------------
earlier of the Effective Time or the termination of this Agreement, unless the
prior written consent of First Deposit shall have been obtained, and except as
otherwise expressly contemplated herein, CFB covenants and agrees that it will
not amend the Articles of Incorporation or Bylaws of CFB in any manner adverse
to the holders of First Deposit Common Stock, or take any action which will
materially adversely impact the ability of CFB Entities to consummate the
transactions contemplated by this Agreement.
7.5 Adverse Changes in Condition. Each of CFB and First Deposit agrees to
----------------------------
give written notice promptly to the other upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a First Deposit Material Adverse Effect or a CFB Material Adverse
Effect, as applicable, or (ii) would cause or constitute a material breach of
any of its representations, warranties, or covenants contained herein, and to
use its reasonable efforts to prevent or promptly to remedy the same.
7.6 Reports. Each of CFB and First Deposit and their Subsidiaries shall
-------
file all reports required to be filed by it with Regulatory Authorities between
the date of this Agreement and the Effective Time and shall deliver to the other
copies of all such periodic reports promptly after the same are filed. If
financial statements are contained in any such reports filed with the SEC, such
financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material). As of their respective dates, such reports filed with the SEC will
comply in all material respects with the Securities Laws and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.
36
ARTICLE 8.
ADDITIONAL AGREEMENTS
---------------------
8.1 Registration Statement. As soon as practicable after execution of this
----------------------
Agreement, CFB shall prepare and file the Registration Statement with the SEC,
and shall use its reasonable efforts to cause the Registration Statement to
become effective under the 1933 Act and take any action required to be taken
under the applicable state Blue Sky or Securities Laws in connection with the
issuance of the shares of CFB Common Stock upon consummation of the Merger.
First Deposit shall cooperate in the preparation and filing of the Registration
Statement and shall furnish all information concerning it and the holders of its
capital stock as CFB may reasonably request in connection with such action. CFB
and First Deposit shall make all necessary filings with respect to the Merger
under the Securities Laws.
8.2 Nasdaq Listing. CFB shall use its reasonable efforts to list, prior to
--------------
the Effective Time, on the Nasdaq National Market the shares of CFB Common Stock
to be issued to the holders of First Deposit Common Stock pursuant to the
Merger, and CFB shall give all notices and make all filings with the NASD
required in connection with the transactions contemplated herein.
8.3 Shareholder Approval.
--------------------
(a) First Deposit shall call a Shareholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of this Agreement
and such other related matters as it deems appropriate. In connection with the
Shareholders' Meeting, the Board of Directors of First Deposit shall recommend
to its shareholders, subject to the conditions in such authorization and
recommendation by the Board of Directors, the approval of the matters submitted
for approval (subject to the Board of Directors of First Deposit, after having
consulted with and considered the advice of outside counsel, reasonably
determining in good faith that the making of such recommendation, or the failure
to withdraw or modify its recommendation, would constitute a breach of fiduciary
duties of the members of such Board of Directors to First Deposit's
shareholders, under applicable law), and the Board of Directors and officers of
First Deposit shall use their reasonable efforts to obtain such shareholders'
approval (subject to the Board of Directors of First Deposit, after having
consulted with and considered the advice of outside counsel, reasonably
determining in good faith that the taking of such actions would constitute a
breach of fiduciary duties of the members of such Board of Directors to the
First Deposit shareholders, under applicable law).
(b) CFB shall call a Shareholders' Meeting to be held as soon as
reasonably practicable after the Registration Statement is declared effective by
the SEC, for the purpose of voting on approval of the issuance of shares of CFB
Common Stock pursuant to the Agreement, as required by law, by the provisions of
any governing instruments, or by the rules of the NASD.
8.4 Applications. CFB shall promptly prepare and file, and First Deposit
------------
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement, including
37
without limitation, the Board of Governors of the Federal Reserve System, the
Office of Thrift Supervision and the Georgia Department of Banking and Finance,
seeking the requisite Consents necessary to consummate the transactions
contemplated by this Agreement. The Parties shall deliver to each other copies
of all filings, correspondence and orders to and from all Regulatory Authorities
in connection with the transactions contemplated hereby.
8.5 Filings with State Offices. Upon the terms and subject to the
--------------------------
conditions of this Agreement, CFB shall cause to be filed the Certificate of
Merger with the Secretary of State of the State of Georgia.
8.6 Agreement as to Efforts to Consummate. Subject to the terms and
-------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.7 Investigation and Confidentiality.
---------------------------------
(a) Prior to the Effective Time, each Party shall keep the other
Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the Party
reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby, and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of any other Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations, and
financial positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return or certify the destruction of all documents and copies thereof, and all
work papers containing confidential information received from the other Party.
(c) Each Party shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with Persons which were
considering an Acquisition Proposal with respect to such Party to preserve the
confidentiality of the information relating to such Party and its Subsidiaries
provided to such Persons and their Affiliates and Representatives.
38
(d) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a First Deposit Material
Adverse Effect or a CFB Material Adverse Effect, as applicable.
8.8 Press Releases. Prior to the Effective Time, First Deposit and CFB
--------------
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.8
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.9 Certain Actions. Except with respect to this Agreement and the
---------------
transactions contemplated hereby, no First Deposit Entity nor any
Representatives thereof retained by any First Deposit Entity shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
the Board of Directors of First Deposit, after having consulted with and
considered the advice of outside counsel, reasonably determines in good faith
that the failure to take such actions would constitute a breach of fiduciary
duties of the members of such Board of Directors to First Deposit's
shareholders, under applicable Law, no First Deposit Entity or Representative
thereof shall furnish any non-public information that it is not legally
obligated to furnish, negotiate with respect to, or enter into any Contract with
respect to, any Acquisition Proposal, but First Deposit may communicate
information about such an Acquisition Proposal to its shareholders if and to the
extent that it is required to do so in order to comply with its legal
obligations. First Deposit shall promptly advise CFB following the receipt of
any Acquisition Proposal and the details thereof, and advise CFB of any
developments with respect to such Acquisition Proposal promptly upon the
occurrence thereof. First Deposit shall (i) immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Persons
conducted heretofore with respect to any of the foregoing, and (ii) direct and
use its reasonable efforts to cause its Representatives not to engage in any of
the foregoing.
8.10 Tax Treatment. Each of the Parties undertakes and agrees to use its
-------------
reasonable efforts to cause the Merger to, and to take no action which would
cause the Merger not to, qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.11 Charter Provisions. Each Party shall take, and shall cause its
------------------
Subsidiaries to take, all necessary action to ensure that the entering into of
this Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any rights to any
Person under the charter, articles of incorporation, bylaws or other governing
instruments of such Party or any of its Subsidiaries or restrict or impair the
ability of CFB or any of its Subsidiaries to vote, or otherwise to exercise the
rights of a shareholder with respect to, shares of any First Deposit Entity that
may be directly or indirectly acquired by them.
39
8.12 Agreements of Affiliates. First Deposit has disclosed in Section 8.12
------------------------
of the First Deposit Disclosure Memorandum each Person whom it reasonably
believes is an "affiliate" of First Deposit for purposes of Rule 145 under the
1933 Act. First Deposit shall use its reasonable efforts to cause each such
Person to deliver to CFB not later than 30 days after the date of this Agreement
a written agreement, substantially in the form of Exhibit 1, providing that such
---------
Person will not sell, pledge, transfer, or otherwise dispose of the shares of
the First Deposit Common Stock held by such Person except as contemplated by
such agreement or by this Agreement and will not sell, pledge, transfer, or
otherwise dispose of the shares of CFB Common Stock to be received by such
Person upon consummation of the Merger except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder. CFB shall
be entitled to place restrictive legends upon certificates for shares of CFB
Common Stock issued to affiliates of First Deposit pursuant to this Agreement to
enforce the provisions of this Section 8.12. CFB shall not be required to
maintain the effectiveness of the Registration Statement under the 1933 Act for
the purposes of resale of CFB Common Stock by such affiliates.
8.13 Employee Benefits and Contracts.
-------------------------------
(a) Following the Effective Time, CFB shall either (i) continue to
provide to officers and employees of the First Deposit Entities employee
benefits under First Deposit's existing employee benefit and welfare plans or,
(ii) if CFB shall determine to provide to officers and employees of the First
Deposit Entities employee benefits under other employee benefit plans and
welfare plans, provide generally to officers and employees of the First Deposit
Entities employee benefits under employee benefit and welfare plans, on terms
and conditions which when taken as a whole are substantially similar to those
currently provided by the CFB Entities to their similarly situated officers and
employees. Any severance benefits provided to First Deposit Entities' officers
and employees shall be in accordance with the existing CFB policy regarding
severance benefits. For purposes of participation and vesting (but not accrual
of benefits) under CFB's employee benefit plans, (i) service under any qualified
defined benefit plan of First Deposit shall be treated as service under CFB's
defined benefit plan, if any, (ii) service under any qualified defined
contribution plans of First Deposit shall be treated as service under CFB's
qualified defined contribution plans, and (iii) service under any other employee
benefit plans of First Deposit shall be treated as service under any similar
employee benefit plans maintained by CFB. With respect to officers and employees
of the First Deposit Entities who, at or after the Effective Time, become
employees of a CFB Entity and who, immediately prior to the Effective Time, are
participants in one or more employee welfare benefit plans maintained by the
First Deposit Entities, CFB shall cause each comparable employee welfare benefit
plan which is substituted for a First Deposit welfare benefit plan to waive any
evidence of insurability or similar provision, to provide credit for such
participation prior to such substitution with regard to the application of any
pre-existing condition limitation, and to provide credit towards satisfaction of
any deductible or out-of-pocket provisions for expenses incurred by such
participants during the period prior to such substitution, if any, that overlaps
with the then current plan year for each such substituted employee welfare
benefit plans. CFB also shall cause the Surviving Corporation and its
Subsidiaries to honor in accordance with their terms all employment, severance,
consulting and other compensation Contracts disclosed in Section 8.13 of the
First Deposit Disclosure Memorandum to CFB between any First Deposit Entity and
any
40
current or former director, officer, or employee thereof, and all provisions for
vested benefits or other vested amounts earned or accrued through the Effective
Time under the First Deposit Benefit Plans.
(b) CFB shall honor the terms of the existing Employment Agreements
by and between First Deposit, Alpha A ▇▇▇▇▇▇, Jr., J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
(c) First Deposit shall take all appropriate action to amend and
restate the ESOP as a tax-qualified profit sharing plan that may invest up to
one hundred percent (100%) of its assets in employer securities, within the
meaning of Section 407 of ERISA, but that is not required to invest all or any
portion of its assets in such securities and shall then immediately terminate
the amended and restated profit sharing plan, with both the amendment and
restatement and the termination effective, in the order prescribed, immediately
after the Effective Time. Prior to the Effective Time, First Deposit shall
effect such amendments to the ESOP loan documents so that the actions
contemplated by this Section 8.13(c) are not inconsistent with any of the
provisions of such loan documents, as so amended.
8.14 Directors' and Officers' Protection. CFB shall provide and keep in
-----------------------------------
force for a period of five (5) years after the Effective Time directors' and
officers' liability insurance providing coverage to directors and officers of
First Deposit for acts or omissions occurring prior to the Effective Time. CFB
shall use its best efforts to continue coverage under the existing First Deposit
directors' and officers' liability insurance policy and First Deposit will use
its best efforts to obtain a "tail rider" under such policy. Such insurance
shall provide at least the same coverage and amounts as contained in First
Deposit's policy on the date hereof except that in no event shall the annual
premium on such policy exceed 150 percent of the annual premium on First
Deposit's policy in effective as of the date hereof (the "Maximum Amount"). If
the amount of the premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, CFB shall use its reasonable efforts to
maintain the most advantageous policies of directors' and officers' liability
insurance obtainable for a premium equal to the Maximum Amount. Notwithstanding
the foregoing, CFB further agrees to indemnify all individuals who are or have
been officers, directors or employees of First Deposit or any First Deposit
subsidiary prior to the Effective Time from any acts or omissions in such
capacities prior to the Effective Time to the extent that such indemnification
is provided pursuant to the Articles of Incorporation of First Deposit or the
governing instruments of the First Deposit subsidiaries on the date hereof and
is permitted under the GBCC.
8.15 Merger Procedures Applicable to ESOP.
------------------------------------
(a) Participant Voting. Each ESOP participant and beneficiary will
------------------
be asked to instruct the Trustee, as the sole shareholder of shares of First
Deposit Common Stock held by the ESOP, to vote the shares of First Deposit
Common Stock held by the ESOP and allocated to such person's ESOP account either
for or against the Merger and to provide instructions as to the form of payment
of that portion of the Merger Consideration allocable to him or her as
contemplated by Section 3.1 (c) of this Agreement. The Trustee will conduct the
vote of the participants and beneficiaries in compliance with all requirements
of ERISA and applicable state
41
and federal laws and consistent with the provisions of the ESOP Documents, as
amended as necessary to satisfy the provisions of this Agreement, including this
Subsection (a). ESOP participants and beneficiaries will have a minimum of ten
(10) business days after delivery of the Memorandum to ESOP Participants and
Beneficiaries within which to respond to the Trustee, all on such terms and
conditions as are consistent with this Agreement and the Trustee's discretion.
(b) Confidentiality of ESOP Participant and Beneficiary
---------------------------------------------------
Instructions. If the Trustee is either not an independent third party or not
------------
composed of a committee consisting exclusively of nonemployee members of the
Board of Directors of First Deposit, the Memorandum to ESOP Participants and
Beneficiaries shall inform participants and beneficiaries that their
instructions shall be kept confidential such that no officer, director or
employee shall be made aware of the instructions given by any participant or
beneficiary. To that effect, participants and beneficiaries shall be advised in
the Memorandum to ESOP Participants and Beneficiaries to deliver their written
instructions to an independent third party so that the third party may compile
the results and inform the Trustee of the aggregate results without divulging to
the Trustee the particular instructions given by any individual participant or
beneficiary.
(c) Vote of Trustee as Shareholder. The Trustee will honor the
------------------------------
instructions of the ESOP participants and beneficiaries provided in accordance
with Subsection (a) above and will vote the shares of First Deposit Common Stock
allocated to the account of each participant and beneficiary and will request
the form of Merger Consideration in accordance with the collective instructions
of such participants and beneficiaries, subject to the Trustee's fiduciary
duties under ERISA. The Trustee will vote any shares of First Deposit Common
Stock held by the ESOP that are not allocated to the accounts of participants
and beneficiaries and also will vote those shares of First Deposit Common Stock
allocated to the accounts of ESOP participants and beneficiaries for which no
instructions are received, subject to the Trustee's fiduciary duties under
ERISA.
8.16 Information to ESOP Participants and Beneficiaries.
--------------------------------------------------
(a) First Deposit, with the assistance and approval of the Trustee,
shall prepare a Memorandum to ESOP Participants and Beneficiaries attaching the
same disclosure materials as will be provided to First Deposit shareholders
generally in order to inform ESOP participants and beneficiaries with respect to
their right to direct the Trustee in voting of the shares of First Deposit
Common Stock allocated to the accounts of such participants and beneficiaries
regarding the Merger.
(b) The Trustee shall provide each ESOP participant or, if
applicable, beneficiary with a copy of the Memorandum to ESOP Participants and
Beneficiaries and related disclosure materials and shall request instructions
from each such person as to how such person directs the Trustee to vote the
shares of First Deposit Common Stock allocated to such person's account with
respect to the Merger. The Memorandum to ESOP Participants and Beneficiaries
shall provide that, in the event that no direction is received from a
participant or beneficiary, the Trustee will vote the shares of First Deposit
Common Stock allocated to the account of such person in the Trustee's
discretion.
42
(c) First Deposit shall provide CFB and the Trustee with a proposed
final draft of the Memorandum to Participants and Beneficiaries at least five
(5) business days prior to the date of the final printing of the document to
allow CFB and the Trustee the opportunity to review and comment on the
inclusiveness of the contents of the Memorandum to ESOP Participants and
Beneficiaries.
ARTICLE 9.
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
9.1 Conditions to Obligations of Each Party. The respective obligations
---------------------------------------
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6.
(a) Shareholder Approval. The shareholders of First Deposit shall
--------------------
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by Law
or by the provisions of any governing instruments. The shareholders of CFB shall
have approved the issuance of shares of CFB Common Stock pursuant to the Merger,
as and to the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD.
(b) Regulatory Approvals. All Consents of, filings and
--------------------
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger, including the conversion of ▇▇▇▇▇▇▇ from a
federal savings association to a Georgia-chartered commercial bank, shall have
been obtained or made and shall be in full force and effect and all waiting
periods required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital or the disposition of
Assets) which in the reasonable judgment of the Board of Directors of any Party
would so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its reasonable judgment, have
entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any and
----------------------
all Consents required for consummation of the Merger (other than those referred
to in Section 9.1 (b)) or for the preventing of any Default under any Contract
or Permit of such Party which, if not obtained or made, is reasonably likely to
have, individually or in the aggregate, a First Deposit Material Adverse Effect
or a CFB Material Adverse Effect, as applicable. No Consent so obtained which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner which in the reasonable judgment of the
Board of Directors of any Party would so materially adversely impact the
economic or business benefits of the transactions contemplated by this Agreement
that, had such condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
43
(d) Legal Proceedings. No court or governmental or regulatory
-----------------
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts, makes illegal
or, in good faith, inadvisable, the consummation of the transactions
contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall be
----------------------
effective under the 1933 Act, and no stop orders suspending the effectiveness of
the Registration Statement shall have been issued, no action, suit, proceeding
or investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of CFB Common Stock issuable pursuant to the Merger shall have been
received.
(f) Nasdaq Listing. The shares of CFB Common Stock issuable
--------------
pursuant to the Merger shall have been approved for listing on the Nasdaq
National Market.
(g) Tax Matters. Each Party shall have received a written opinion
-----------
of counsel from Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, in form reasonably
satisfactory to such Parties (the "Tax Opinion"), to the effect that (i) the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code, (ii) the exchange in the Merger of First Deposit
Common Stock for CFB Common Stock will not give rise to gain or loss to the
shareholders of First Deposit with respect to such exchange (except to the
extent of any cash received), and (iii) neither First Deposit nor CFB will
recognize gain or loss as a consequence of the Merger (except for amounts
resulting from any required change in accounting methods and any income and
deferred gain recognized pursuant to Treasury regulations issued under Section
1502 of the Internal Revenue Code). In rendering such Tax Opinion, such counsel
shall be entitled to rely upon representations of officers of First Deposit and
CFB reasonably satisfactory in form and substance to such counsel.
9.2 Conditions to Obligations of CFB. The obligations of CFB to perform
--------------------------------
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by CFB pursuant to Section 10.6(a):
(a) Representations and Warranties. For purposes of this Section
------------------------------
10.2(a), the accuracy of the representations and warranties of First Deposit set
forth in this Agreement shall be assessed as of the date of this Agreement and
as of the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties set forth in
Section 5.3 shall be true and correct (except for inaccuracies which are de
minimus in amount). The representations and warranties set forth in Sections
5.20 and 5.21 shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of First Deposit
set forth in this Agreement (including the representations and warranties set
forth in Sections 5.3, 5.20 and 5.21) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to
44
have, a First Deposit Material Adverse Effect; provided that, for purposes of
this sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or to the "Knowledge" of
any Person shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of First Deposit to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
material respects.
(c) Certificates. First Deposit shall have delivered to CFB (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its secretary, to the effect that to the best of
their Knowledge the conditions set forth in Section 9.1 as relates to First
Deposit and in Section 9.2(a) and 9.2(b) have been satisfied; provided, however,
-------- -------
that the representations, warranties and covenants to which such certificate
relates shall not been deemed to have survived the Closing, and (ii) certified
copies of resolutions duly adopted by First Deposit's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as CFB and its counsel shall request.
(d) Opinion of Counsel. CFB shall have received an opinion of
------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC, counsel to First Deposit, dated as of the
Closing Date, in form reasonably satisfactory to CFB, as to the matters set
forth in Exhibit 2.
---------
(e) Affiliates Agreements. CFB shall have received from each
---------------------
affiliate of First Deposit the affiliates letter referred to in Section 8.12 and
Exhibit 1.
---------
(f) Claims Letters. Each of the directors and executive officers
--------------
of First Deposit and ▇▇▇▇▇▇▇ shall have executed and delivered to CFB letters in
substantially the form of Exhibit 3.
---------
(g) Conversion of ▇▇▇▇▇▇▇. The conversion of ▇▇▇▇▇▇▇ from a
---------------------
federal savings bank to a Georgia-chartered commercial bank shall have been
completed.
(h) Trustee Certificate. The certificate of the Trustee dated as
-------------------
of the Closing Date stating that the Trustee has (i) received from, and
effected, the written directions of the ESOP participants and beneficiaries in a
manner consistent with and in due compliance with all requirements of the ESOP
Documents and ERISA, (ii) determined that following such directions is not
contrary to the fiduciary provisions of ERISA, (iii) determined that the Merger
is in the best interests of the ESOP and its participants and beneficiaries, and
(iv) voted those shares of First Deposit Common Stock over which it has complete
discretionary authority consistent with its fiduciary duties under ERISA.
9.3 Conditions to Obligations of First Deposit. The obligations of
------------------------------------------
First Deposit to perform this Agreement and consummate the Merger and the other
transactions contemplated
45
hereby are subject to the satisfaction of the following conditions, unless
waived by First Deposit pursuant to Section 11.6(b):
(a) Representations and Warranties. For purposes of this Section
------------------------------
9.3(a), the accuracy of the representations and warranties of CFB set forth in
this Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties set forth in
Section 6.3 shall be true and correct (except for inaccuracies which are de
minimus in amount). The representations and warranties of CFB set forth in
Section 6.12 shall be true and correct in all material respects. There shall not
exist inaccuracies in the representations and warranties of CFB set forth in
this Agreement (including the representations and warranties set forth in
Sections 6.3 and 6.12) such that the aggregate effect of such inaccuracies has,
or is reasonably likely to have, a CFB Material Adverse Effect; provided that,
for purposes of this sentence only, those representations and warranties which
are qualified by references to "material" or "Material Adverse Effect" or to the
"Knowledge" of any Person shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of CFB to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. CFB shall have delivered to First Deposit (i) a
------------
certificate, dated as of the Closing Date and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that to the
best of their knowledge the conditions set forth in Section 9.1 as relates to
CFB and in Section 9.3(a) and 9.3(b) have been satisfied, provided, however,
-------- -------
that the representations, warranties and covenants to which such certificate
relates shall not been deemed to have survived the Closing, and (ii) certified
copies of resolutions duty adopted by CFB's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, all in such reasonable detail as First
Deposit and its counsel shall request.
(d) Opinion of Counsel. First Deposit shall have received an
------------------
opinion of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to CFB, dated as of
the Closing Date, in form reasonably acceptable to First Deposit, as to the
matters set forth in Exhibit 4.
---------
(e) Fairness Opinion. First Deposit shall have received from
----------------
Trident Securities, Inc. a letter dated not more than five (5) business days
prior to the date of the proxy statement to be mailed to the First Deposit
shareholders in connection with the Shareholders Meeting to the effect that, in
the opinion of such firm, the consideration to be paid to the First Deposit
shareholders in connection with the Merger is fair, from a financial point of
view, to the shareholders of First Deposit.
46
ARTICLE 10.
TERMINATION
-----------
10.1 Termination. Notwithstanding any other provision of this Agreement,
-----------
and notwithstanding the approval of this Agreement by the shareholders of First
Deposit, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of CFB and First Deposit; or
(b) By either Party (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by the
other Party of any representation or warranty contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach and which breach is reasonably
likely, in the opinion of the non-breaching Party, to have, individually or in
the aggregate, a First Deposit Material Adverse Effect or a CFB Material Adverse
Effect, as applicable, on the breaching Party; or
(c) By either Party (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by the
other Party of any covenant or agreement contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final non-appealable
action of such authority or if any action taken by such authority is not
appealed within the time limit for appeal, or (ii) the shareholders of First
Deposit fail to vote their approval of the matters relating to this Agreement
and the transactions contemplated hereby at the Shareholders' Meeting where such
matters were presented to such shareholders for approval and voted upon; or
(e) By either Party in the event that the Merger shall not have
been consummated by June 30, 2001, if the failure to consummate the transactions
contemplated hereby on or before such date is not caused by any breach of this
Agreement by the Party electing to terminate pursuant to this Section 10.1(e).
10.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Article 11 and Section 8.7(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c) or
10.1(e) shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination.
47
10.3 Non-Survival of Representations and Covenants. The respective
---------------------------------------------
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 1, 2, 3, 4 and 11 and Section 8.10.
ARTICLE 11.
MISCELLANEOUS
-------------
11.1 Definitions.
-----------
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Acquisition Proposal" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of the
stock or assets of, or other business combination involving the acquisition of
such Party or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or any of its
Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including
the Exhibits, the CFB Disclosure Memorandum and the First Deposit Disclosure
Memorandum delivered pursuant hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, or any Affiliate of such Person and wherever
located.
"Certificate of Merger" shall mean the Certificate of Merger to be
executed by CFB and First Deposit and filed with the Secretary of State of the
State of Georgia relating to the Merger as contemplated by Section 1.1.
"CFB Capital Stock" shall mean, collectively, the CFB Common Stock
and any other class or series of capital stock of CFB.
48
"CFB Common Stock" shall mean the $.01 par value common stock of
CFB.
"CFB Disclosure Memorandum" shall mean the written information
entitled "CFB Disclosure Memorandum" delivered prior to execution of this
Agreement to First Deposit describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure is being
made. Information disclosed with respect to one Section shall not be deemed to
be disclosed for purposes of any other Section not specifically referenced with
respect thereto, unless it is clear from the disclosure of such information that
it applies to other Sections.
"CFB Entities" shall mean, collectively, CFB and all CFB
Subsidiaries.
"CFB Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of CFB as of December 31,
1999, 1998 and 1997, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for each of the three fiscal years ended December 31, 1999, 1998 and 1997,
as filed by CFB in SEC Documents, and (ii) the consolidated balance sheets of
CFB (including related notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to December 31, 1999
"CFB Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of CFB and its Subsidiaries, taken as a
whole, or (ii) the ability of CFB Entities to perform their obligations under
this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) changes in banking and similar Laws
of general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting principles generally applicable to savings associations,
banks, and their holding companies, and (c) actions and omissions of CFB (or any
of its Subsidiaries) taken with the prior informed written Consent of First
Deposit in contemplation of the transactions contemplated hereby.
"CFB Subsidiaries" shall mean the Subsidiaries of CFB, which shall
include the CFB Subsidiaries described in Section 6.4 and any corporation, bank,
savings association, or other organization acquired as a Subsidiary of CFB in
the future and held as a Subsidiary by CFB at the Effective Time.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
49
"Contract" shall mean any written or oral agreement (provided such
oral agreement is, in any one year period, in excess of $5,000 individually, or
$25,000 in the aggregate), arrangement, authorization, commitment, contract,
indenture, instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other document to
which any Person is a party or that is binding on any Person or its capital
stock, Assets or business.
"Default" shall mean (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, after
failing to cure any such breach, violation, default, contravention or conflict
within any applicable grace or cure period (ii) any occurrence of any event that
with the passage of time or the giving of notice or both would constitute a
breach or violation of, default under, contravention of, or conflict with, any
Contract, Law, Order, or Permit, or (iii) any occurrence of any event that with
or without the passage of time or the giving of notice would give rise to a
right of any Person to exercise any remedy or obtain any relief under, terminate
or revoke, suspend, cancel, or modify or change the current terms of, or
renegotiate, or to accelerate the maturity or performance of, or to increase or
impose any Liability under, any Contract, Law, Order, or Permit.
"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface, or subsurface strata) and which are
administered, interpreted, or enforced by the United States Environmental
Protection Agency and other federal, state and local agencies with jurisdiction
over, and including common law in respect of, pollution or protection of the
environment, including the Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource
- ------ -
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and
- ---- -
other Laws relating to emissions, migrations, discharges, releases, or
threatened releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution use, treatment, storage, disposal,
generation, recycling, transport, or handling of any Hazardous Material.
"Equity Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings, warrants, or
other binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ESOP" means the employee stock ownership plan which is maintained
by ▇▇▇▇▇▇▇ Federal Bank and is intended to be qualified under Section 401(a) of
the Internal Revenue Code.
"ESOP Documents" means all written documentation constituting the
ESOP and its related trust, as contemplated by Sections 402 and 403 of the
Internal Revenue Code.
50
"Exhibits 1 through 4," inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"First Deposit Common Stock" shall mean the no par value common stock
of First Deposit.
"First Deposit Disclosure Memorandum" shall mean the written
information entitled "First Deposit Disclosure Memorandum" delivered prior to
execution of this Agreement to CFB describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto, unless it is clear from the
disclosure of such information that it applies to other Sections.
"First Deposit Entities" shall mean, collectively, First Deposit and
all First Deposit Subsidiaries.
"First Deposit Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of First Deposit
as of December 31, 1999 and 1998 and the related statements of income, changes
in shareholders' equity, and cash flows (including related notes and schedules,
if any) for the fiscal year ended December 31, 1999 and 1998, and (ii) the
consolidated balance sheets of First Deposit (including related notes and
schedules, if any) and related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any) with
respect to periods ended subsequent to December 31, 1999.
"First Deposit Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of First Deposit and its Subsidiaries, taken
as a whole, or (ii) the ability of First Deposit to perform its obligations
under this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that a "First Deposit Material Adverse
Effect" shall not be deemed to include the impact of (a) changes in banking and
similar Laws of general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting principles generally applicable to banks,
savings associations and their holding companies, and (c) actions and omissions
of First Deposit (or any of its Subsidiaries) taken with the prior informed
written Consent of CFB in contemplation of the transactions contemplated hereby.
"First Deposit Subsidiaries" shall mean the Subsidiaries of First
Deposit, which shall include the First Deposit Subsidiaries described in Section
5.4 and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of First Deposit in the future and held as a Subsidiary
by First Deposit at the Effective Time.
51
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean (i) any hazardous substance, hazardous
constituent, hazardous waste, solid waste, special waste, regulated substance,
or toxic substance (as those terms are listed, defined or regulated by any
applicable Environmental Laws) and (ii) any chemicals, pollutants, contaminants,
petroleum, petroleum products, or oil (and specifically shall include asbestos
requiring abatement. removal, or encapsulation pursuant to the requirements of
governmental authorities and any polychlorinated biphenyls).
"HSR Act" shall mean Section 7A of the ▇▇▇▇▇▇▇ Act, as added by Title
II of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor, and licenses,
computer software (including any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, inventions, and
other intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a CFB Entity (including references
to being aware of a particular matter) shall mean those facts that are known or
should reasonably have been known after due inquiry by the chairman, president,
chief financial officer, chief accounting officer, chief operating officer,
chief credit officer, general counsel, any assistant or deputy general counsel,
or any senior, executive or other vice president of such CFB Entity. "Knowledge"
as used with respect to a First Deposit Entity (including references to being
aware of a particular matter) shall mean those facts that are actually known
(with no obligation of inquiry) by the president and chief executive officer of
such First Deposit Entity.
"Law" shall mean any code, law (including common law), ordinance,
regulation, decision, judicial interpretation, reporting or licensing
requirement, rule, or statute applicable to a Person or its Assets, Liabilities,
or business, including those promulgated, interpreted or enforced by any
Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
52
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property Taxes not yet due
and payable, (ii) for depository institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the ordinary course of the banking
business, and (iii) Liens which do not materially impair the use of or title to
the Assets subject to such Lien.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint investigation hearing, criminal prosecution, governmental or
other examination or other administrative or other proceeding relating to or
affecting a Party, its business, its Assets (including Contracts related to it),
or the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their Affiliates
by Regulatory Authorities.
"Memorandum to ESOP Participants and Beneficiaries" shall mean the
memorandum to be distributed to ESOP participants and beneficiaries prior to the
shareholder vote on the Merger setting forth information pertaining to the
transactions contemplated by the Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq National Market" shall mean the National Market System of the
National Association of Securities Dealers Automated Quotations System.
"Operating Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries and, where
required by the context, includes the owner or operator of such property, but
only with respect to such property.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the management
and, where required by the context, said term means the owner or operator of
such facility or property, but only with respect to such facility or property.
"Party" shall mean either First Deposit, CFB, the Bank or ▇▇▇▇▇▇▇, and
"Parties" shall mean CFB, the Bank, First Deposit and ▇▇▇▇▇▇▇.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which
53
any Person is a party or that is or may be binding upon or inure to the benefit
of any Person or its securities, Assets, or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Registration Statement" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by CFB under the 1933 Act
with respect to the shares of CFB Common Stock to be issued to the shareholders
of First Deposit in connection with the transactions contemplated by this
Agreement.
"Regulatory Authorities" shall mean, collectively, the SEC, the NASD,
the Federal Trade Commission, the United States Department of Justice, the Board
of the Governors of the Federal Reserve System, the Office of Thrift Supervision
(including its predecessor, the Federal Home Loan Bank Board), the Federal
Deposit Insurance Corporation, the Georgia Department of Banking and Finance,
and all other federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
"Representative" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative engaged by a Person.
"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Shareholders Meeting" shall mean the meeting of the shareholders of
First Deposit to be held pursuant to Section 8.3, including any adjournment or
adjournments thereof.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i) owns or
controls 50% or more of the outstanding equity securities either directly or
through an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its parent
(provided, there shall not be included any such entity the equity securities of
which are owned or controlled in a fiduciary capacity), (ii) in the case of
partnerships, serves as a general partner, (iii) in the case of a limited
liability company, serves as a managing member, or (iv) otherwise has the
ability to elect a majority of the directors, trustees or managing members
thereof.
54
"Surviving Bank" shall mean the Bank as the surviving bank resulting
from the Merger.
"Tax Return" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in connection
with Taxes, including any return of an affiliated or combined or unitary group
that includes a Party or its Subsidiaries.
"Tax" or Taxes" shall mean any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, including any interest, penalties, and additions
imposed thereon or with respect thereto.
"Trustee" means ▇▇▇▇ ▇. ▇▇▇▇, J. ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ in
their collective capacity as sole trustees of the ESOP.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Allowance Section 5.9
Certificates Section 4.1
Closing Section 1.2
Conversion Application Preamble
▇▇▇▇▇▇▇ Preamble
Effective Time Section 1.3
First Deposit Benefit Plans Section 5.15(a)
First Deposit Contracts Section 5.16
First Deposit ERISA Plan Section 5.15(a)
First Deposit Pension Plan Section 5.15(a)
ERISA Affiliate Section 5.15(c)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(b)
CFB SEC Reports Section 6.5(a)
Indemnified Party Section 8.14(a)
Merger Section 1.1
Tax Opinion Section 9.1(g)
(c) Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
55
11.2 Expenses.
--------
(a) Except as otherwise provided in this Section 11.2, each Party
shall bear and pay all direct costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including filing,
registration and application fees, printing fees, and fees and expenses of its
own financial or other consultants, investment bankers, accountants, and
counsel, except that CFB shall bear and pay the filing fees payable in
connection with the Registration Statement and the proxy statement/prospectus
and one-half of the printing costs incurred in connection with the printing of
the Registration Statement and the proxy statement/prospectus.
(b) If this Agreement is terminated by CFB pursuant to Sections
10.1(b), (c) or (d)(ii), First Deposit shall pay to CFB an amount equal to the
lesser of $100,000 or CFB's actual out of pocket expenses incurred in connection
with the transactions contemplated by this Agreement.
(c) If this Agreement is terminated by First Deposit pursuant to
Sections 10.1(b) or (c), CFB shall pay to First Deposit an amount equal to the
lesser of $100,000 or First Deposit's actual out of pocket expenses incurred in
connection with the transactions contemplated by this Agreement.
(d) If this Agreement is terminated by CFB pursuant to Sections
10.1(b), (c) or (d)(ii) and if First Deposit enters into any agreement to
---
acquire or be acquired by a third party within twelve (12) months from the date
of the termination, then First Deposit shall pay to CFB liquidated damages in
the amount of $500,000, less any payments made pursuant to Section 11.2(b).
(e) Nothing contained in this Section 11.2 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a Party of
the terms of this Agreement or otherwise limit the rights of the nonbreaching
Party.
11.3 Brokers and Finders. Except as disclosed in Section 11.3 of the CFB
-------------------
Disclosure Memorandum, and except as disclosed in Section 11.3 of the First
Deposit Disclosure Memorandum, each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained by
First Deposit or by CFB, each of First Deposit and CFB, as the case may be,
agrees to indemnify and hold the other Party harmless of and from any Liability
in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein, this
----------------
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and
56
supersedes all prior arrangements or understandings with respect thereto,
written or oral. Nothing in this Agreement, expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
----------
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after shareholder approval of this
Agreement has been obtained; provided, that after any such approval by the
holders of First Deposit Common Stock, there shall be made no amendment that,
pursuant to the GBCC, requires further approval by such shareholders without the
further approval of such shareholders; and further provided, that after any such
approval by the holders of CFB Common Stock, the provisions of this Agreement
relating to the manner or basis in which shares of First Deposit Common Stock
will be exchanged for shares of CFB Common Stock shall not be amended after the
Shareholders' Meeting in a manner adverse to the holders of CFB Common Stock
without any requisite approval of the holders of the issued and outstanding
shares of CFB Common Stock entitled to vote thereon.
11.6 Waivers.
-------
(a) Prior to or at the Effective Time, CFB, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by First Deposit, to waive or extend the time for the compliance or fulfillment
by First Deposit of any and all of its obligations under this Agreement, and to
waive any or all of the conditions precedent to the obligations of CFB under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of CFB.
(b) Prior to or at the Effective Time, First Deposit, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by CFB, to waive or extend the time for the compliance or fulfillment
by CFB, of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of First Deposit under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of First Deposit.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto
57
(whether by operation of Law or otherwise) without the prior written consent of
the other Party. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
First Deposit First Deposit Bancshares, Inc.
and ▇▇▇▇▇▇▇: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Copy to Counsel: Womble, Carlyle, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
CFB and the Bank: Community First Banking Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Copy to Counsel: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Sixteenth Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, Esq.
11.9 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions, Articles and Sections. The captions contained in this
-------------------------------
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all
58
references to particular Articles or Sections shall mean and refer to the
referenced Articles and Sections of this Agreement.
11.12 Interpretations. Neither this Agreement nor any uncertainty or
---------------
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 Enforcement of Agreement. The Parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
[SIGNATURES APPEAR ON NEXT PAGE]
59
[SIGNATURES TO AGREEMENT AND PLAN OF MERGER]
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
COMMUNITY FIRST BANKING COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President & Chief Executive Officer
COMMUNITY FIRST BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President & Chief Executive Officer
FIRST DEPOSIT BANCSHARES, INC.
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇▇▇▇ FEDERAL BANK, FSB
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
EXHIBIT 2.1
EXHIBIT 1
AFFILIATE AGREEMENT
Community First Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and Chief Executive Officer
Gentlemen:
The undersigned is a shareholder of First Deposit Bancshares, Inc. ("First
Deposit"), a Georgia Corporation, and will become a shareholder of Community
First Banking Company ("CFB"), a Georgia corporation, pursuant to the
transactions described in the Agreement and Plan of Merger, dated as of January
___, 2001 (the "Agreement"), by and between CFB and First Deposit. Under the
terms of the Agreement, First Deposit will be merged with and into CFB (the
"Merger"), and the shares of the no par value common stock of First Deposit
("First Deposit Common Stock") will be converted into and exchanged for shares
of the $.01 par value common stock of CFB ("CFB Common Stock"). This Affiliate
Agreement represents an agreement between the undersigned and CFB regarding
certain rights and obligations of the undersigned in connection with the shares
of CFB to be received by the undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and CFB hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
First Deposit he is an "affiliate" under Rule 145(c) as defined in Rule 405 of
the Rules and Regulations of the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended ("1933 Act"), and the undersigned
anticipates that he will be such an "affiliate" at the time of the Merger.
2. Covenants and Warranties of Undersigned. The undersigned represents,
warrants and agrees that:
(a) At any meeting of shareholders of First Deposit called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with respect to
the Merger and the Merger Agreement is sought (the "Shareholders' Meeting"), the
undersigned shall, to the extent that the Shareholder has the power, vote (or
cause to be voted) the Shareholder's Shares in favor of the Merger, the
execution and delivery by First Deposit of the Merger Agreement, and the
approval of the terms thereof and each of the other transactions contemplated by
the Merger Agreement, provided that the terms of the Merger Agreement shall not
have been amended to reduce the consideration payable in the Merger to a lesser
amount of CFB Common Stock or cash or otherwise to materially and adversely
impair the Shareholder's rights or increase the
Shareholder's obligations thereunder. The undersigned hereby waives any rights
of appraisal, or rights to dissent from the Merger, that the undersigned may
have.
(b) The CFB Common Stock received by the undersigned as a result of
the Merger will be taken for his own account and not for others, directly or
indirectly, in whole or in part.
(c) CFB has informed the undersigned that any distribution by the
undersigned of CFB Common Stock has not been registered under the 1933 Act and
that shares of CFB Common Stock received pursuant to the Merger can only be sold
by the undersigned (1) following registration under the 1933 Act, or (2) in
conformity with the volume and other requirements of Rule 145(d) promulgated by
the SEC as the same now exist or may hereafter be amended, or (3) to the extent
some other exemption from registration under the 1933 Act might be available.
The undersigned understands that CFB is under no obligation to file a
registration statement with the SEC covering the disposition of the
undersigned's shares of CFB Common Stock or to take any other action necessary
to make compliance with an exemption from such registration available.
(d) The undersigned will, and will cause each of the other parties
whose shares are deemed to be beneficially owned by the undersigned pursuant to
Section 9 hereof, have all shares of First Deposit Common Stock beneficially
owned by the undersigned registered in the name of the undersigned or such
parties, as applicable, prior to the effective date of the Merger and not in the
name of any bank, broker-dealer, nominee or clearinghouse.
(e) During the thirty (30) days immediately preceding the Effective
Time of the Merger, the undersigned has not sold, transferred, or otherwise
disposed of his interests in, or reduced his risk relative to, any of the shares
of First Deposit Common Stock beneficially owned by the undersigned as of the
record date for determination of shareholders entitled to vote at the
Shareholders' Meeting of First Deposit held to approve the Merger.
(f) The undersigned is aware that CFB intends to treat the Merger as
a tax-free reorganization under Section 368 of the Code for federal income tax
purposes. The undersigned agrees to treat the transaction in the same manner as
CFB for federal income tax purposes.
3. Restrictions on Transfer. The undersigned understands and agrees that
stop-transfer instructions with respect to the shares of CFB Common Stock
received by the undersigned pursuant to the Merger will be given to CFB's
Transfer Agent and that there will be placed on the certificates for such
shares, or shares issued in substitution thereof, a legend stating in substance:
The shares represented by this certificate may not be sold, transferred
or otherwise disposed of except or unless (1) covered by an effective
registration statement under the Securities Act of 1933, as amended, (2) in
accordance with (i) Rule 145(d) (in the case of shares issued to an
individual who is an affiliate of CFB) of the Rules and Regulations of such
Act, or (3) in accordance with a legal opinion satisfactory to counsel
2
for CFB that such sale or transfer is otherwise exempt from the
registration requirements of such Act.
Such legend will also be placed on any certificate representing CFB securities
issued subsequent to the original issuance of CFB Common Stock pursuant to the
Merger as a result of any transfer of such shares or any stock dividend, stock
split, or other recapitalization as long as the CFB Common Stock issued to the
undersigned pursuant to the Merger has not been transferred in such manner as to
justify the removal of the legend therefrom. Upon the request of the
undersigned, CFB shall cause the certificates representing the shares of CFB
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to restrictions on transfer set forth in
Rules 144 and 145(d) if the provisions of Rules 144 and 145 are amended to
eliminate restrictions applicable to the CFB Common Stock received by the
undersigned pursuant to the Merger, or at the expiration of the restrictive
period set forth in Rule 145(d) upon receipt by CFB of an opinion of its counsel
to the effect that such legend may be removed.
4. Understanding of Restrictions on Disposition. The undersigned has
carefully read the Agreement and this Affiliate Agreement and has discussed
their requirements and impact upon his ability to sell, transfer or otherwise
dispose of the shares of CFB Common Stock received by the undersigned, to the
extent he believes necessary, with his counsel or counsel for First Deposit.
5. Filing of Reports by CFB. CFB agrees, for a period of three years after
the effective date of the Merger, to file on a timely basis all reports required
to be filed by it pursuant to Section 13 of the Securities Exchange Act of 1934,
as amended, so that the public information provisions of Rule 145(d) promulgated
by the SEC as the same are presently in effect will be available to the
undersigned in the event the undersigned desires to transfer any shares of CFB
Common Stock issued to the undersigned pursuant to the Merger.
6. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of CFB Common Stock received by him in connection
with the Merger at any time during the restrictive period set forth in Rule
145(d), the undersigned will provide the necessary representation letter to the
transfer agent for CFB Common Stock, together with such additional information
as the transfer agent may reasonably request. If CFB's counsel concludes that
such proposed sale or transfer complies with the requirements of Rule 145(d),
CFB shall cause such counsel to provide such opinions as may be necessary to
CFB's transfer agent so that the undersigned may complete the proposed sale or
transfer.
7. Certain Actions. The undersigned covenants and agrees with CFB that,
for a period of two (2) years after the effective time of the Merger, the
undersigned shall not, without the prior written consent of CFB, directly or
indirectly serve as a consultant to, serve as a management official of, or be or
become a major shareholder of any financial institution having an office in
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ or Paulding County, Georgia. It is expressly understood that
the covenants contained in this paragraph 7 do not apply to (i) "management
official" positions which the undersigned holds with financial institutions
(other than CFB, First Deposit, and their subsidiaries) as of the date of this
Agreement, (ii) securities holdings which cause the
3
undersigned to be deemed a major shareholder of a financial institution (other
than CFB, First Deposit, and their subsidiaries) as of the date of this
Agreement, or (iii) advisory relationships with a financial institution which
the undersigned has as of the date of this Agreement or may have after the date
hereof solely in the capacity as legal counsel. For the purposes of the
covenants contained in this paragraph 7, the following terms shall have the
following respective meanings:
(a) The term "management official" shall refer to service of any
type which gives the undersigned the authority to participate, directly or
indirectly, in policy-making functions of the financial institution. This
includes, but is not limited to, service as an organizer, officer, director, or
advisory director of the financial institution. It is expressly understood that
the undersigned may be deemed a management official of the financial institution
whether or not he holds any official, elected, or appointed position with such
financial institution.
(b) The term "financial institution" shall refer to any bank, bank
holding company, savings and loan association, savings and loan holding company,
banking-related company, or any other similar financial institution which
engages in the business of accepting deposits or making loans or which owns or
controls a company which engages in the business of accepting deposits or making
loans. It is expressly understood that the term "financial institution" shall
include any financial institution as defined herein that, after the date of this
Agreement, makes application for an appropriate federal or state regulatory
authority for approval to organize.
(c) The term "major shareholder" shall refer to the beneficial
ownership of five percent (5%) or more of any class of voting securities or the
ownership of five percent (5%) of the total equity interest in such company,
however denominated.
8. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to all shares of the capital stock of First
Deposit and CFB that are deemed to be beneficially owned by the undersigned
pursuant to applicable federal securities laws, which the undersigned agrees may
include, without limitation, shares owned or held in the name of (i) the
undersigned's spouse, (ii) any relative of the undersigned or of the
undersigned's spouse who has the same home as the undersigned, (iii) any trust
or estate in which the undersigned, the undersigned's spouse and any such
relative collectively own at least a ten percent (10%) beneficial interest or of
which any of the foregoing serves as trustee, executor, or in any similar
capacity, and (iv) any corporation or other organization in which the
undersigned, the undersigned's spouse and any such relative collectively own at
least ten percent (10%) of any class of equity securities or of the equity
interest. The undersigned further recognizes that, in the event that the
undersigned is a director or officer of CFB or becomes a director or officer of
CFB upon consummation of the Merger, among other things, any sale of CFB Common
Stock by the undersigned within a period of less than six (6) months following
the Effective Time of the Merger may subject the undersigned to liability
pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended.
9. Miscellaneous. This Affiliate Agreement is the complete agreement
between CFB and the undersigned concerning the subject matter hereof. Any notice
required to be sent to any
4
party hereunder shall be sent by registered or certified mail, return receipt
requested, using the addresses set forth herein or such other address as shall
be furnished in writing by the parties. This Affiliate Agreement shall be
governed by the laws of the State of Georgia.
[SIGNATURES CONTAINED ON NEXT PAGE]
5
This Affiliate Agreement is executed as of the ____ day of _________, 2001.
Very truly yours,
___________________________________________
Signature
___________________________________________
Print Name
Address: _________________________________
___________________________________________
___________________________________________
[add below the signatures of all registered
owners of shares deemed beneficially owned
by the affiliate]
___________________________________________
Name
___________________________________________
Name
___________________________________________
Name
AGREED TO AND ACCEPTED as of
the ______ day of __________________, 2001.
Community First Banking Company
By: __________________________________
6
EXHIBIT 2.1
EXHIBIT 2
MATTERS AS TO WHICH WOMBLE, CARLYLE,
▇▇▇▇▇▇▇▇▇ & RICE LLC WILL OPINE
1 First Deposit Bancshares, Inc. ("First Deposit") is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia with full corporate power and authority to carry on the business in
which it is engaged, and to own and use its Assets.
2. ▇▇▇▇▇▇▇ Federal Bank, FSB [name to be changed?] ("▇▇▇▇▇▇▇") is a
state-chartered commercial bank and is duly organized, validly existing, and in
good standing under the Laws of the State of Georgia, with full corporate power
and authority to carry on the business in which it is engaged, and to own and
use its Assets. ▇▇▇▇▇▇▇ is a wholly-owned subsidiary of First Deposit.
3. The authorized capital stock of First Deposit consists of 10,000,000
shares of First Deposit Common Stock, no par value per share. To our knowledge,
___________ shares of First Deposit Common Stock are issued and outstanding. The
authorized capital stock of ▇▇▇▇▇▇▇ consists of shares of ▇▇▇▇▇▇▇ common stock,
$__________ par value per share. To our knowledge, ___________ shares of ▇▇▇▇▇▇▇
common stock are issued and outstanding. To our knowledge, the shares of First
Deposit and ▇▇▇▇▇▇▇ common stock that are issued and outstanding were not issued
in violation of any preemptive rights of shareholders, were duly issued and are
fully paid and nonassessable under the Georgia Business Corporation Code and the
Financial Institutions Code of Georgia, respectively. To our knowledge, except
as set forth above or as disclosed in Section 5.3 of the First Deposit
Disclosure Memorandum, there are no shares of capital stock or other equity
securities of First Deposit and ▇▇▇▇▇▇▇ outstanding and no outstanding Equity
Rights relating to the capital stock of First Deposit and ▇▇▇▇▇▇▇.
4. The execution and delivery of the Agreement and the Plan of Merger
and compliance with their terms do not and will not violate or contravene any
provisions of the Articles of Incorporation or Bylaws of First Deposit or the
Articles of Incorporation or Bylaws of ▇▇▇▇▇▇▇ or, to our knowledge, result in
any conflict with, breach of, or default or acceleration under any Contract,
Law, Order or Permit to which First Deposit or ▇▇▇▇▇▇▇ is a party or by which
First Deposit or ▇▇▇▇▇▇▇ is bound.
5. To our knowledge, neither the execution and delivery of the Agreement
by First Deposit, nor the consummation by First Deposit of the transactions
contemplated thereby, nor compliance by First Deposit with any of the provisions
thereof, will (i) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of any
First Deposit Entity under, any Contract or Permit of any First Deposit Entity,
where such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a First Deposit Material
Adverse Effect or where such event would cause a breach of the Agreement or a
Default under the Agreement, or (ii) subject to receipt of the requisite
Consents referred to in Section 9.1(c), constitute or result in a Default
under, or require any Consent pursuant to, any Law or Order applicable to any
First Deposit Entity or any of their respective material Assets (including any
CFB Entity or any First Deposit Entity becoming subject to or liable for the
payment of any Tax on any of the Assets owned by any CFB Entity or any First
Deposit Entity being reassessed or revalued by any Taxing authority).
6. Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, no notice to, filing with, or Consent of, any public body
or authority is necessary for the consummation by First Deposit of the Mergers
and the other transactions contemplated in the Agreement.
7. The Agreement and the Plan of Merger have been duly and validly
executed and delivered by First Deposit and ▇▇▇▇▇▇▇ and, assuming valid
authorization, execution and delivery by Community First Banking Company ("CFB")
and Community First Bank, as the case may be, constitute valid and binding
agreements of First Deposit and ▇▇▇▇▇▇▇ enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, provided, however, that we express no opinion as to the availability
of the equitable remedy of specific performance or indemnity or contribution or
other matters which may be limited by public policy.
8. Each First Deposit Entity has taken all necessary action to exempt
the transactions contemplated by the Agreement from, or if necessary to
challenge the validity or applicability of, any applicable "moratorium," "fair
price," "business combination," "control share," or other antitakeover Laws,
including without limitation Sections 14-2-1111 and 14-2-1131 of the Georgia
Business Corporation Code.
9. Each First Deposit Entity has taken all necessary action so that the
entering into of the Agreement and the consummation of the Mergers and the other
transactions contemplated by the Agreement do not and will not result in the
grant of any rights to any Person under the Articles of Incorporation, Bylaws
and other governing instruments of any First Deposit Entity or restrict or
impair the ability of CFB or any of its Subsidiaries to vote, or otherwise to
exercise the rights of a stockholder with respect to, shares of any First
Deposit Entity that may be directly or indirectly acquired or controlled by
them.
10. There is no Litigation instituted or pending, or, to our knowledge,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable outcome)
against any First Deposit Entity or any employee benefit plan of any First
Deposit Entity, or against any director or employee of any First Deposit Entity,
in their capacity as such, or against any Asset, interest, or right of any of
them, nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any First Deposit Entity.
2
EXHIBIT 2.1
EXHIBIT 3
FORM OF CLAIMS LETTER
___________, 2001
Community First Banking Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Re: First Deposit Bancshares, Inc. and ▇▇▇▇▇▇▇ Federal Bank, FSB
Gentlemen:
This letter is delivered pursuant to Section 9.2(f) of the Agreement and
Plan of Merger dated as of ______________, 2001, by and between Community First
Banking Company ("CFB") and First Deposit Bancshares, Inc. ("First Deposit").
Concerning claims which the undersigned may have against First Deposit or
any of its subsidiaries in my capacity as an officer, director, employee,
partner or Affiliate of First Deposit or any of its subsidiaries, and in
consideration of the premises, and the mutual covenants contained herein and in
the Merger Agreement and the mutual benefits to be derived hereunder and
thereunder, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the undersigned, intending to be legally
bound, I hereby affirm the following in each and every such capacity of the
undersigned:
1. Claims. The undersigned does not have, and is not aware of, any claims
------
it might have against First Deposit or any of its subsidiaries, except for (i)
compensation for services rendered that have accrued but not yet been paid in
the ordinary course of business consistent with past practice or other contract
rights relating to severance and employment, (ii) contract rights, under loan
commitments and agreements between the undersigned and First Deposit or any of
its subsidiaries, specifically limited to possible future advances in accordance
with the terms of such commitments or agreements, and (iii) certificates of
deposit, consistent with and subject to the terms and conditions of the Merger
Agreement.
2. Releases. The undersigned hereby releases and forever discharges CFB,
--------
First Deposit and their respective directors, officers, employees, agents,
attorneys, representatives, subsidiaries, partners, affiliates, controlling
persons and insurers, and its successors and assigns, and each of them
(hereinafter, individually and collectively, the "Releasees") of and from any
and all liabilities, claims, demands, debts, accounts, covenants, agreements,
obligations, costs, expenses, actions or causes of action of every nature,
character or description, now accrued or which may hereafter accrue, without
limitation and whether or not in law, equity or otherwise,
based in whole or in part on any facts, conduct, activities, transactions,
events or occurrences known or unknown, matured or unmatured, contingent or
otherwise, which have or allegedly have existed, occurred, happened, arisen or
transpired from the beginning of time to the date of the closing of the
transaction contemplated by the Merger Agreement, except for (i) compensation
for services that have accrued but not yet been paid in the ordinary course of
business consistent with past practice or other contract rights relating to
severance and employment, (ii) contract rights, under loan commitments and
agreements between the undersigned and First Deposit or its subsidiaries,
specifically limited to possible future advances in accordance with the terms of
such commitments or agreements, and (iii) certificates of deposits, consistent
with and subject to the terms and conditions of the Merger Agreement
(individually, a "Claim" and collectively, the "Claims"). The undersigned
represents, warrants and covenants that no Claim released herein has been
assigned, expressly, impliedly , by operation of law or otherwise, and that all
Claims released hereby are owned solely by the undersigned, which has the sole
authority to release them.
3. Indemnity. The undersigned shall indemnify and hold harmless, to the
---------
fullest extent permitted by law, the Releasees from and against any and all
Claims which are released hereby and all claims, damages, losses, liabilities,
actions and expenses, including, without limitation, reasonable attorneys' fees
and disbursements, arising from, out of, or in connection with the performance
or nonperformance of any obligation of the undersigned hereunder or any action
or proceeding in respect thereof.
4. Forbearance. The undersigned shall forever refrain and forebear from
-----------
commencing, instituting or prosecuting any lawsuit, action, claim or proceeding
before or in any court, regulatory, government, arbitral or other authority to
collect or enforce any Claims which are released and discharged hereby.
5. Miscellaneous.
-------------
(a) This Release shall be governed and construed in accordance with
the laws of the State of Georgia (other than the choice of law provisions
thereof).
(b) This Release contains the entire agreement between the parties
with respect to the claims released hereby, and such Release supersedes all
prior agreements, arrangement or understandings (written or otherwise) with
respect to such Claims and no representation or warranty, oral or written,
express or implied, has been made by or relied upon by any party hereto, except
as expressly contained herein or in the Merger Agreement.
(c) This Release shall be binding upon and insure to the benefit of
the undersigned and the Releasees and their respective successors and assigns.
(d) This Release may not be modified, amended or rescinded except by
the written agreement of the undersigned and the Releasees, it being the express
understanding of the undersigned and the Releasees that no term hereof may be
waived by the action, inaction or course of delaying by or between the
undersigned or the Releasees, except in strict accordance
2
with this paragraph, and further that the waiver of any breach of this Release
shall not constitute or be construed as the waiver of any other breach of the
terms hereof.
(e) The undersigned represents, warrants and covenants that he or she
is fully aware of his or her rights to discuss any and all aspects of this
matter with any attorney chosen by him or her, and that he or she has carefully
read and fully understands all the provisions of this Release, and that he or
she is voluntarily entering into this Release.
(f) This Release is effective when signed by the undersigned and
delivered to CFB and acknowledged by CFB, and its operation to extinguish all of
the Claims released hereby is not dependent on or affected by the performance or
non-performance of any future act by the undersigned or the Releasees.
Sincerely,
---------------------------------------
Signature of Officer or Director
---------------------------------------
Name of Officer or Director
On behalf of Community First Banking Company, I hereby acknowledge
receipt of this letter as of this ______ day of _______________, 2001.
Community First Banking Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
3
EXHIBIT 2.1
EXHIBIT 4
MATTERS AS TO WHICH POWELL, GOLDSTEIN,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP WILL OPINE
1 Community First Banking Company ("CFB ") has been incorporated under
the Georgia Business Corporation Code (or prior law), its status is active, and
it has full corporate power and authority to carry on the business in which it
is engaged and to own and use its Assets.
2. The execution and delivery of the Agreement and compliance with its
terms do not and will not violate or contravene any provisions of the Articles
of Incorporation or Bylaws of CFB or, to our knowledge but without any
independent investigation, any Law or Order to which CFB is a party or by which
CFB is bound.
3. The Agreement has been duly and validly executed and delivered by CFB
and assuming valid authorization, execution and delivery by First Deposit
Bancshares, Inc. ("First Deposit") constitutes a valid and binding agreement of
CFB enforceable in accordance with its terms.
4. The shares of CFB Common Stock to be issued to the shareholders of
First Deposit as contemplated by the Agreement, when properly issued and
delivered following consummation of the Holding Company Merger, will be fully
paid and nonassessable under the Georgia Business Corporation Code.
Our opinion concerning the validity, binding effect and enforceability of
the Agreement means that (i) the Agreement constitutes an effective contract
under applicable laws, (ii) the Agreement is not invalid in its entirety because
of a specific statutory prohibition or public policy and is not subject in its
entirety to a contractual defense, and (iii) subject to the last sentence of
this paragraph, some remedy is available if CFB is in material default under the
Agreement. This opinion does not mean that (i) any particular remedy is
available upon a material default, or (ii) every provision of the Agreement will
be upheld or enforced in any or each circumstance by a court. Furthermore, the
validity, binding effect and enforceability of the Agreement may be limited or
otherwise affected by (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar statutes, rules, regulations or other
laws affecting the enforcement of creditors' rights and remedies generally, and
(ii) the unavailability of, or limitation on the availability of, a particular
right or remedy (whether in a proceeding in equity or at law) because of an
equitable principle or a requirement as to commercial reasonableness,
conscionability or good faith.
1