EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ABC BANCORP
AND
▇▇▇▇▇ BANKCORP, INC.
AS OF MAY 15, 1997
TABLE OF CONTENTS
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PAGE
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Preamble.................................................................... 1
ARTICLE 1 TERMS OF MERGER............................................... 1
1.1 Merger........................................................ 1
1.2 Time and Place of Closing..................................... 1
1.3 Effective Time................................................ 2
ARTICLE 2 ARTICLES, BYLAWS, MANAGEMENT.................................. 2
2.1 Articles of Incorporation..................................... 2
2.2 Bylaws........................................................ 2
2.3 Directors and Officers........................................ 2
ARTICLE 3 MANNER OF CONVERTING AND EXCHANGING SHARES.................... 2
3.1 Conversion of Shares.......................................... 2
3.2 Exchange of Shares............................................ 3
3.3 Anti-Dilution Provisions...................................... 4
3.4 Shares Held by TARGET or PURCHASER............................ 4
3.5 TARGET Bank................................................... 4
3.6 Rights of Former TARGET Shareholders.......................... 4
3.7 Options....................................................... 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF TARGET...................... 5
4.1 Organization, Standing and Power.............................. 5
4.2 Authority; No Breach.......................................... 6
4.3 Capital Stock................................................. 6
4.4 TARGET Subsidiaries........................................... 7
4.5 Financial Statements.......................................... 7
4.6 Absence of Undisclosed Liabilities............................ 8
4.7 Absence of Certain Changes or Events.......................... 8
4.8 Tax Matters................................................... 8
4.9 TARGET Allowance for Possible Loan Losses..................... 9
4.10 Assets........................................................ 9
4.11 Environmental Matters......................................... 10
4.12 Compliance with Laws.......................................... 11
4.13 Labor Relations............................................... 11
4.14 Employee Benefit Plans........................................ 11
4.15 Material Contracts............................................ 13
4.16 Legal Proceedings............................................. 13
4.17 Reports....................................................... 14
4.18 Statements True and Correct................................... 14
4.19 Accounting, Tax and Regulatory Matters........................ 14
4.20 Charter Provisions............................................ 15
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER................... 15
5.1 Organization, Standing and Power.............................. 15
5.2 Authority; No Breach.......................................... 15
5.3 Capital Stock................................................. 16
5.4 PURCHASER Subsidiaries........................................ 16
5.5 Financial Statements.......................................... 17
5.6 Absence of Undisclosed Liabilities............................ 17
5.7 Absence of Certain Changes or Events.......................... 18
5.8 Tax Matters................................................... 18
5.9 PURCHASER Allowance for Possible Loan Losses.................. 18
5.10 Assets........................................................ 19
5.11 Environmental Matters......................................... 19
5.12 Compliance with Laws.......................................... 20
5.13 Labor Relations............................................... 21
5.14 Employee Benefit Plans........................................ 21
5.15 Legal Proceedings............................................. 23
5.16 Reports....................................................... 23
5.17 Statements True and Correct................................... 23
5.18 Accounting, Tax and Regulatory Matters........................ 24
5.19 Charter Provisions............................................ 24
ARTICLE 6 CONDUCT OF BUSINESS PENDING CONSUMMATION...................... 24
6.1 Affirmative Covenants of TARGET............................... 24
6.2 Negative Covenants of TARGET.................................. 24
6.3 Covenants of PURCHASER........................................ 26
6.4 Adverse Changes in Condition.................................. 26
6.5 Reports....................................................... 27
6.6 Pooling....................................................... 27
ARTICLE 7 ADDITIONAL AGREEMENTS......................................... 27
7.1 Registration Statement; Proxy Statement; Shareholder Approval. 27
7.2 Listing....................................................... 28
7.3 Applications.................................................. 28
7.4 Filings with State Offices.................................... 28
7.5 Agreement as to Efforts to Consummate......................... 28
7.6 Investigation and Confidentiality............................. 28
7.7 Press Releases................................................ 29
7.8 No Solicitation............................................... 29
7.9 Tax Treatment................................................. 31
7.10 Agreement of Affiliates....................................... 31
7.11 Employee Benefits and Contracts............................... 31
7.12 Large Deposits................................................ 32
7.13 Indemnification............................................... 32
7.14 Irrevocable Proxies........................................... 32
7.15 Employment Agreement.......................................... 32
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ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE................................................. 32
8.1 Conditions to Obligations of Each Party...................... 32
8.2 Conditions to Obligations of PURCHASER....................... 33
8.3 Conditions to Obligations of TARGET.......................... 34
ARTICLE 9 TERMINATION.................................................. 35
9.1 Termination.................................................. 35
9.2 Effect of Termination........................................ 37
ARTICLE 10 MISCELLANEOUS................................................ 37
10.1 Definitions.................................................. 37
10.2 Expenses..................................................... 43
10.3 Brokers and Finders.......................................... 44
10.4 Entire Agreement............................................. 44
10.5 Amendments................................................... 44
10.6 Waivers...................................................... 44
10.7 Assignment................................................... 45
10.8 Notices...................................................... 45
10.9 Governing Law................................................ 46
10.10 Counterparts................................................. 46
10.11 Captions..................................................... 46
10.12 Enforcement of Agreement..................................... 46
10.13 Severability................................................. 46
10.14 Survival..................................................... 46
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LIST OF EXHIBITS
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EXHIBIT NUMBER DESCRIPTION
-------------- -----------
1. Form of agreement of affiliates of ▇▇▇▇▇ Bankcorp Inc.
((S) 7.10).
2. Matters as to which Martin, Snow, Grant & ▇▇▇▇▇▇ will
opine ((S) 8.2(d)).
3. Matters as to which ▇▇▇▇▇▇ & ▇▇▇▇▇▇ will opine ((S)
8.3(d)).
4. Irrevocable Proxy ((S)7.14).
5. Form of Employment Agreement between The Citizens Bank of
Tifton and C. ▇▇▇▇▇ ▇▇▇▇▇ ((S) 8.2(f)).
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of May 15, 1997, by and between ▇▇▇▇▇ BANKCORP, INC. ("TARGET"), a
corporation organized and existing under the laws of the State of Georgia, with
its principal office located in Ocilla, Georgia, and ABC BANCORP ("PURCHASER"),
a corporation organized and existing under the laws of the State of Georgia,
with its principal office located in Moultrie, Georgia.
PREAMBLE
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Certain terms used in this Agreement are defined in Section 10.1 hereof.
The Boards of Directors of TARGET and PURCHASER are of the opinion that the
transactions described herein are in the best interests of TARGET and PURCHASER
and their respective shareholders. This Agreement provides for the combination
of TARGET with PURCHASER pursuant to the merger of TARGET with and into
PURCHASER, as a result of which the outstanding shares of the capital stock of
TARGET shall be converted into the right to receive shares of common stock of
PURCHASER (except as provided herein), and the shareholders of TARGET shall
become shareholders of PURCHASER (except as provided herein). The transactions
described in this Agreement are subject to the approvals of the shareholders of
TARGET, the Board of Governors of the Federal Reserve System, the Georgia
Department of Banking and Finance and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the Merger for federal income tax purposes shall qualify as
a "reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
Simultaneous with the Closing of the Merger, The Bank of Ocilla, a wholly-
owned Georgia state bank subsidiary of TARGET, will be merged with and into The
Citizens Bank of Tifton ("Citizens Bank"), a wholly-owned Georgia state bank
subsidiary of PURCHASER, and will thereafter be operated as a branch of Citizens
Bank.
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
TERMS OF MERGER
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1.1 MERGER. Subject to the terms and conditions of this Agreement, at
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the Effective Time, TARGET shall be merged with and into PURCHASER in accordance
with the provisions of Section 14-2-1101 of the GBCC and with the effect
provided in Section 14-2-1106 of the GBCC (the "Merger"). PURCHASER shall be
the Surviving Corporation resulting from the Merger. 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 TARGET and PURCHASER.
1.2 TIME AND PLACE OF CLOSING. The Closing shall take place at 10:00
-------------------------
a.m. on the date that the Effective Time occurs or at such other time as the
Parties, acting through their chief
executive officers or chief financial officers, may mutually agree (the "Closing
Date"). The place of Closing shall be at the main office of The Bank of Ocilla,
Ocilla, Georgia, or such other place 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 Georgia
Articles 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 chief executive officers of each Party, the Parties shall use
their reasonable efforts to cause the Effective Time to occur on (a) the last
business day of the month in which occurs 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 date on which the shareholders of TARGET
approve this Agreement to the extent such approval is required by applicable
Law; or (b) such later date as may be mutually agreed upon in writing by the
chief executive officer or chief financial officer of each Party.
ARTICLE 2
ARTICLES, BYLAWS, MANAGEMENT
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2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
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PURCHASER in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed.
2.2 BYLAWS. The Bylaws of PURCHASER in effect immediately prior to the
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Effective Time shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of PURCHASER in office
----------------------
immediately prior to the Effective Time 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 officers of PURCHASER in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of PURCHASER from and
after the Effective Time in accordance with the Bylaws of PURCHASER. The
directors and officers of TARGET Bank immediately prior to the Effective Time
shall serve as the initial directors and officers of TARGET Bank from and after
the Effective Time in accordance with the Bylaws of TARGET Bank.
ARTICLE 3
MANNER OF CONVERTING AND EXCHANGING SHARES
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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 the holders thereof, the shares of PURCHASER and TARGET shall be
converted as follows:
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(a) Each share of PURCHASER Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each Outstanding TARGET Share shall automatically be converted
at the Effective Time into the right to receive that number of shares of
PURCHASER Common Stock (plus cash in lieu of fractional shares pursuant to
subsection (d) below, if applicable) in an amount equal to (i) 500,000 (subject
to possible increase pursuant to Section 3.3 and 3.7 of this Agreement) divided
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by (ii) the aggregate number of Outstanding TARGET Shares (the "Exchange
--
Ratio").
(c) In accordance with the provisions of this Section 3.1, each
TARGET shareholder who does not dissent shall receive the number of shares (or
such fraction of a share, subject to subsection (d) below) of PURCHASER Common
Stock that shall be equal to (i) the Exchange Ratio multiplied by (ii) the
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aggregate number of Outstanding TARGET Shares such shareholder holds as of the
Effective Time (the "Merger Consideration").
(d) Notwithstanding any other provision of this Agreement, each
holder of shares of TARGET Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of PURCHASER
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 PURCHASER Common Stock multiplied by
the Base Period Trading Price. No such holder will be entitled to dividends,
voting rights, or any other rights as a shareholder in respect of any fractional
shares.
(e) Each share of the TARGET Common Stock that is not an Outstanding
TARGET Share as of the Effective Time shall be cancelled without consideration
therefor.
(f) Outstanding TARGET Shares held by TARGET shareholders who, prior
to the Effective Time, have met the requirements of Article 13 of the GBCC with
respect to shareholders dissenting from the Merger shall not be converted in the
Merger. All such shares shall be cancelled and the holders thereof shall
thereafter have only such rights as are granted to dissenting shareholders under
Article 13 of the GBCC; provided, however, that if any such shareholder fails to
perfect his or her rights as a dissenting shareholder with respect to his or her
Outstanding TARGET Shares in accordance with Article 13 of the GBCC, such shares
held by such shareholder shall, upon the happening of that event, be treated the
same as all other holders of TARGET Common Stock who have not dissented as to
the Merger.
3.2 EXCHANGE OF SHARES. Prior to the Effective Time, PURCHASER shall
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select a bank or trust company reasonably acceptable to TARGET to act as
exchange agent (the "Exchange Agent") to effectuate the delivery of the Merger
Consideration to holders of TARGET Common Stock. Promptly following the
Effective Time, the Exchange Agent shall send to each holder of Outstanding
TARGET Shares immediately prior to the Effective Time a form of letter of
transmittal (the "Letter of Transmittal") for use in exchanging certificates
previously evidencing shares of TARGET Common Stock ("Old Certificates"). The
Letter of Transmittal will contain instructions with respect to the surrender of
Old Certificates and the distribution of any cash and certificates representing
PURCHASER Common Stock, which certificates shall be deposited with the Exchange
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Agent by PURCHASER as of the Effective Time. If any certificates for shares of
PURCHASER Common Stock are to be issued in a name other than that for which an
Old Certificate surrendered or exchanged is issued, the Old Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and the person requesting such exchange shall affix any requisite stock transfer
tax stamps to the Old Certificate surrendered or provide funds for their
purchase or establish to the satisfaction of he Exchange Agent that such taxes
are not payable. Unless and until Old Certificates or evidence that such
certificates have been lost, stolen or destroyed accompanied by such security or
indemnity as shall be requested by TARGET) are presented to the Exchange Agent,
the holder thereof shall not be entitled to the consideration to be paid in
exchange therefor pursuant to the Merger, to any dividends payable on any
PURCHASER Common Stock to which he or she is entitled, or to exercise any rights
as a shareholder of PURCHASER Common Stock. Subject to applicable law and to
the extent that the same has not yet been paid to a public official pursuant to
applicable abandoned property laws, upon surrender of his or her Old
Certificates, the holder thereof shall be paid the consideration to which he or
she is entitled. All such property, if held by the Exchange Agent for payment
or delivery to the holders of unsurrendered Old Certificates and unclaimed at
the end of one (1) year from the Effective Time, shall at such time be paid or
redelivered by the Exchange Agent to PURCHASER, and after such time any holder
of an Old Certificate who has not surrendered such certificate shall, subject to
applicable laws and to the extent that the same has not yet been paid to a
public official pursuant to applicable abandoned property laws, look as a
general creditor only to PURCHASER for payment or delivery of such property. In
no event will any holder of TARGET Common Stock exchanged in the Merger be
entitled to receive any interest on any amounts held by the Exchange Agent or
PURCHASER.
3.3 ANTI-DILUTION PROVISIONS. In the event PURCHASER changes the number
------------------------
of shares of PURCHASER 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 therefor (in the case of a stock
split or similar recapitalization) shall be prior to the Effective Time, the
Exchange Ratio shall be proportionately adjusted.
3.4 SHARES HELD BY TARGET OR PURCHASER. Each of the shares of TARGET
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Common Stock held by any TARGET Company or by any PURCHASER Company, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.5 TARGET BANK. After consummation of the Merger, TARGET Bank shall be
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operated as a branch of Citizens Bank.
3.6 RIGHTS OF FORMER TARGET SHAREHOLDERS. At the Effective Time, the
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stock transfer books of TARGET shall be closed as to holders of TARGET Common
Stock immediately prior to the Effective Time and no transfer of TARGET Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 3.2 of
this Agreement, each Old Certificate (other than shares to be canceled pursuant
to Section 3.1(d) of this Agreement) shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Section 3.1 of this Agreement in exchange therefor. To the extent permitted
by Law, former shareholders of record of TARGET shall be
4
entitled to vote after the Effective Time at any meeting of shareholders of
PURCHASER the number of whole shares of PURCHASER Common Stock into which their
respective shares of TARGET Common Stock are converted, regardless of whether
such holders have exchanged their certificates representing TARGET Common Stock
for certificates representing PURCHASER Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by PURCHASER on the PURCHASER Common Stock, the record date for which
is at or after the Effective Time, the declaration shall include dividends or
other distributions on all shares issuable pursuant to this Agreement, but no
dividend or other distribution payable to the holders of record of PURCHASER
Common Stock as of any time subsequent to the Effective Time shall be delivered
to the holder of any certificate representing shares of TARGET Common Stock
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided in Section 3.2 of this Agreement. However,
upon surrender of such TARGET Common Stock certificate, both the PURCHASER
Common Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate.
3.7 OPTIONS. Each warrant, stock option or other right, if any, to
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purchase shares of TARGET Common Stock issued and outstanding immediately prior
to the Effective Time shall be cancelled (whether or not such warrant, option or
other right is then exercisable), and all rights in respect thereof shall cease
to exist, without any conversion thereof or payment of any consideration
therefor; provided, however, that C. ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇, who hold
options exercisable for an aggregate of 752 shares of TARGET Common Stock at an
aggregate exercise price of $108,959, shall be permitted to exercise any or all
such options at any time prior to the Closing Date, in which event the number of
shares of PURCHASER Common Stock into which Outstanding TARGET Shares will be
converted pursuant to Section 3.1(b) of this Agreement shall be increased by (i)
the aggregate exercise price of all of said options that are so exercised
divided by (ii) 16.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TARGET
----------------------------------------
TARGET hereby represents and warrants to PURCHASER as follows:
4.1 ORGANIZATION, STANDING AND POWER. TARGET is a corporation duly
--------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and is duly registered as a bank holding company under the BHC Act.
TARGET has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. TARGET 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 Material Adverse Effect on TARGET.
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4.2 AUTHORITY; NO BREACH
--------------------
(a) TARGET has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of TARGET,
subject to the approval of this Agreement by the holders of two-thirds of the
outstanding TARGET Common Stock. Subject to such requisite shareholder approval,
this Agreement represents a legal, valid and binding obligation of TARGET,
enforceable against TARGET in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by TARGET,
nor the consummation by TARGET of the transactions contemplated hereby, nor
compliance by TARGET with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of TARGET's Articles of Incorporation or
Bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any TARGET
Company under, any Contract or Permit of any TARGET Company, where such Default
or Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, or, (iii)
subject to receipt of the requisite approvals referred to in Section 8.1(b) of
this Agreement, violate any Law or Order applicable to any TARGET Company or any
of their respective Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate Laws, and other than Consents
required from Regulatory Authorities, and other than notices to or filings with
the IRS or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, and other than Consents, filings or notifications which, if not
obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TARGET, no notice to, filing with, or
Consent of any public body or authority is necessary for the consummation by
TARGET of the Merger and the other transactions contemplated in this Agreement.
4.3 CAPITAL STOCK.
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(a) The authorized capital stock of TARGET consists of 5,000,000
shares of TARGET Common Stock, of which 29,230 shares are issued and outstanding
as of the date of this Agreement. All of the issued and outstanding shares of
capital stock of TARGET 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 TARGET has been issued in violation of any preemptive rights of
the current or past shareholders of TARGET.
(b) There are no shares of capital stock or other equity securities
of TARGET outstanding and, except as set forth in Section 3.7 of this Agreement,
no outstanding options,
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warrants, scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of TARGET or contracts, commitments,
understandings, or arrangements by which TARGET is or may be bound to issue
additional shares of its capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock.
4.4 TARGET SUBSIDIARIES. TARGET has Previously Disclosed all of the
-------------------
TARGET Subsidiaries as of the date of this Agreement. TARGET owns all of the
issued and outstanding shares of capital stock of TARGET Bank, and TARGET Bank
owns all of the issued and outstanding stock of each other TARGET Subsidiary.
No equity securities of any TARGET Subsidiary are or may become required to be
issued (other than to a TARGET Company) by reason of any options, warrants,
scrip, rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of any such Subsidiary, and there are no Contracts
by which any TARGET Subsidiary is bound to issue (other than to a TARGET
Company) additional shares of its capital stock or options, warrants, or rights
to purchase or acquire any additional shares of its capital stock or by which
any TARGET Company is or may be bound to transfer any shares of the capital
stock of any TARGET Subsidiary (other than to a TARGET Company). There are no
Contracts relating to the rights of any TARGET Company to vote or to dispose of
any shares of the capital stock of any TARGET Subsidiary. All of the shares of
capital stock of each TARGET Subsidiary held by a TARGET Company are fully paid
and nonassessable under the applicable corporation Law of the jurisdiction in
which such Subsidiary is incorporated or organized and are owned by the TARGET
Company free and clear of any Lien. Each TARGET Subsidiary is either a bank or
a corporation, and is duly organized, validly existing, and (as to corporations)
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 TARGET 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 Material Adverse
Effect on TARGET. Each TARGET Subsidiary that is a depository institution is an
insured institution as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder.
4.5 FINANCIAL STATEMENTS. TARGET has Previously Disclosed, and
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delivered to PURCHASER prior to the execution of this Agreement, copies of all
TARGET Financial Statements for periods ended prior to the date hereof and will
deliver to PURCHASER copies of all TARGET Financial Statements prepared
subsequent to the date hereof. The TARGET Financial Statements (as of the dates
thereof and for the periods covered thereby) (a) are or, if dated after the date
of this Agreement, will be in accordance with the books and records of the
TARGET Companies, which are or will be, as the case may be, complete and correct
and which have been or will have been, as the case may be, maintained in
accordance with good business practices, and (b) present or will present, as the
case may be, fairly the consolidated financial position of the TARGET Companies
as of the dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows of the TARGET Companies for the periods
indicated, in accordance with GAAP (subject to any exceptions as to consistency
specified therein or as may be indicated in the notes
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thereto or, in the case of interim financial statements, to normal recurring
year-end adjustments that are not material).
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously Disclosed,
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no TARGET Company has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of TARGET as of March 31, 1997 included in the TARGET Financial
Statements or reflected in the notes thereto. Except as Previously Disclosed,
no TARGET Company has incurred or paid any Liability since March 31, 1997,
except for such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on TARGET.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1997, (a)
------------------------------------
there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET, and (b) the TARGET Companies 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 TARGET
provided in Article 7 of this Agreement.
4.8 TAX MATTERS.
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(a) All Tax returns required to be filed by or on behalf of any of
the TARGET Companies have been duly filed or requests for extensions have been
timely filed, granted and have not expired for periods ended on or before
December 31, 1996, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on TARGET, and all returns filed are complete and accurate to the
Knowledge of TARGET. All Taxes shown on filed returns have been paid. As of the
date of this Agreement, 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 Material
Adverse Effect on TARGET, except as reserved against in the TARGET Financial
Statements delivered prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the TARGET Companies has executed an extension or waiver
of any statute of limitations on the assessment or collection of any Tax due
that is currently in effect, and no unpaid tax deficiency has been asserted in
writing against or with respect to any TARGET Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET.
(c) Adequate provision for any Taxes due or to become due for any of
the TARGET Companies for the period or periods through and including the date of
the respective TARGET Financial Statements has been made and is reflected on
such TARGET Financial Statements.
8
(d) Deferred Taxes of the TARGET Companies have been provided for in
accordance with GAAP.
(e) Each of the TARGET Companies is in compliance with, and its
records contain all information and documents (including, without limitation,
properly completed IRS Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements under federal, state and
local Tax Laws, and such records identify with specificity all accounts subject
to backup withholding under Section 3406 of the Internal Revenue Code, except
for such instances of noncompliance and such omissions as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
TARGET.
(f) Effective January 1, 1993, TARGET adopted Financial Accounting
Standards Board Statement 109, "Accounting for Income Taxes."
4.9 TARGET ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for
-----------------------------------------
possible loan or credit losses (the "TARGET Allowance") shown on the
consolidated balance sheets of TARGET included in the most recent TARGET
Financial Statements dated prior to the date of this Agreement was, and the
TARGET Allowance shown on the consolidated balance sheets of TARGET included in
the TARGET Financial Statements as of dates subsequent to the execution of this
Agreement will be, maintained in accordance with, and are in the amounts
required by, GAAP and applicable regulatory requirements or guidelines as of the
dates thereof, except where the failure of such TARGET Allowance to be so
maintained is not reasonably likely to have a Material Adverse Effect on TARGET.
4.10 ASSETS. Except as Previously Disclosed or as disclosed or reserved
------
against in the TARGET Financial Statements, or where the failure to own good and
marketable title is not reasonably likely to have a Material Adverse Effect on
TARGET, the TARGET Companies have good and marketable title, free and clear of
all Liens, to all of their respective Assets. All material tangible properties
used in the businesses of the TARGET Companies are in good condition, reasonable
wear and tear excepted, and are usable in the ordinary course of business
consistent with TARGET's past practices. All Assets which are material to
TARGET's business on a consolidated basis, held under leases or subleases by any
of the TARGET Companies are held under valid Contracts enforceable in accordance
with their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The
policies of fire, theft, liability, and other insurance maintained with respect
to the Assets or businesses of the TARGET Companies provide adequate coverage
under current industry practices against loss or Liability, and the fidelity and
blanket bonds in effect as to which any of the TARGET Companies is a named
insured are reasonably sufficient. The Assets of the TARGET Companies include
all assets required to operate the business of the TARGET Companies as presently
conducted.
9
4.11 ENVIRONMENTAL MATTERS.
---------------------
(a) Each TARGET Company, its Participation Facilities and its Loan
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 Material Adverse Effect on TARGET.
(b) There is no Litigation pending or, to the Knowledge of TARGET,
threatened before any court, governmental agency or authority or other forum in
which any TARGET Company or any of its Participation Facilities 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 release into the environment of any Hazardous Material
or oil, whether or not occurring at, on, under or involving a site owned, leased
or operated by any TARGET Company or any of its Participation Facilities, except
for such Litigation pending or, to the Knowledge of TARGET, threatened that is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TARGET.
(c) There is no Litigation pending or, to the Knowledge of TARGET,
threatened before any court, governmental agency or board or other forum in
which any of its Loan Properties (or any TARGET Company in respect of such Loan
Property) has been or, with respect to threatened litigation, may be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material or oil, whether or
not occurring at, on, under or involving a Loan Property, except for such
Litigation pending or, to the Knowledge of TARGET, threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET.
(d) To the Knowledge of TARGET, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c) above, except such as
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TARGET.
(e) During the period of (i) any TARGET Company's ownership or
operation of any of their respective current properties, (ii) any TARGET
Company's participation in the management of any Participation Facility, or
(iii) any TARGET Company's holding of a security interest in a Loan Property,
there have been no releases of Hazardous Material or oil in, on, under or
affecting any such property, Participation Facility, or to the Knowledge of
TARGET Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET.
(f) Prior to the period of (i) any TARGET Company's ownership or
operation of any of their respective current properties, (ii) any TARGET
Company's participation in the management of any Participation Facility, or
(iii) any TARGET Company's holding of a security interest in a Loan Property, to
the Knowledge of TARGET, there were no releases of Hazardous Material or oil in,
on, under or affecting any such property, Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on TARGET.
10
4.12 COMPLIANCE WITH LAWS.
--------------------
(a) TARGET is duly registered as a bank holding company under the
BHC Act. Each TARGET Company has in effect all Permits necessary for it to own,
lease or operate its 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 Material Adverse Effect on TARGET, and 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 Material Adverse
Effect on TARGET.
(b) Except as Previously Disclosed, no TARGET Company:
(i) is in violation of any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for violations
which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on TARGET; and
(ii) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (A) asserting that any TARGET
Company 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 Material Adverse Effect on TARGET, (B) threatening to revoke
any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, or
(C) requiring any TARGET Company 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 manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
4.13 LABOR RELATIONS. No TARGET Company is the subject of any Litigation
---------------
asserting that it or any other TARGET Company 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 TARGET Company to bargain with
any labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any TARGET Company, pending or, to its
Knowledge, threatened or, to its Knowledge, is there any activity involving any
TARGET Company's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
4.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) TARGET has Previously Disclosed, and delivered or made available
to PURCHASER 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
plans all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including, without
limitation, "employee benefit
11
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 TARGET
Company or Affiliate 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,
the "TARGET Benefit Plans"). Any of the TARGET Benefit Plans which is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "TARGET ERISA Plan." Each TARGET ERISA Plan
which is also a "defined benefit plan" (as defined in Section 414(j)) of the
Internal Revenue Code) is referred to herein as a "TARGET Pension Plan." No
TARGET Pension Plan is or has been a multi-employer plan within the meaning of
Section 3(37) of ERISA.
(b) All TARGET 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 Material Adverse Effect on TARGET. Each TARGET 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 IRS, and TARGET is
not aware of any circumstances likely to result in revocation of any such
favorable determination letter. To the Knowledge of TARGET, no TARGET Company
has engaged in a transaction with respect to any TARGET Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof
would subject any TARGET Company to a tax or penalty 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 Material
Adverse Effect on TARGET.
(c) No TARGET ERISA Plan which is a defined benefit pension plan has
any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, based on actuarial assumptions set forth for such plan's
most recent actuarial valuation. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any TARGET Pension Plan, (ii) no change in the actuarial assumptions with
respect to any TARGET Pension Plan, and (iii) no increase in benefits under any
TARGET Pension Plan as a result of plan amendments or changes in applicable law,
which is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TARGET or materially adversely affect the funding status of
any such plan. Neither any TARGET Pension Plan nor any "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any TARGET Company, or the single-employer plan of any entity
which is considered one employer with TARGET under Section 4001 of ERISA or
Section 414 of the Internal Revenue Code or Section 302 of ERISA (whether or not
waived) (an "ERISA Affiliate") has an "accumulated funding deficiency" within
the meaning of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
which is reasonably likely to have a Material Adverse Effect on TARGET. No
TARGET Company has provided, or is required to provide, security to a TARGET
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV or ERISA has been or is expected to
be incurred by any TARGET Company with respect to any ongoing, frozen or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Material Adverse
Effect on TARGET. Except as Previously Disclosed, no TARGET Company has
incurred
12
any withdrawal Liability with respect to a multi-employer plan under Subtitle B
of Title TV or ERISA (regardless of whether based on contributions of an ERISA
Affiliate), which Liability is reasonably likely to have a Material Adverse
Effect on TARGET. No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any TARGET Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(e) No TARGET Company has any obligations for retiree health and
life benefits under any of the TARGET Benefit Plans, and there are no
restrictions on the rights of such TARGET Company to amend or terminate any such
Plan without incurring any Liability thereunder, which Liability is reasonably
likely to have a Material Adverse Effect on TARGET.
(f) Except as Previously Disclosed, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
director or any employee of any TARGET Company from any TARGET Company under any
TARGET Benefit Plan or otherwise, (ii) increase any benefits otherwise payable
under any TARGET Benefit Plan, or (iii) result in any acceleration of the time
of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including, without limitation, entitlements under any
executive compensation, supplemental retirement, or employment agreement) of
employees and former employees of any TARGET Company and their respective
beneficiaries, other than entitlements accrued pursuant to funded retirement
plans subject to the provisions of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, have been fully reflected on the TARGET Financial
Statements to the extent required by and in accordance with GAAP.
4.15 MATERIAL CONTRACTS. Except as Previously Disclosed or otherwise
------------------
reflected in the TARGET Financial Statements, none of the TARGET Companies, nor
any of their respective Assets, businesses or operations, is a party to, or is
bound or affected by, or receives benefits under, (a) any employment, severance,
termination, consulting or retirement Contract providing for aggregate payments
to any Person in any calendar year, (b) any Contract relating to the borrowing
of money by any TARGET Company or the guarantee by any TARGET Company of any
such obligation (other than Contracts evidencing deposit liabilities, purchases
of federal funds, fully secured repurchase agreements, trade payables, and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), and (c) any Contracts between or among TARGET Companies (together
with all Contracts referred to in Sections 4.10 and 4.14(a) of this Agreement,
the "TARGET Contracts"). None of the TARGET Companies is in Default under any
TARGET Contract, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET. All of
the indebtedness of any TARGET Company for money borrowed is prepayable at any
time by such TARGET Company without penalty or premium.
4.16 LEGAL PROCEEDINGS. Except as Previously Disclosed, there is no
-----------------
Litigation instituted or pending or, to the Knowledge of TARGET, threatened (or
unasserted but considered
13
probable of assertion and which, if asserted, would have at least a reasonable
probability of an unfavorable outcome) against any TARGET Company, or against
any Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any TARGET Company, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
TARGET.
4.17 REPORTS. Except as Previously Disclosed, since January 1, 1994,
-------
each TARGET Company 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 all Regulatory Authorities. As of their respective dates, each of
such reports and documents, including, without limitation, the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of their respective dates, none of such reports or
documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
4.18 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument
---------------------------
or other writing furnished or to be furnished by any TARGET Company or any
Affiliate thereof to PURCHASER 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
TARGET Company or any Affiliate thereof for inclusion in the Registration
Statement to be filed by PURCHASER with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
any TARGET Company or any Affiliate thereof for inclusion in the Proxy Statement
to be mailed to TARGET's shareholders in connection with the Shareholders'
Meeting, and any other documents to be filed by any TARGET Company or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Proxy Statement, when first mailed
to the shareholders of TARGET, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any TARGET Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
4.19 ACCOUNTING, TAX AND REGULATORY MATTERS. Except as Previously
--------------------------------------
Disclosed, no TARGET Company or any Affiliate thereof has taken any action or
has any Knowledge of any fact or circumstance that is reasonably likely to (a)
prevent the transactions contemplated hereby, including the Merger, from
qualifying as a reorganization within the meaning of Section 368(a) of
14
the Internal Revenue Code, or (b) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 8.1 (b) of this
Agreement or result in the imposition of a condition or restriction of the
referred to in the second sentence of such Section. To the Knowledge of TARGET,
there exists no fact, circumstance, or reason why the requisite Consents
referred to in Section 8.1(b) of this Agreement cannot be received in a timely
manner without the imposition of any condition or restriction of the type
described in the second sentence of such Section 8.1(b).
4.20 CHARTER PROVISIONS. Each TARGET Company has taken all action so
------------------
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any TARGET Company or restrict or
impair the ability of PURCHASER to vote, or otherwise to exercise the rights of
a shareholder with respect to, shares of any TARGET Company that may be acquired
or controlled by it.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
PURCHASER hereby represents and warrants to TARGET as follows:
5.1 ORGANIZATION, STANDING AND POWER. PURCHASER is a corporation duly
--------------------------------
organized, validly existing, and in good standing under the laws of the State of
Georgia, and is duly registered as a bank holding company under the BHC Act.
PURCHASER has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. PURCHASER 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 Material Adverse Effect on PURCHASER.
5.2 AUTHORITY; NO BREACH.
--------------------
(a) PURCHASER has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of PURCHASER.
This Agreement represents a legal, valid and binding obligation of PURCHASER,
enforceable against PURCHASER in accordance with its terms (except in all cases
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
PURCHASER, nor the consummation by PURCHASER of the transactions contemplated
hereby, nor compliance
15
by PURCHASER with any of the provisions hereof will (i) conflict with or result
in a breach of any provision of PURCHASER's Articles of Incorporation or Bylaws,
or (ii) constitute or result in a Default under, or require any Consent pursuant
to, or result in the creation of any Lien on any Asset of any PURCHASER Company
under, any Contract or Permit of any PURCHASER Company, where such Default or
Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER, or,
(iii) subject to receipt of the requisite approvals referred to in Section
8.1(b) of this Agreement, violate any Law or Order applicable to any PURCHASER
Company or any of their respective Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate Laws, and rules of the NASD, and
other than Consents required from Regulatory Authorities, and other than notices
to or filings with the IRS or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, and other than Consents, filings or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER, no
notice to, filing with, or Consent of any public body or authority is necessary
for the consummation by PURCHASER of the Merger and the other transactions
contemplated in this Agreement.
5.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of PURCHASER consists of (i)
15,000,000 shares of PURCHASER Common Stock, of which 6,745,701 shares are
issued and outstanding as of the date of this Agreement, and (ii) 5,000,000
shares of Preferred Stock, none of which are issued or outstanding as of the
date of this Agreement. All of the issued and outstanding shares of PURCHASER
Common Stock are, and all of the shares of PURCHASER Common Stock to be issued
in exchange for shares of TARGET Common Stock upon consummation of the Merger,
when issued in accordance with the terms of this Agreement, will be, duly and
validly issued and outstanding and fully paid and nonassessable under the GBCC.
None of the outstanding shares of PURCHASER Common Stock has been, and none of
the shares of PURCHASER Common Stock to be issued in exchange for shares of
TARGET Common Stock upon consummation of the Merger will be, issued in violation
of any preemptive rights of the current or past shareholders of PURCHASER.
PURCHASER has reserved 595,833 shares of PURCHASER Common Stock for issuance
under the PURCHASER Stock Plans, pursuant to which options to purchase not more
than 64,583 shares of PURCHASER Common Stock are outstanding as of the date of
this Agreement.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
Previously Disclosed, there are no shares of capital stock or other equity
securities of PURCHASER outstanding and no outstanding options, warrants, scrip,
rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of PURCHASER or contracts, commitments,
understandings, or arrangements by which PURCHASER is or may be bound to issue
additional shares of its capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock.
5.4 PURCHASER SUBSIDIARIES. PURCHASER has Previously Disclosed all of
----------------------
the PURCHASER Subsidiaries as of the date of this Agreement. PURCHASER owns all
of the issued and outstanding shares of capital stock of each PURCHASER
Subsidiary. No equity securities of
16
any PURCHASER Subsidiary are or may become required to be issued (other than to
a PURCHASER Company) by reason of any options, warrants, scrip, rights to
subscribe to, calls, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of any such Subsidiary, and there are no Contracts by which any PURCHASER
Subsidiary is bound to issue (other than to a PURCHASER Company) additional
shares of its capital stock or options, warrants, or rights to purchase or
acquire any additional shares of its capital stock or by which any PURCHASER
Company is or may be bound to transfer any shares of the capital stock of any
PURCHASER Subsidiary (other than to a PURCHASER Company). There are no
Contracts relating to the rights of any PURCHASER Company to vote or to dispose
of any shares of the capital stock of any PURCHASER Subsidiary. All of the
shares of capital stock of each PURCHASER Subsidiary held by a PURCHASER Company
are fully paid and nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the PURCHASER Company free and clear of any Lien. Each PURCHASER Subsidiary
is either a bank or a corporation, and is duly organized, validly existing, and
(as to corporations) 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 PURCHASER 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 Material Adverse Effect on PURCHASER. Each PURCHASER Subsidiary
that is a depository institution is an insured institution as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder.
5.5 FINANCIAL STATEMENTS. PURCHASER has Previously Disclosed and
--------------------
delivered to TARGET prior to the execution of this Agreement copies of all
PURCHASER Financial Statements for periods ended prior to the date hereof and
will deliver to TARGET copies of all PURCHASER Financial Statements prepared
subsequent to the date hereof. The PURCHASER Financial Statements (as of the
dates thereof and for the periods covered thereby) (a) are or, if dated after
the date of this Agreement, will be in accordance with the books and records of
the PURCHASER Companies, which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may be, maintained in
accordance with good business practices, and (b) present or will present, as the
case may be, fairly the consolidated financial position of the PURCHASER
Companies as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows of the PURCHASER Companies for
the periods indicated, in accordance with GAAP (subject to exceptions as to
consistency specified therein or as may be indicated in the notes thereto or, in
the case of interim financial statements, to normal recurring year-end
adjustments that are not material).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No PURCHASER Company has any
----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of PURCHASER as
of March 31, 1997 included in the PURCHASER Financial Statements or reflected in
the notes thereto. No PURCHASER Company has incurred or paid any Liability
since March 31, 1997, except for such Liabilities incurred or paid in the
ordinary course
17
of business consistent with past business practice and which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
PURCHASER.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1997, except
------------------------------------
as disclosed in SEC Documents filed by PURCHASER prior to the date of this
Agreement, (a) there have been no events, changes or occurrences which have had,
or are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER, and (b) the PURCHASER Companies 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 PURCHASER provided in Article 7 of this Agreement.
5.8 TAX MATTERS.
-----------
(a) All Tax returns required to be filed by or on behalf of any
of the PURCHASER Companies have been timely filed or requests for extensions
have been timely filed, granted and have not expired for periods ended on or
before December 31, 1996, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that all
such failures to file, taken together, are not reasonably likely to have a
Material Adverse Effect on PURCHASER, and all returns filed are complete and
accurate to the Knowledge of PURCHASER. All Taxes shown on filed returns have
been paid. As of the date of this Agreement, 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 Material Adverse Effect on PURCHASER, except as reserved against in
the PURCHASER Financial Statements delivered prior to the date of this
Agreement. All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid.
(b) None of the PURCHASER Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect, and no unpaid tax deficiency has been asserted
in writing against or with respect to any PURCHASER Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER.
(c) Adequate provision for any Taxes due or to become due for
any of the PURCHASER Companies for the period or periods through and including
the date of the respective PURCHASER Financial Statements has been made and is
reflected on such PURCHASER Financial Statements.
(d) Deferred Taxes of the PURCHASER Companies have been provided
for in accordance with GAAP.
(e) Effective January 1, 1993, PURCHASER adopted Financial
Accounting Standards Board Statement 109, "Accounting for Income Taxes."
5.9 PURCHASER ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for
--------------------------------------------
possible loan or credit losses (the "PURCHASER Allowance") shown on the
consolidated balance sheets of
18
PURCHASER included in the most recent PURCHASER Financial Statements dated prior
to the date of this Agreement was, and the PURCHASER Allowance shown on the
consolidated balance sheets of PURCHASER included in the PURCHASER 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 losses relating to or
inherent in the loan and lease portfolios (including accrued interest
receivables) of the PURCHASER Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
the PURCHASER Companies as of the dates thereof except where the failure of such
PURCHASER Allowance to be so adequate is not reasonably likely to have a
Material Adverse Effect on PURCHASER.
5.10 ASSETS. Except as Previously Disclosed or as disclosed or reserved
------
against in the PURCHASER Financial Statements, the PURCHASER Companies have good
and marketable title, free and clear of all Liens, to all of their respective
Assets. All material tangible properties used in the businesses of the
PURCHASER Companies are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with PURCHASER's
past practices. All Assets which are material to PURCHASER's business on a
consolidated basis, held under leases or subleases by any of the PURCHASER
Companies, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The policies of fire, theft,
liability, and other insurance maintained with respect to the Assets or
businesses of the PURCHASER Companies provide adequate coverage under current
industry practices against loss or Liability, and the fidelity and blanket bonds
in effect as to which any of the PURCHASER Companies is a named insured are
reasonably sufficient. The Assets of the PURCHASER Companies include all assets
required to operate the business of the PURCHASER Companies as presently
conducted.
5.11 ENVIRONMENTAL MATTERS.
---------------------
(a) Each PURCHASER Company, its Participation Facilities and its
Loan 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 Material Adverse Effect on PURCHASER.
(b) There is no Litigation pending or, to the Knowledge of
PURCHASER, threatened before any court, governmental agency or authority or
other forum in which any PURCHASER Company or any of its Participation
Facilities 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 release into the environment of any
Hazardous Material (as defined below) or oil, whether or not occurring at, on,
under or involving a site owned, leased or operated by any PURCHASER Company or
any of its Participation Facilities, except for such Litigation pending or, to
the Knowledge of Purchaser, threatened that is
19
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(c) There is no Litigation pending or, to the Knowledge of
Purchaser, threatened before any court, governmental agency or board or other
forum in which any of its Loan Properties (or any PURCHASER Company in respect
of such Loan Property) has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor), with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material or oil,
whether or not occurring at, on, under or involving a Loan Property, except for
such Litigation pending or, to the Knowledge of Purchaser, threatened that is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(d) To the Knowledge of PURCHASER, there is no reasonable basis for
any Litigation of a type described in subsections (b) or (c) above, except such
as is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PURCHASER.
(e) During the period of (i) any PURCHASER Company's ownership or
operation of any of their respective current properties, (ii) any PURCHASER
Company's participation in the management of any Participation Facility, or
(iii) any PURCHASER Company's holding of a security interest in a Loan Property,
there have been no releases of Hazardous Material or oil in, on, under or
affecting such property, Participation Facility or Loan Property, except such as
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(f) Prior to the period of (i) any PURCHASER Company's ownership or
operation of any of their respective current properties, (ii) any PURCHASER
Company's participation in the management of any Participation Facility, or
(iii) any PURCHASER Company's holding of a security interest in a Loan Property,
to the Knowledge of PURCHASER, there were no releases of Hazardous Material or
oil in, on, under or affecting any such property, Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on PURCHASER.
5.12 COMPLIANCE WITH LAWS. PURCHASER is duly registered as a bank
--------------------
holding company under the BHC Act. Each PURCHASER Company has in effect all
Permits necessary for it to own, lease or operate its 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 Material Adverse
Effect on PURCHASER, and 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 Material Adverse Effect on PURCHASER. No PURCHASER Company:
(i) is in violation of any Laws, Orders or Permits applicable to its business or
employees conducting its business, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER; or (ii) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (A) asserting that any PURCHASER
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
20
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PURCHASER, (B) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER, or (C) requiring any
PURCHASER Company 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 manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends.
5.13 LABOR RELATIONS. No PURCHASER Company is the subject of any
---------------
Litigation asserting that it or any other PURCHASER Company 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 PURCHASER Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any PURCHASER Company,
pending or, to its Knowledge, threatened or, to its Knowledge, is there any
activity involving any PURCHASER Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) PURCHASER has Previously Disclosed and delivered or made
available to TARGET 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
plans, all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including, without
limitation, "employee benefit plans," as that term is defined in Section 3(3) of
ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any PURCHASER Company or Affiliate 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, the "PURCHASER Benefit Plans). Any of the PURCHASER
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "PURCHASER ERISA
Plan." Each PURCHASER ERISA Plan which is also a "defined benefit plan" (as
defined in Section 414(j)) of the Internal Revenue Code) is referred to herein
as a "PURCHASER Pension Plan." No PURCHASER Pension Plan is or has been a multi-
employer plan within the meaning of Section 3(37) of ERISA.
(b) All PURCHASER 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 Material Adverse Effect on PURCHASER. Each
PURCHASER 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
IRS, and PURCHASER is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. To the Knowledge of
PURCHASER, no PURCHASER Company has engaged in a transaction with respect to any
PURCHASER Benefit Plan that, assuming the taxable period
21
of such transaction expired as of the date hereof would subject any PURCHASER
Company to a tax or penalty 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 Material Adverse Effect on
PURCHASER.
(c) No PURCHASER ERISA Plan which is a defined benefit pension plan
has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, based on actuarial assumptions set forth for such plan's
most recent actuarial valuation. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any PURCHASER Pension Plan, (ii) no change in the actuarial assumptions with
respect to any PURCHASER Pension Plan, and (iii) no increase in benefits under
any PURCHASER Pension Plan as a result of plan amendments or changes in
applicable Law which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER or materially adversely affect
the funding status of any such plan. Neither any PURCHASER Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any PURCHASER Company, or the single-
employer plan of any ERISA Affiliate has an "accumulated funding deficiency"
within the meaning of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, which is reasonably likely to have a Material Adverse Effect on
PURCHASER. No PURCHASER Company has provided, or is required to provide,
security to a PURCHASER Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV or ERISA has
been or is expected to be incurred by any PURCHASER Company with respect to any
ongoing, frozen or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate, which Liability is reasonably likely to have a Material
Adverse Effect on PURCHASER. No PURCHASER Company has incurred any withdrawal
Liability with respect to a multi-employer plan under Subtitle B of Title IV or
ERISA (regardless of whether based on contributions of an ERISA Affiliate),
which Liability is reasonably likely to have a Material Adverse Effect on
PURCHASER. No notice of a "reportable event" within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any PURCHASER Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof
(e) Except as Previously Disclosed, (i) no PURCHASER Company has
any obligations for retiree health and life benefits under any of the PURCHASER
Benefit Plans and (ii) there are no restrictions on the rights of such PURCHASER
Company to amend or terminate any such Plan without incurring any Liability
thereunder, which Liability is reasonably likely to have a Material Adverse
Effect on PURCHASER.
(f) Except as Previously Disclosed, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
director or any employee of any PURCHASER Company from any PURCHASER Company
under any PURCHASER Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any PURCHASER Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
22
(g) The actuarial present values of all accrued deferred
compensation entitlements (including, without limitation, entitlements under any
executive compensation, supplemental retirement, or employment agreement) of
employees and former employees of any PURCHASER Company and their respective
beneficiaries, other than entitlements accrued pursuant to funded retirement
plans subject to the provisions of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, have been fully reflected on the PURCHASER Financial
Statements to the extent required by and in accordance with GAAP.
5.15 LEGAL PROCEEDINGS. There is no Litigation instituted or pending or,
-----------------
to the Knowledge of PURCHASER, 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 PURCHASER Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any PURCHASER Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER.
5.16 REPORTS. Since January 1, 1994, each PURCHASER Company 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 (a) the SEC,
including, without limitation, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy
statements, (b) other Regulatory Authorities, and (c) any applicable state
securities or banking authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER). As
of their respective dates, each of such reports and documents, including,
without limitation, the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its
respective date, none of such reports and documents contained any untrue
statement of a material fact or omitted 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.
5.17 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument
---------------------------
or other writing furnished or to be furnished by any PURCHASER Company or any
Affiliate thereof to TARGET 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
PURCHASER Company or any Affiliate thereof for inclusion in the Registration
Statement to be filed by PURCHASER with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
any PURCHASER Company or any Affiliate thereof for inclusion in the Proxy
Statement to be mailed to TARGET's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by any PURCHASER
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of TARGET, be false or misleading with respect
to any material fact, or omit to state
23
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of the
Proxy Statement or any amendment thereof or supplement thereto, at the time of
the Shareholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any PURCHASER Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
5.18 ACCOUNTING, TAX AND REGULATORY MATTERS. No PURCHASER Company or any
--------------------------------------
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (a) prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 8.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the second sentence of such
Section. To the Knowledge of PURCHASER, there exists no fact, circumstance, or
reason why the requisite Consents referred to in Section 8.1(b) of this
Agreement cannot be received in a timely manner without the imposition of any
condition or restriction of the type described in the second sentence of such
Section 8.1(b).
5.19 CHARTER PROVISIONS. Each PURCHASER Company has taken all action so
------------------
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any PURCHASER Company or restrict or
impair the ability of any TARGET shareholder to vote, or otherwise to exercise
the rights of a shareholder with respect to, shares of PURCHASER Common Stock
that may be acquired or controlled by it.
ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
6.1 AFFIRMATIVE COVENANTS OF TARGET. Unless the prior written consent
-------------------------------
of PURCHASER shall have been obtained, and except as otherwise contemplated
herein, TARGET shall, and shall cause each of its Subsidiaries: (a) to operate
its business in the usual, regular, and ordinary course; (b) to preserve intact
its business organization and Assets and maintain its rights and franchises; (c)
to use its reasonable efforts to cause its representations and warranties to be
correct at all times; and (d) to take no action which would (i) 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 second sentence of Section 8.1(b) of this Agreement or (ii)
adversely affect in any material respect the ability of either Party to perform
its covenants and agreements under this Agreement.
6.2 NEGATIVE COVENANTS OF TARGET. From the date of this Agreement until
----------------------------
the earlier of the Effective Time or the termination of this Agreement, TARGET
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
24
commit to do, any of the following without the prior written consent of the
chief executive officer or chief financial officer of PURCHASER, which consent
shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any TARGET Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a TARGET Company to another TARGET
Company) (for the TARGET Companies on a consolidated basis) except in the
ordinary course of the business of TARGET Companies consistent with past
practices (which shall include, for TARGET Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal funds,
receipt of Federal Home Loan Bank advances, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any share of stock held by any TARGET Company of any Lien or
permit any such Lien to exist; 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 TARGET Company, or declare or pay any dividend or make any
other distribution in respect of TARGET's capital stock, provided that TARGET
shall be permitted (i) to pay a cash dividend in an amount not to exceed $50,000
if the Merger shall not have been consummated by September 30, 1997, so long as
the failure to consummate the Merger on or before such date was not caused by
any breach of this Agreement by TARGET, and (ii) to pay a cash dividend if, as
and to the extent that the consolidated after-tax net income of TARGET and its
Subsidiaries for calendar year 1997 (which shall be computed in accordance with
GAAP) is in excess of the sum of (A) the amount of any dividend paid pursuant to
clause (i) of this subsection (c) and (B) $1,370.00 multiplied by the number of
---------- --
full calendar days between January 1, 1997 and the day which is five (5)
calendar days prior to the Closing Date; 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 Previously Disclosed, issue, sell, pledge,
encumber, authorize the issuance of, or enter into any Contract to issue, sell,
pledge, encumber, or authorize the issuance of or otherwise permit to become
outstanding, any additional shares of TARGET Common Stock or any other capital
stock of any TARGET Company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any security
convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of any
TARGET Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of TARGET Common Stock or sell, lease,
mortgage or otherwise dispose of or otherwise encumber (i) any shares of capital
stock of any TARGET Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another TARGET Company) or (ii) any Asset having a book
value in excess of $50,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
25
(f) acquire direct or indirect control over any Person, other than
in connection with (i) internal reorganizations or consolidations involving
existing Subsidiaries, (ii) foreclosures in the ordinary course of business, or
(iii) acquisitions of control by a depository institution Subsidiary in its
fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees
or officers of any TARGET Company (including such discretionary increases as may
be contemplated by existing employment agreements), except in accordance with
past practice Previously Disclosed or as required by Law; pay any bonus except
to employees in accordance with past practice Previously Disclosed or the
provisions of any applicable program or plan adopted by its Board of Directors
prior to the date of this Agreement; enter into or amend any severance
agreements with officers of any TARGET Company; or pay any bonus to, or grant
any increase in fees or other increases in compensation or other benefits to,
directors of any TARGET Company; or
(h) enter into or amend any employment Contract between any TARGET
Company and any Person (unless such amendment is required by Law) that the
TARGET Company 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 TARGET Company or
make any material change in or to any existing employee benefit plans of any
TARGET Company 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
(j) make any significant change in any accounting methods or
systems of internal accounting controls, except as may be appropriate to conform
to changes in regulatory accounting requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any TARGET Company
for money damages in excess of $50,000 or which involves material restrictions
upon the operations of any TARGET Company; or
(l) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive, release, compromise or assign any
material rights or claims.
6.3 COVENANTS OF PURCHASER. From the date of this Agreement until the
----------------------
earlier of the Effective Time or the termination of this Agreement, PURCHASER
covenants and agrees that it shall continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the PURCHASER Common Stock and the business
prospects of the PURCHASER Companies and, to the extent consistent therewith, to
use all reasonable efforts to preserve intact the PURCHASER Companies' core
businesses and goodwill with their respective employees and the communities they
serve.
6.4 ADVERSE CHANGES IN CONDITION. Each Party agrees (a) to give written
----------------------------
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have,
26
individually or in the aggregate, a Material Adverse Effect on it or (ii) is
reasonably likely to cause or constitute a material breach of any of its
representations, warranties, or covenants contained herein, and (b) to use its
reasonable efforts to prevent or promptly to remedy the same.
6.5 REPORTS. Each Party and its Subsidiaries shall file all reports
-------
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such 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.
6.6 POOLING. From and after the date of this Agreement, no Party, or
-------
any of its Affiliates, shall knowingly take or fail to take any action, other
than actions which such Party is required to take or abstain from taking
pursuant to this Agreement, which action or failure to act could reasonably be
expected to jeopardize the treatment of the Merger as a "pooling of interests"
for accounting purposes. From and after the date of this Agreement, each of the
Parties shall take all reasonable actions necessary to cause the Merger to be
characterized as a "pooling of interests" for accounting purposes.
ARTICLE 7
ADDITIONAL AGREEMENTS
---------------------
7.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL. As
-------------------------------------------------------------
soon as practicable after execution of this Agreement, PURCHASER shall file the
Registration Statement with the SEC, and shall use its best efforts to cause the
Registration Statement to become effective under the 1933 Act and take any
action required to be taken under applicable Securities Laws in connection with
the issuance of the shares of PURCHASER Common Stock upon consummation of the
Merger. TARGET shall furnish all information concerning it and the holders of
its capital stock as PURCHASER may reasonably request in connection with such
action. TARGET 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 the Merger and this
Agreement and such other related matters as it deems appropriate. In connection
with the Shareholders' Meeting, (a) PURCHASER shall prepare and file on TARGET's
behalf a Proxy Statement (which shall be included in the Registration Statement
and which shall include an explanation of the restrictions on resale with
respect to the shares of PURCHASER Common Stock received by the holders of
TARGET Common Stock in the Merger) with the SEC and mail it to its shareholders,
(b) the Parties shall furnish to each other all information concerning them that
they may reasonably request in connection with such Proxy Statement, (c) the
Board of Directors of TARGET
27
shall recommend to its shareholders that they approve this Agreement, and (d)
the Board of Directors and officers of TARGET shall use their reasonable efforts
to obtain such shareholders' approval.
7.2 LISTING. PURCHASER shall use its best efforts to list, prior to the
-------
Effective Time, on the NASDAQ/NMS, the shares of PURCHASER Common Stock to be
issued to the holders of TARGET Common Stock pursuant to the Merger.
7.3 APPLICATIONS. PURCHASER shall promptly prepare and file, and TARGET
------------
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
7.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
--------------------------
conditions of this Agreement, PURCHASER shall execute and file the Georgia
Articles of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
7.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
-------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its best 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, as promptly as practicable so as to permit
consummation of the Merger at the earliest possible date and to otherwise enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the other Party hereto to that end (it being understood that any amendments
to the Registration Statement filed by PURCHASER in connection with the
PURCHASER Common Stock to be issued in the Merger or a resolicitation of proxies
as a consequence of an acquisition agreement by PURCHASER or any of its
Subsidiaries shall not violate this covenant), including, without limitation,
using its efforts to lift or rescind any Order adversely affecting its ability
to consummate the transactions contemplated herein and to cause to be satisfied
the conditions referred to in Article 9 of this Agreement. Each Party shall
use, and shall cause each of its Subsidiaries to use, its best efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
7.6 INVESTIGATION AND CONFIDENTIALITY.
---------------------------------
(a) Prior to the Effective Time, each Party will keep the other
Party advised of all material developments relevant to its business and to
consummation of the 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 other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Except as may be required by applicable Law or legal process,
and except for such disclosure to those of its directors, officers, employees
and representatives as may be appropriate or required in connection with the
transactions contemplated hereby, each Party shall hold in confidence all
nonpublic information obtained from the other Party (including work papers and
other material derived therefrom) as a result of this Agreement or in connection
with the
28
transactions contemplated hereby (whether so obtained before or after the
execution hereof) until such time as the Party providing such information
consents to its disclosure or such information becomes otherwise publicly
available. Promptly following any termination of this Agreement, each of the
Parties agrees to use its best efforts to cause its respective directors,
officers, employees and representatives to destroy or return to the providing
party all such nonpublic information (including work papers and other material
retrieved therefrom), including all copies thereof. 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 position 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 all documents and copies
thereof and all work papers containing confidential information received from
the other Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Material Adverse Effect on
the other Party.
7.7 PRESS RELEASES. Prior to the Effective Time, TARGET and PURCHASER
--------------
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing in this Section
7.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
7.8 NO SOLICITATION. (a) TARGET shall not, nor shall it permit any of
---------------
its Subsidiaries to, nor shall it authorize or permit any officer, director of
employee of, or any investment banker, attorney or other advisor or
representative of, TARGET or any of its Subsidiaries to, (i) solicit or
initiate, or encourage the submission of, any Takeover Proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal; provided, however, that, subject
to compliance with subsection (c) below and after receiving the written opinion
of independent outside legal counsel to the effect that the failure to do so
would constitute a breach by the TARGET Board of Directors of its fiduciary
duties to TARGET shareholders under applicable law, TARGET may, in response to
an unsolicited Takeover Proposal that (i) was not received in violation of this
Section 7.8, (ii) is not subject to financing and (iii) the TARGET Board of
Directors determines in good faith, after receipt of a written opinion of a
financial advisor of nationally recognized reputation to such effect, would
result in a transaction more favorable to TARGET shareholders than the Merger,
(A) furnish information with respect to TARGET to any Person pursuant to a
confidentiality agreement and (B) participate in negotiations regarding such
Takeover Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the immediately preceding sentence by
any executive officer of TARGET or any of its Subsidiaries or any investment
banker, attorney or other advisor or representative of TARGET or any of its
Subsidiaries, whether or not such person is purporting to act on behalf of
TARGET or
29
any of its Subsidiaries or otherwise, shall be deemed to be a breach of this
Section 7.8 by TARGET. For purposes of this Agreement, "Takeover Proposal"
means an inquiry, proposal or acquisition or purchase of a substantial amount of
assets of TARGET or any of its Subsidiaries (other than investors in the
ordinary course of business) or of over 15% of any class of equity securities of
TARGET or any of its Subsidiaries or any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 15% or more of any
class of equity securities of TARGET or any of its Subsidiaries, or any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving
TARGET or any of its Subsidiaries other than the transactions contemplated by
this Agreement, or any other transaction the consummation of which would
reasonably be expected to impede, interfere with, prevent or materially delay
the Merger or which would reasonably be expected to dilute materially the
benefits to PURCHASER of the transactions contemplated hereby.
(b) Except as set forth herein, neither the Board of Directors of TARGET
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to PURCHASER, the approval or recommendation of
such Board of Directors or any such committee of this Agreement or the Merger,
(ii) approve or recommend, or propose to approve or recommend, any Takeover
Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing, upon receipt of the written opinion of
independent outside legal counsel to the effect that failure to do so would
constitute a breach of its fiduciary duties to TARGET shareholders under
applicable law, then, prior to the Shareholders' Meeting, the TARGET Board of
Directors may (subject to the terms of this and the following sentences) approve
or recommend (and, in connection therewith, withdraw or modify its approval or
recommendation of this Agreement or the Merger) a Superior Proposal, or enter
into an agreement with respect to a Superior Proposal, in each case at any time
after the second business day following PURCHASER'S receipt of written notice (a
"Notice of Superior Proposal") advising PURCHASER that the TARGET Board of
Directors has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the Person making such
Superior Proposal; provided that TARGET shall not enter into an agreement with
respect to a Superior Proposal unless TARGET shall have furnished PURCHASER with
written notice no later than 12:00 noon one (1) day in advance of any date that
it intends to enter into such agreement. For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal (not subject to financing) to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the shares of TARGET Common Stock or TARGET Bank
then outstanding or all or substantially all of the assets of TARGET or TARGET
Bank and otherwise on terms that the TARGET Board of Directors determines in its
good faith judgment (after receipt of a written opinion of a financial advisor
of nationally recognized reputation to such effect) to be more favorable to
TARGET shareholders than the Merger.
(c) In addition to the obligations of TARGET set forth in subsection (b)
above, TARGET shall immediately advise PURCHASER orally and in writing of any
request for information or of any Takeover Proposal, or any inquiry with respect
to or which could lead to any Takeover Proposal, the material terms and
conditions of such request, Takeover Proposal or inquiry, and the identity of
the person making any Takeover Proposal or inquiry. TARGET shall keep PURCHASER
fully informed of the status and details (including amendments or proposed
amendments) of any such request, Takeover Proposal or inquiry.
30
(d) Nothing contained in this Section 7.8 shall prohibit TARGET from
making any disclosure to TARGET's shareholders if, the TARGET Board of Directors
determines in good faith, after receipt of the written advice of outside counsel
to such effect, that it is required to do so in order to discharge properly its
fiduciary duties to shareholders under applicable law; provided that TARGET does
not, except as permitted by subsection (b) above, withdraw or modify, or propose
to withdraw or modify, its position with respect to the Merger or approve or
recommend, or propose to approve or recommend, a Takeover Proposal.
7.9 TAX TREATMENT. Each of the Parties undertakes and agrees to use its
-------------
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify for treatment as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes.
7.10 AGREEMENT OF AFFILIATES. TARGET has Previously Disclosed all
-----------------------
Persons whom it reasonably believes are "affiliates" of TARGET for purposes of
Rule 145 under the 1933 Act. TARGET shall use its reasonable efforts to cause
each such Person to deliver to PURCHASER not later than thirty (30) days after
the date of this Agreement, a written agreement, substantially in the form of
Exhibit 1 hereto, providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of TARGET 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 PURCHASER 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. Regardless of whether each such affiliate has provided
the written agreement referred to in this Section, PURCHASER shall be entitled
to place restrictive legends upon certificates for shares of PURCHASER Common
Stock issued to affiliates of TARGET pursuant to this Agreement to enforce the
provisions of this Section.
7.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
-------------------------------
PURCHASER shall provide generally to officers and employees of the TARGET
Companies employee benefits under employee benefit plans (other than stock
option or other plans involving the potential issuance of PURCHASER Common
Stock), on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the PURCHASER Companies to their
similarly situated officers and employees, provided that for a period of twelve
(12) months after the Effective Time, PURCHASER shall provide generally to
officers and employees of TARGET Companies severance benefits in accordance with
the policies of either (i) TARGET as Previously Disclosed, or (ii) PURCHASER,
whichever of (i) or (ii) will provide the greater benefit to the officer or
employee. For purposes of participation and vesting under such employee benefit
plans, the service of the employees of the TARGET Companies prior to the
Effective Time shall be treated as service with a PURCHASER Company
participating in such employee benefit plans. PURCHASER also shall honor in
accordance with their terms all employment, severance, consulting and other
compensation Contracts Previously Disclosed to PURCHASER between any TARGET
Company and any 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 TARGET Benefit Plans.
31
7.12 LARGE DEPOSITS. Prior to the Closing, TARGET will provide PURCHASER
--------------
with a list of all certificates of deposit or checking, savings or other
deposits owned by persons who, to the Knowledge of the TARGET, had deposits
aggregating more than $100,000 and a list of all certificates of deposit or
checking, savings or other deposits owned by directors and officers of TARGET
and the Bank and their affiliates in an amount aggregating more than $100,000 as
of the last day of the calendar month immediately prior to the Closing.
7.13 INDEMNIFICATION. PURCHASER agrees that all rights to
---------------
indemnification and all limitations of liability existing in favor of the
officers and directors of TARGET and TARGET Bank ("Indemnified Parties") as
provided in their respective articles of incorporation and bylaws as of the date
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto, for a period of not less than six (6) years from the
Effective Time; provided, however, that all rights to any indemnification in
respect of any claim asserted or made within such period shall continue until
the final disposition of such claim.
7.14 IRREVOCABLE PROXIES. Concurrent with the execution hereof, TARGET
-------------------
shall obtain and deliver to PURCHASER irrevocable proxies in substantially the
form of Exhibit 4 hereto from each member of TARGET'S Board of Directors and
from certain other affiliates of TARGET, which proxies represent not less than
55% of the outstanding shares of TARGET Common Stock.
7.15 EMPLOYMENT AGREEMENT. PURCHASER agrees to cause Citizens Bank to
--------------------
execute and deliver to C. ▇▇▇▇▇ ▇▇▇▇▇ at Closing an Employment Agreement
substantially in the form of Exhibit 5 hereto.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
---------------------------------------
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 10.6 of
this Agreement:
(a) SHAREHOLDER APPROVAL. The shareholders of TARGET 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.
(b) REGULATORY APPROVALS. All Consents of, filings and
--------------------
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect, and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner (including, without limitation, requirements relating to
the raising of additional capital or the disposition of Assets) which, in the
reasonable judgment of the Board of Directors of either Party,
32
would so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger; provided, however, that no such condition or
restriction shall be deemed to be materially adverse unless it materially
differs from terms and conditions customarily imposed by any Regulatory
Authority in connection with similar transactions.
(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 8.1(b) of this Agreement) or for the preventing of any Default
under any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party.
(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, materially restricts or
makes illegal consummation of the transactions contemplated by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall be
----------------------
effective under the 1933 Act, 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 all Securities
Laws relating to the issuance or trading of the shares of PURCHASER Common Stock
issuable pursuant to the Merger shall have been received.
(f) NASD LISTING. The shares of PURCHASER Common Stock issuable
------------
pursuant to the Merger shall have been approved for listing on the NASDAQ/NMS.
(g) TAX MATTERS. TARGET shall have received a written opinion of
-----------
counsel from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, in form reasonably satisfactory to it,
substantially to the effect that for federal income tax purposes (a) the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, and (b) the exchange in the Merger of TARGET Common Stock
for PURCHASER Common Stock will not give rise to gain or loss to the
shareholders of TARGET with respect to such exchange (except to the extent of
any cash received).
8.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
--------------------------------------
PURCHASER 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 PURCHASER pursuant to Section 10.6(a) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of TARGET set forth or referred to in this Agreement shall be true
and correct in all respects 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), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and
33
warranties (other than the representations and warranties set forth in Section
4.3 of this Agreement, which shall be true in all respects) the inaccuracies of
which relate to matters that are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on TARGET.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of TARGET 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. TARGET shall have delivered to PURCHASER (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer, to the effect that the conditions of its obligations
set forth in Sections 8.2(a) and 8.2(b) of this Agreement have been satisfied,
and (ii) certified copies of resolutions duly adopted by TARGET'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 PURCHASER and its counsel shall reasonably request.
(d) NET INCOME. The consolidated after-tax net income for calendar
----------
year 1997 of TARGET and its Subsidiaries (which shall be computed in accordance
with GAAP) shall not be less than an amount equal to $1,100.00 multiplied by the
---------- --
number of full calendar days between January 1, 1997 and the day which is five
(5) calendar days prior to the Closing Date.
(e) OPINION OF COUNSEL. TARGET shall have delivered to PURCHASER
------------------
an opinion of Martin, Snow, Grant & ▇▇▇▇▇▇, counsel to TARGET, dated as of the
Closing Date, covering those matters set forth in Exhibit 2 hereto, which
opinion may be rendered in accordance with the Interpretive Standards on Legal
Opinions to Third Parties in Corporate Transactions promulgated by the Corporate
and Banking Law Section of the State Bar of Georgia (January 1, 1992) (the
"Interpretive Standards").
(f) ACCOUNTANT'S LETTERS. PURCHASER shall have received from
--------------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ letters dated not more than five (5) days prior to (i) the
date of the Proxy Statement and (ii) the Effective Time, with respect to certain
financial information regarding TARGET, in form and substance reasonably
satisfactory to PURCHASER, which letters shall be based upon customary specified
procedures undertaken by such firm.
(g) EMPLOYMENT AGREEMENT. C. ▇▇▇▇▇ ▇▇▇▇▇ shall have executed and
--------------------
delivered an Employment Agreement substantially in the form of Exhibit 5 hereto.
(h) DISSENTING SHAREHOLDERS. Holders of not more than 5% of the
-----------------------
issued and outstanding shares of TARGET Common Stock shall have perfected their
rights as dissenting shareholders pursuant to Article 13 of the GBCC.
8.3 CONDITIONS TO OBLIGATIONS OF TARGET. The obligations of TARGET to
-----------------------------------
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are
34
subject to the satisfaction of the following conditions, unless waived by TARGET
pursuant to Section 10.6(b) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of PURCHASER set forth or referred to in this Agreement shall be true
and correct in all respects 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), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 5.3 of this Agreement, which
shall be true in all respects) the inaccuracies of which relate to matters that
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of PURCHASER 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. PURCHASER shall have delivered to TARGET (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 8.3(a) and 8.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by PURCHASER's Board of Directors evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as TARGET and its counsel shall reasonably request.
(d) OPINION OF COUNSEL. PURCHASER shall have delivered to TARGET
------------------
an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to PURCHASER, dated as of the Closing
Date, covering those matters set forth in Exhibit 3 hereto, which opinion may be
rendered in accordance with the Interpretive Standards.
ARTICLE 9
TERMINATION
-----------
9.1 TERMINATION. Notwithstanding any other provision of this Agreement,
-----------
and notwithstanding the approval of this Agreement by the shareholders of
TARGET, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of the Board of Directors of PURCHASER and
the Board of Directors of TARGET; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
of a material breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within
35
thirty (30) days after the giving of written notice to the breaching Party of
such breach and which breach would provide the non-breaching party the ability
to refuse to consummate the Merger under the standard set forth in Section
8.2(a) of this Agreement in the case of PURCHASER and Section 8.3(a) of this
Agreement in the case of TARGET; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
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 the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
(i) any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby has been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) if the shareholders of
TARGET fail to approve this Agreement and the transactions contemplated hereby
as required by the GBCC at the Shareholders' Meeting where the transactions were
presented to such shareholders for approval and voted upon (assuming, for this
purpose, that PURCHASER votes the proxies granted to it pursuant to Section 7.14
hereof in favor thereof); or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by December 31, 1997, provided the
failure to consummate the Merger on or before such date was not caused by any
breach of this Agreement by the Party electing to terminate pursuant to this
Section 9.1 (e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 9.1(e) of this Agreement.
(g) By the Board of Directors of TARGET in connection with entering
into a definitive agreement in accordance with Section 7.8(b), provided that it
has complied with all provisions thereof, including the notice provisions
therein, and that it makes simultaneous payment of the Expenses and the
Termination Fee.
(h) By PURCHASER at any time prior to June 22, 1997, if PURCHASER
determines, in its sole good faith judgment, that the financial condition,
business or prospects of TARGET are unsatisfactory to PURCHASER based on
PURCHASER'S due diligence conducted prior to such date, provided that (i)
PURCHASER shall inform TARGET upon such termination as to the reasons for
PURCHASER'S determination and (ii) that this Section 9.1(h) shall not limit in
any way the due diligence investigation of TARGET which PURCHASER may perform or
otherwise affect any other rights which PURCHASER has after the date hereof
under the terms of this Agreement.
36
9.2 EFFECT OF TERMINATION. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 9.1 of this Agreement, this
Agreement shall become void and have no effect, except (i) as provided in
Sections 10.2 and 10.14, and (ii) a termination pursuant to Section 9.1(b) or
(c) of this Agreement shall entitle the non-breaching Party to the sum of
$300,000 to be paid by the breaching Party, as and for liquidated damages, which
shall be sole remedy of either Party against the other under this Agreement
pursuant to O.C.G.A. (S)13-6-7. The Parties agree that the amount specified as
liquidated damages hereunder represents a good faith and reasonable estimate by
the Parties of the amount of damages that the non-breaching Party would expect
to incur in the event of a default under this Agreement and is not intended as a
penalty.
ARTICLE 10
MISCELLANEOUS
-------------
10.1 DEFINITIONS. Except as otherwise provided herein, the capitalized
-----------
terms set forth below (in their singular and plural forms as applicable) shall
have the following meanings:
"Affiliate" of a Person shall mean (a) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person or (b) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person.
"Agreement" shall mean this Agreement and Plan of Merger and the Exhibits
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, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"Base Period Trading Price" shall mean the average of the daily closing
price of a share of PURCHASER Common Stock as reported on NASDAQ/NMS for the
twenty (20) consecutive trading days immediately preceding five (5) consecutive
calendar days immediately preceding the Effective Time.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Citizens Bank" shall have the meaning provided in the Preamble hereto.
"Closing" shall mean the closing of the transactions contemplated hereby,
as described in Section 1.2 of this Agreement.
"Closing Date" shall have the meaning provided in Section 1.2 of this
Agreement.
37
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets or business.
"Default" shall mean (a) any breach or violation of or default under any
Contract, Order or Permit, (b) any occurrence of any event that with the passage
of time or the giving of notice or both would constitute a breach or violation
of or default under any Contract, Order or Permit, or (c) any occurrence of any
event that with or without the passage of or the giving of notice would give
rise to a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability under, any
Contract, Order or Permit.
"Effective Time" shall mean the date and time at which the Merger becomes
effective as defined in Section 1.3 of this Agreement.
"Environmental Laws" shall mean all Laws which are administered,
interpreted or enforced by the United States Environmental Protection Agency and
state and local agencies with primary jurisdiction over pollution or protection
of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning provided in Section 4.14(c) of
this Agreement.
"ERISA Plan" shall have the meaning provided in Section 4.14 of this
Agreement.
"Exchange Agent" shall have the meaning provided in Section 3.2 of this
Agreement.
"Exchange Ratio" shall have the meaning provided in Section 3.1(b) of this
Agreement.
"Exhibits" 1 through 5, 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.
"Expenses" shall have the meaning provided in Section 10.2 of this
Agreement.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"Georgia Articles of Merger" shall mean the Articles of Merger to be
executed by PURCHASER and filed with the Secretary of State of the State of
Georgia relating to the Merger as contemplated by Section 1.3 of this Agreement.
38
"GBCC" shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean any pollutant, contaminant, or hazardous
substance within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.,
or any similar federal, state or local Law.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Interpretive Standards" shall have the meaning provided in Section 8.2(d)
of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" as used with respect to a Person shall mean the Knowledge after
reasonable due inquiry of the Chairman, President, Chief Financial Officer,
Chief Accounting Officer, Chief Credit Officer, or any Senior or Executive Vice
President of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including, without limitation, those promulgated,
interpreted or enforced by any of the Regulatory Authorities.
"Letter of Transmittal" shall have the meaning provided in Section 3.2 of
this Agreement.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than endorsements
of notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"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 are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on a Party.
"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including, without limitation, Contracts related to it),
or the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their Affiliates
by Regulatory Authorities.
39
"Loan Property" shall mean any property owned by the Party in question or
by any of its Subsidiaries or in which such Party or Subsidiary holds a security
interest, and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
"Material" for purposes of this Agreement shall be determined in light of
the facts and circumstances of the matter in question, provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"Material Adverse Effect" on a Party shall mean an event, change or
occurrence which has a material adverse impact on (a) the financial position,
business, or results of operations of such Party and its Subsidiaries taken as a
whole, or (b) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "material adverse impact" shall not be deemed to
include the impact of (x) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(y) changes in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies, and (z)
the Merger and compliance with the provisions of this Agreement on the operating
performance of the Parties.
"Merger" shall mean the merger of TARGET with and into PURCHASER referred
to in Section 1.1 of this Agreement.
"Merger Consideration" shall have the meaning provided in Section 3.1(c) of
this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ/NMS" shall mean the National Market System of the National
Association of Securities Dealers Automated Quotations System.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Old Certificates" shall have the meaning provided in Section 3.2 of this
Agreement.
"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.
"Outstanding TARGET Shares" shall mean all shares of TARGET outstanding
immediately prior to the Effective Time, other than shares held in TARGET'S
treasury which shall be cancelled without consideration at the Effective Time.
"Participation Facility" shall mean any facility or property in which the
Party in question or any of its Subsidiaries participates in the management
(including, without limitation, any property or facility held in a joint
venture) and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility or
property.
40
"Party" shall mean either TARGET or PURCHASER, and "Parties" shall mean
both TARGET and PURCHASER.
"Permit" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its capital stock, Assets,
Liabilities, or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Previously Disclosed" shall mean information (a) delivered in writing
prior to the date of this Agreement in the manner and to the Party and counsel
described in Section 10.8 of this Agreement and describing in reasonable detail
the matters contained therein, provided that in the case of Subsidiaries
acquired after the date of this Agreement, such information may be so delivered
by the acquiring Party to the other Party prior to the date of such acquisition,
(b) disclosed prior to the date of this Agreement by PURCHASER to TARGET in an
SEC Document delivered to TARGET in which the specific information has been
identified by PURCHASER, or (c) disclosed in writing during PURCHASER's due
diligence investigation pursuant to Section 9.1(h) by TARGET to PURCHASER in the
manner described in Section 10.8 of this Agreement and describing in reasonable
detail the matters contained therein.
"Proxy Statement" shall mean the proxy statement used by TARGET to solicit
the approval of its shareholders of the transactions contemplated by this
Agreement and shall include the prospectus of PURCHASER relating to shares of
PURCHASER Common Stock to be issued to the shareholders of TARGET.
"PURCHASER Allowance" shall have the meaning provided in Section 5.9 of
this Agreement.
"PURCHASER Benefit Plans" shall have the meaning set forth in Section 5.14
of this Agreement.
"PURCHASER Common Stock" shall mean the $1.00 par value common stock of
PURCHASER.
"PURCHASER Companies" shall mean, collectively, PURCHASER and all PURCHASER
Subsidiaries.
"PURCHASER Financial Statements" shall mean (i) the consolidated statements
of condition (including related notes and schedules, if any) of PURCHASER as of
March 31, 1997, and as of December 31, 1996 and 1995, and the related statements
of income, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) for the three months ended March 31, 1997, and for
each of the three years ended December 31, 1996, 1995 and 1994, as filed by
41
PURCHASER in SEC Documents and (ii) the consolidated statements of condition of
PURCHASER (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 March 31, 1997.
"PURCHASER Stock Plans" shall mean the existing stock option and other
stock-based compensation plans.
"PURCHASER Subsidiaries" shall mean the Subsidiaries of PURCHASER.
"Record Date" shall have the meaning provided in Section 3.1(e) of this
Agreement.
"Registration Statement" shall mean the Registration Statement on Form S-4,
or other appropriate form, filed with the SEC by PURCHASER under the 1933 Act in
connection with the transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Office of the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, all state banking and other
regulatory agencies having jurisdiction over the Parties and their respective
Subsidiaries, the NASD, and the SEC.
"SEC Documents" shall mean all reports and registration statements 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, state blue sky laws, and
the rules and regulations of any Regulatory Authority promulgated thereunder.
"Shareholders' Meeting" shall mean the meeting of the shareholders of
TARGET to be held pursuant to Section 7.1 of this Agreement, including any
adjournment or postponement thereof.
"Subsidiaries" shall mean all those corporations, banks, associations, or
other entities of which the entity in question owns or controls 5% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 5 % or more of the outstanding equity securities
is owned directly or indirectly by its parent; provided, however, there shall
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
"Superior Proposal" shall have the meaning provided in Section 7.8(b) of
this Agreement.
"Surviving Corporation" shall mean PURCHASER as the surviving corporation
resulting from the Merger.
42
"Takeover Proposal" shall have the meaning provided in Section 7.8(a) of
this Agreement.
"TARGET Allowance" shall have the meaning provided in Section 4.9 of this
Agreement.
"TARGET Bank" shall mean The Bank of Ocilla, a Georgia state-chartered bank
and a TARGET Subsidiary.
"TARGET Benefit Plans" shall have the meaning set forth in Section 5.14 of
this Agreement.
"TARGET Common Stock" shall mean the $50.00 par value Common Stock of
TARGET.
"TARGET Companies" shall mean, collectively, TARGET and all TARGET
Subsidiaries.
"TARGET Financial Statements" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of TARGET as of March 31,
1997, and as of December 31, 1996 and 1995, and the related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) for the three months ended March 31, 1997, and for each
of the three fiscal years ended December 31, 1996, 1995 and 1994, as previously
furnished by TARGET to Purchaser, and (b) the consolidated balance sheets of
TARGET (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 March 31,
1997.
"TARGET Stock Plans" shall mean the existing stock option and other stock-
based compensation plans of TARGET.
"TARGET Subsidiaries" shall mean the Subsidiaries of TARGET, which shall
include the TARGET Subsidiaries described in Section 4.4 of this Agreement and
any Person acquired as a Subsidiary of TARGET in the future and owned by TARGET
at the Effective Time.
"Taxes" shall mean any federal, state, county, local, foreign and other
taxes, assessments, charges, fares, and impositions, including interest and
penalties thereon or with respect thereto.
"Termination Fee" shall have the meaning provided in Section 10.2 of this
Agreement.
10.2 EXPENSES.
--------
(a) Except as otherwise provided in this Section 10.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants, and
counsel (the "Expenses"), except that each of the Parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection with
the printing of the Registration Statement and the Proxy Statement.
43
(b) TARGET shall pay, or cause to be paid, in same day funds to
PURCHASER the sum of (i) all of PURCHASER'S Expenses plus (ii) $300,000 (the
"Termination Fee") upon demand if (A) TARGET terminates this Agreement pursuant
to Section 9.1(g), or (B) prior to the termination of this Agreement (other than
by TARGET pursuant to Section 9.1(c)), a Takeover Proposal shall have been made
and within one (1) year of such termination, TARGET enters into an agreement
with respect to, or approves or recommends or takes any action to facilitate,
such Takeover Proposal. If TARGET terminates this Agreement pursuant to Section
9.1(d)(2) under circumstances where clause (B) of the immediately preceding
sentence is not applicable, TARGET shall pay, or cause to be paid, in same day
funds to PURCHASER all of PURCHASER'S Expenses but shall not be obligated to pay
any Termination Fee. The amount of Expenses so payable shall be the reasonable
Expenses actually incurred by PURCHASER, proof of which shall be furnished to
TARGET.
10.3 BROKERS AND FINDERS. Except as Previously Disclosed, 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 its representing or being retained by or
allegedly representing or being retained by TARGET or PURCHASER, each of TARGET
and PURCHASER, 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.
10.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
----------------
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b) of this Agreement, with respect to the Confidentiality Agreements).
Nothing in this Agreement expressed or implied, is intended to confer upon any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
other than as provided in Section 7.13 of this Agreement.
10.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
----------
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; provided, however, that after
any such approval by the holders of TARGET Common Stock, there shall be made no
amendment decreasing the consideration to be received by TARGET shareholders
without the further approval of such shareholders.
10.6 WAIVERS.
-------
(a) Prior to or at the Effective Time, PURCHASER, 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 TARGET, to waive or extend the time for the compliance or
fulfillment by TARGET of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
PURCHASER under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law.
44
No such waiver shall be effective unless in writing signed by a duly authorized
officer of PURCHASER.
(b) Prior to or at the Effective Time, TARGET, 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 PURCHASER, to waive or extend the time for the compliance or
fulfillment by PURCHASER of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of TARGET
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 TARGET.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
10.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the immediately
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by the Parties and their respective successors and
assigns.
10.8 NOTICES. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage 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:
PURCHASER: ABC Bancorp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
Copy to Counsel: ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇
45
TARGET: ▇▇▇▇▇ Bankcorp, Inc.
▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
Copy to Counsel: Martin, Snow, Grant & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
10.9 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, except to the extent that the federal laws of the
United States may apply to the Merger.
10.10 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.11 CAPTIONS. The captions contained in this Agreement are for
--------
reference purposes only and are not part of this Agreement.
10.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
10.13 SEVERABILITY. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any 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.
10.14 SURVIVAL. The respective representations, warranties, obligations,
--------
covenants and agreements of the Parties shall not survive the Effective Time or
the termination and abandonment of this Agreement, except that (i) Articles Two,
Three and Ten and Sections 7.6(b), 7.9, 7.11 and 7.13 of this Agreement shall
survive the Effective Time; and (ii) Sections 7.6(b), 7.8(b), 9.2, 10.2 and
10.14 shall survive the termination and abandonment of this Agreement.
46
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by its officers as of the day and year first above written.
ATTEST: ABC BANCORP
\s\ ▇▇▇▇▇ ▇▇▇▇▇ By: \s\ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------ -----------------------------------------
Ass't Secretary Its: CEO
--------------------------
[CORPORATE SEAL]
ATTEST: ▇▇▇▇▇ BANKCORP, INC.
\s\ Ruby ▇▇▇▇ ▇▇▇▇▇▇▇ By: \s\ C. ▇▇▇▇▇ ▇▇▇▇▇
------------------------ ---------------------------------------
Secretary Its: V.P.
--------------------------
[CORPORATE SEAL]
47
EXHIBIT 1
---------
AFFILIATE AGREEMENT
-------------------
ABC Bancorp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Ladies and Gentlemen:
The undersigned is a shareholder of ▇▇▇▇▇ Bankcorp, Inc. ("Target"), a
corporation organized under the laws of the State of Georgia and located in
Ocilla, Georgia, and will become a shareholder of ABC Bancorp ("Purchaser")
pursuant to the transactions described in the Agreement and Plan of Merger,
dated as of May 15, 1997 (the "Agreement"), by and between Target and Purchaser.
Under the terms of the Agreement, Target will be merged into and with Purchaser
(the "Merger"), and the shares of the $50.00 par value common stock of Target
("Target Common Stock") will be converted into and exchanged for shares of the
$1.00 par value common stock of Purchaser ("Purchaser Common Stock"). This
Affiliate Agreement represents an agreement between the undersigned and
Purchaser regarding certain rights and obligations of the undersigned in
connection with the shares of Purchaser 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 Purchaser hereby agree as follows:
1. AFFILIATE STATUS. The undersigned understands and agrees that as to
----------------
Target the undersigned 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 the undersigned 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) The Purchaser Common Stock received by the undersigned as a
result of the Merger will be taken for his or her own account and not for
others, directly or indirectly, in whole or in part.
(b) Purchaser has informed the undersigned that any distribution by
the undersigned of Purchaser Common Stock has not been registered under the 1933
Act and that shares of Purchaser Common Stock received pursuant to the Merger
can only be sold by the undersigned (i) following registration under the 1933
Act, or (ii) 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
(iii) to the extent some other exemption from registration under the 1933 Act
might be
available. The undersigned understands that Purchaser is under no obligation to
file a registration statement with the SEC covering the disposition of the
undersigned's shares of Purchaser Common Stock.
3. RESTRICTIONS ON TRANSFER.
------------------------
(a) The undersigned understands and agrees that stop transfer
instructions with respect to the shares of Purchaser Common Stock received by
the undersigned pursuant to the Merger will be given to Purchaser'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 (i) covered by an effective
registration statement under the Securities Act of 1933, as amended, (ii)
in accordance with (x) Rule 145(d) (in the case of shares issued to an
individual who is not an affiliate of Purchaser) or (y) Rule 144 (in the
---
case of shares issued to an individual who is an affiliate of Purchaser) of
the Rules and Regulations of such Act, or (iii) in accordance with a legal
opinion satisfactory to counsel for Purchaser that such sale or transfer is
otherwise exempt from the registration requirements of such Act."
(b) Such legend will also be placed on any certificate representing
Purchaser securities issued subsequent to the original issuance of the Purchaser
Common Stock pursuant to the Merger as a result of any stock dividend, stock
split, or other recapitalization as long as the Purchaser Common Stock issued to
the undersigned pursuant to the Merger has not been transferred in such manner
to justify the removal of the legend therefrom. In addition, if the provisions
of Rules 144 and 145 are amended to eliminate restrictions applicable to the
Purchaser Common Stock received by the undersigned pursuant to the Merger, or at
the expiration of the restrictive period set forth in Rule 145(d), Purchaser,
upon the request of the undersigned, will cause the certificates representing
the shares of Purchaser Common Stock issued to the undersigned in connection
with the Merger to be reissued free of any legend relating to the restrictions
set forth in Rules 144 and 145(d) upon receipt by Purchaser of an opinion of its
counsel to the effect that such legend may be removed.
4. UNDERSTANDING OF RESTRICTIONS ON DISPOSITIONS. The undersigned has
---------------------------------------------
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his or her ability to sell, transfer, or otherwise
dispose of the shares of Purchaser Common Stock received by the undersigned in
connection with the Merger, to the extent he or she believes necessary, with his
or her counsel or counsel for Target.
5. FILING OF REPORTS BY PURCHASER. Purchaser 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 (the "1934 Act"), 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 Purchaser Common Stock issued to
the undersigned pursuant to the Merger.
2
6. TRANSFER UNDER RULE 145(D). If the undersigned desires to sell or
--------------------------
otherwise transfer the shares of Purchaser Common Stock received by him or her
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 Purchaser Common Stock, together with such
additional information as the Transfer Agent may reasonably request. If
Purchaser's counsel concludes that such proposed sale or transfer complies with
the requirements of Rule 145(d), Purchaser shall cause such counsel, at
Purchaser's expense, to provide such opinions as may be necessary to Purchaser's
Transfer Agent so that the undersigned may complete the proposed sale or
transfer.
7. ACKNOWLEDGMENTS. The undersigned recognizes and agrees that the
---------------
foregoing provisions also apply with respect to Target Common Stock held by, and
Purchaser Common Stock issued in connection with the Merger to, (a) the
undersigned's spouse, (b) any relative of the undersigned or of the
undersigned's spouse who has the same home as the undersigned, (c) any trust or
estate in which the undersigned, the undersigned's spouse, and any such relative
collectively own at least a 10% beneficial interest or of which any of the
foregoing serves as trustee, executor or in any similar capacity, and (d) any
corporation or other organization in which the undersigned, the undersigned's
spouse and any such relative collectively own at least 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 executive officer of
Purchaser or becomes a director or executive officer of Purchaser upon
consummation of the Merger, among other things, any sale of Purchaser Common
Stock by the undersigned within a period of less than six months following the
effective time of the Merger may subject the undersigned to liability pursuant
to Section 16(b) of the 1934 Act.
8. MISCELLANEOUS. This Affiliate Agreement is the complete agreement
-------------
between Purchaser and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any parry 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.
3
This Affiliate Agreement is executed as of the _____ day of
_________________, 1997.
Very truly yours,
____________________________
Signature
____________________________
Print Name
____________________________
____________________________
____________________________
____________________________
Address
____________________________
Telephone No.
AGREED TO AND ACCEPTED as of
____________________, 1997
ABC BANCORP
By:_________________________
Its:_______________________
4
EXHIBIT 2
---------
MATTERS AS TO WHICH
MARTIN, SNOW, GRANT & ▇▇▇▇▇▇ WILL OPINE
1. Target is a corporation duly organized, existing and in good standing
under the laws of the State of Georgia with corporate power and authority (a) to
conduct its business as described in the Proxy Statement and (b) to own and use
its Assets.
2. Target Bank is a Georgia chartered state bank duly organized and
validly existing under the laws of the State of Georgia with all requisite power
and authority to conduct its business as described in the Proxy Statement, and
to own and use its Assets. The deposits of Target Bank are insured by the
Federal Deposit Insurance Corporation to the extent provided by law.
3. Target's authorized shares consist of 5,000,000 shares of Common
Stock, $50.00 par value, of which ________ shares were outstanding as of
_________________. The outstanding shares of Target Common Stock have been duly
authorized and validly issued, were not issued in violation of any statutory
preemptive rights of shareholders, and are fully paid and nonassessable. To our
Knowledge, except as Previously Disclosed, there are no options, subscriptions,
warrants, calls, rights or commitments obligating Target to issue equity
securities or acquire its equity securities.
4. Target owns directly or indirectly all the issued and outstanding
shares of the capital stock of Target Bank. To our knowledge, there are no
options, subscriptions, warrants, calls, rights or commitments obligating Target
Bank to issue equity securities or acquire its equity securities.
5. The execution and delivery by Target of the Agreement do not, and if
Target were now to perform its obligations under the Agreement such performance
would not, result in any violation of the Articles of Incorporation or Bylaws of
Target or the Articles of Incorporation or Bylaws of Target Bank or, to our
Knowledge, result in any breach of, or default or acceleration under, any
material Contract or Order to which Target or Target Bank is a party or by which
Target or Target Bank is bound.
6. Target has duly authorized the execution and delivery of the Agreement
and all performance by Target thereunder and has duly executed and delivered the
Agreement.
7. The Agreement is enforceable against Target.
EXHIBIT 3
---------
MATTERS AS TO WHICH
▇▇▇▇▇▇ & ▇▇▇▇▇▇ WILL OPINE
1. Purchaser is a corporation duly organized, existing and in good
standing under the laws of the State of Georgia with corporate power and
authority (a) to conduct its business as described in the Proxy Statement and
(b) to own and use its Assets.
2. Purchaser's authorized shares consist of 15,000,000 shares of Common
Stock, $1.00 par value per share, of which __________ shares were outstanding as
of _____________, and 5,000,000 shares of Preferred Stock, none of which were
outstanding as of ____________. The outstanding shares of Purchaser Common Stock
have been duly authorized and validly issued, were not issued in violation of
any statutory preemptive rights of shareholders, and are fully paid and
nonassessable. To our Knowledge, except as Previously Disclosed, there are no
options, subscriptions, warrants, calls, rights or commitments obligating
Purchaser to issue equity securities or acquire its equity securities. The
shares of Purchaser Common Stock to be issued to the shareholders of Target upon
consummation of the Merger have been registered under the Securities Act of
1933, as amended, and when issued in accordance with the Agreement, will be
validly issued, fully paid and nonassessable.
3. The execution and delivery by Purchaser of the Agreement do not, and
if Purchaser were now to perform its obligations under the Agreement such
performance would not, result in any violation of the Articles of Incorporation
or Bylaws of Purchaser or, to our knowledge, result in any breach of, or default
or acceleration under, any material Contract or Order to which Purchaser is a
party or by which Purchaser is bound.
4. Purchaser has duly authorized the execution and delivery of the
Agreement and all performance by Purchaser thereunder and has duly executed and
delivered the Agreement.
5. The Agreement is enforceable against Purchaser.
EXHIBIT 4
---------
IRREVOCABLE PROXY
-----------------
This Irrevocable Proxy is given by the undersigned, ______________
("Shareholder"), in favor of ABC Bancorp, a Georgia corporation ("ABC"), as of
the 15th day of May, 1997.
WHEREAS, ABC and ▇▇▇▇▇ Bankcorp, Inc., a Georgia corporation
("Target"), have entered into an Agreement and Plan of Merger dated as of May
15, 1997 (the "Merger Agreement") (capitalized terms used but not defined herein
shall have the same meaning assigned to such terms in the Merger Agreement),
pursuant to which ABC proposes to acquire the entire equity interest in Target
by means of a merger (the "Merger") of Target with and into ABC;
WHEREAS, Shareholder owns, as of the date hereof, _________ shares of
Target Common Stock (the "Existing Shares", together with any shares of Target
Common Stock acquired after the date hereof and prior to the termination hereof,
hereinafter collectively referred to as the "Shares"); and
WHEREAS, ABC has entered into the Merger Agreement in reliance on
Shareholder's agreement to support the Merger, including the granting of
Shareholder's Irrevocable Proxy hereunder.
NOW, THEREFORE, with respect to the Merger Agreement and the
transactions contemplated thereby and in accordance with the GBCC, Shareholder
hereby irrevocably makes, constitutes and appoints ABC to act as Shareholder's
true and lawful proxy and attorney-in-fact in the name and on behalf of
Shareholder, solely for the limited purpose set forth herein, with full power to
appoint a substitute or substitutes solely for the limited purpose set forth
herein. Shareholder further directs ABC, and ABC hereby agrees, to vote all of
the Shares which are entitled to vote at any meeting of the shareholders of
Target (whether annual or special and whether or not an adjourned meeting), or
by written consent in the place and stead of Shareholder, in favor of the Merger
and the Merger Agreement. ABC shall have no right to vote the shares with
respect to any other matter. By giving this proxy, Shareholder hereby revokes
any other proxy granted by Shareholder at any time with respect to the Shares,
and no subsequent proxies will be given with respect thereto by Shareholder.
THE PROXY GRANTED HEREBY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE. The
proxy granted hereby shall not be terminated by any act of Shareholder or by
operation of law, by lack of appropriate power of authority, or by the
occurrence of any other event or events and shall be binding upon all
beneficiaries, heirs at law, legatees, distributees, successors, assigns and
legal representatives of Shareholder. Shareholder agrees to use all good faith
efforts to cause any record owner of the Shares of which Shareholder is the
beneficial owner to grant to ABC a proxy of the same effect as that contained
herein. Shareholder shall perform such further acts and execute such further
documents as may be required to vest in ABC the sole power to vote the Shares
during the term of the proxy granted herein. The proxy granted herein shall
expire on the earlier of (i) the date on which ABC and Shareholder mutually
consent in writing to terminate this Irrevocable Proxy, (ii) the date of the
Closing, or (iii) the termination of the Merger Agreement in accordance with the
terms thereof. Notwithstanding
anything herein to the contrary, the proxy granted hereby and power herein
conferred upon ABC (or any substitute or substitutes) may not be exercised prior
to the receipt by ABC and Target of the Consents of the Regulatory Authorities
(as contemplated by the Merger Agreement).
IN WITNESS WHEREOF, Shareholder has executed and delivered this
Irrevocable Proxy as of the date first set forth above.
______________________
(Name)
______________________
Witness
______________________
(Signature)
2
EXHIBIT 5
---------
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of ___________,
1997, by and between THE CITIZENS BANK OF TIFTON, a Georgia state bank (the
"Bank"), and C. ▇▇▇▇▇ ▇▇▇▇▇, a resident of the State of Georgia (the
"Executive").
WHEREAS, ABC Bancorp, a Georgia corporation ("ABC"), has acquired all of
the equity interest of The Bank of Ocilla by means of a merger (the "Merger")
pursuant to an Agreement and Plan of Merger between ABC and ▇▇▇▇▇ Bankcorp, Inc.
dated as of May 15, 1997 (the "Merger Agreement");
WHEREAS, simultaneous with the Merger, The Bank of Ocilla was merged with
and into the Bank and is now operated as a branch of the Bank (the "Ocilla
Branch");
WHEREAS, the Executive was the President and Chief Executive Officer of The
Bank of Ocilla and desires to become the President of the Ocilla Branch;
WHEREAS, the Bank desires that the Executive serve in such capacity; and
WHEREAS, the Bank and the Executive, in conjunction with and pursuant to
the terms of the Merger Agreement, desire to set forth in writing the terms and
conditions of the Executive's employment.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. EMPLOYMENT AND DUTIES.
---------------------
(a) The Bank hereby agrees to employ the Executive and the Executive
agrees serve as the President of the Ocilla Branch and to act in accordance with
the terms and conditions set forth herein. During the term of this Agreement,
the Executive agrees that he will serve the Bank faithfully and to the best of
his ability and that he will devote his full business time, attention and skills
to the operation of the business of the Ocilla Branch, subject to reasonable
absences for vacation and illness, and that he will perform such duties,
functions and responsibilities in connection with such position and consistent
with the foregoing as are from time to time delegated to the Executive by the
Board of Directors of the Bank (the "Board"); provided, however, that the
-------- -------
foregoing shall not be deemed to restrict the Executive from devoting a
reasonable amount of time and attention to the management of his personal
affairs and investments, so long as such activities do not interfere with the
responsible performance of the Executive's duties hereunder. The Executive
shall provide the Board with periodic reports on, and keep it informed on a
current basis concerning, the business and affairs of the Ocilla Branch.
(b) The Bank shall provide the Executive with a private office,
secretarial and administrative assistance, office equipment, supplies and other
facilities and services suitable to the Executive's position to be located at
▇▇▇▇▇ & 2nd Street, Ocilla, Georgia, or at a comparable location within ▇▇▇▇▇
County, Georgia.
2. TERM. The term ("Term") of this Agreement shall commence on the date
----
hereof and shall continue until the second anniversary of the date hereof unless
earlier terminated pursuant to Section 4 hereof.
3. COMPENSATION. In consideration of the services to be rendered by the
------------
Executive to the Bank hereunder, the Bank hereby agrees to pay or otherwise
provide the Executive the following compensation and benefits, it being
understood that the Bank shall have the right to deduct therefrom all taxes
which may be required to be deducted or withheld under any provision of
applicable law (including, without limitation, Social Security payments, income
tax withholding and other required deductions now in effect or which may become
effective by law any time during the Term):
(A) SALARY. The Executive shall receive an annual salary of
------
("Salary") of $68,000.00 to be paid in equal installments in accordance with the
Bank's salary payment practices in effect from time to time for executives of
the Bank. The Bank may consider and declare from time to time increases in the
Salary.
(B) COMPENSATION PURSUANT TO PLANS. During the Term, the Executive
------------------------------
shall be included as a participant in all present and future employee benefit,
retirement and compensation plans generally available to employees of the Bank,
consistent with his Salary and his position with the Bank.
(C) EXPENSES. The Executive shall be entitled to receive
--------
reimbursement for all reasonable expenses incurred by him in connection with the
fulfillment of his duties hereunder, upon receipt of appropriate vouchers
therefor, provided that the Executive has complied with all reasonable policies
and procedures relating to the reimbursement of such expenses as shall, from
time to time, be established by the Bank.
(D) VACATION AND PERQUISITES. For so long as the Executive is
------------------------
employed by the Bank hereunder, the Executive shall be entitled to such paid
vacation and such perquisites, including, without limitation, the use of an
automobile and a local country club membership, as are provided to other
executive officers of ABC's banking subsidiaries.
4. TERMINATION.
-----------
(a) This Agreement shall terminate on the earliest to occur of the
second anniversary of the date hereof or the occurrence of any of the following
events: (i) the mutual agreement of the Bank and the Executive; (ii) the
death or Disability (as hereinafter defined) of the Executive or Executive's
voluntary retirement; or (iii) immediately upon the Bank giving written notice
to the Executive of termination for Cause (as defined herein).
2
(b) The Bank may terminate the Executive's employment under this
Agreement at any time for Cause. The termination shall be evidenced by written
notice to the Executive, which shall specify the cause for termination. "Cause"
shall exist if: (i) the Executive is convicted of (from which no appeal may be
taken), or pleads guilty to, any act of fraud, misappropriation or embezzlement,
or any felony; (ii) in the reasonable determination of the Board, the Executive
has engaged in conduct or activity materially damaging to the business of the
Bank (it being understood, however, that unintentional physical damage to any
property of the Bank by the Executive shall not be a ground for such a
determination by the Board); or (iii) the Executive has failed, without
reasonable cause, to devote his full business time and best efforts to the
business of the Bank as provided in Section 1(a) hereof and, after written
notice from the Bank of such failure, the Executive at any time thereafter again
so fails.
(c) The Executive may terminate his employment under this Agreement
at any time for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (i) the assignment to the Executive of duties or responsibilities
which are materially inconsistent with the responsibilities of an executive
officer holding the office of the Executive; (ii) a material breach by the Bank
of any of the material provisions of this Agreement; or (iii) the Bank's
requiring the Executive to be based at any place outside a fifty mile radius
from Ocilla, Georgia, except for reasonably required travel on the Bank's
business.
(d) In the event that the Executive's employment hereunder is
terminated by reason of Disability or by the Bank other than for Cause, the
Executive shall be entitled to continue to receive his Salary from the Bank at
the rate in effect at the time of such termination until the second anniversary
of the date hereof. For purposes of this Agreement, "Disability" shall mean the
absence of the Executive from the Executive's duties hereunder on a full-time
basis for 120 consecutive business days (or such shorter period as will suffice
for the Executive to qualify for full disability benefits under the applicable
disability insurance policy or policies of the Bank) as a result of incapacity
due to mental or physical illness which is determined to be total and permanent
by a physician selected by the Bank or its insurers and reasonably acceptable to
the Executive or the Executive's legal representative.
5. REPRESENTATIONS AND WARRANTIES.
------------------------------
(a) The Executive represents and warrants to the Bank that: (i) he
has the full power and authority to execute, deliver and perform this Agreement
and that he has taken all actions necessary to secure all approvals required in
connection herewith and therewith; (ii) this Agreement has been duly authorized,
executed and delivered by him and constitutes his valid and binding agreement,
enforceable against him in accordance with its terms; and (iii) the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not, with the passage of time or the
giving of notice or both, violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under, or permit the
acceleration of or entitle any party to accelerate any obligation under or
pursuant to, any material mortgage, lien, leases, agreement, instrument, order,
arbitration award, judgment or decree to which he is a party or by which he or
any of his assets are bound.
3
(b) The Bank hereby represents and warrants to the Executive that:
(i) this Agreement has been duly authorized, executed and delivered by it and
constitutes the valid and binding agreement of it, enforceable against it in
accordance with its terms; (ii) it has the full power and authority to execute,
deliver and perform this Agreement and has taken all necessary action to secure
all approvals required in connection herewith; and (iii) the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, its
charter or bylaws or any material mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which it is a party or by which
it or any of its assets are bound.
6. RESTRICTIVE COVENANTS. Acknowledging that (i) he has intimate
---------------------
knowledge of the business of the Ocilla Branch which, if exploited by him in
contravention of this Agreement, would seriously adversely and irreparably
affect the value of the Ocilla Branch to the Bank and the ability of ABC to
continue to operate the Ocilla Branch following the consummation of the Merger;
(ii) the provisions of this Section 6 are reasonable and necessary to protect
the legitimate interests of ABC and the Bank; (iii) the provisions of this
Section 6 are reasonable and necessary to protect the goodwill of the Bank
acquired by ABC pursuant to the Merger Agreement; (iv) any violation of this
Section 6 will result in irreparable injury to ABC and the Bank and that damages
at law would not be reasonable or adequate compensation to ABC and the Bank for
a violation of this Section 6; and (v) in the course of his employment with the
Bank, as contemplated by this Agreement, and as a result of the position of
trust that he will hold under this Agreement, he will obtain private and
confidential information and proprietary data relating to ABC, the Bank, the
Ocilla Branch and other affiliates of ABC, including, without limitation,
financial information, product information and other data that are valuable
assets and property rights of the Bank and ABC and its affiliates (collectively
referred to as "Confidential Information"), the Executive hereby agrees as
follows:
(a) The Executive shall not, during the Term of this Agreement or any
time after the termination of this Agreement, either directly or indirectly,
disclose or use any Confidential Information acquired during his employment with
the Bank, unless (i) the Confidential Information has been made public through
no action or fault of the Executive, or (ii) its disclosure is requested or
compelled by applicable law or regulatory agency. The Executive further agrees
that upon termination of this Agreement, or at such other time as the Bank
requests, the Executive will return to the Bank all documents, papers and
records constituting Confidential Information, and all copies of same in the
Executive's possession and control.
(b) For a period of one (1) year after termination of the Executive's
employment hereunder pursuant to Section 4(b), or by reason of Disability or by
the Executive without Good Reason, the Executive shall not directly or
indirectly provide banking or bank-related services to, or solicit the banking
or bank-related business of, any customer of the Bank at the time of such
provision of services or solicitation which the Executive served either alone or
with others while employed by the Bank in any city, town, borough, township,
village or other place in which the Executive performed services for the Bank
while employed by it, or assist any actual or potential competitor of the Bank
to provide banking or bank-related services to or solicit any such customer's
banking or bank-related business in any such place.
4
(c) While the Executive is employed by the Bank and for a period of
one (1) year after termination of the Executive's employment hereunder pursuant
to Section 4(b) by reason of Disability or by the Executive without Good Reason,
the Executive shall not, directly or indirectly, as principal, agent, or
trustee, or through the agency of any corporation, partnership, trade
association, agent or agency, engage in any banking or bank-related business or
venture which competes with the business of the Bank as conducted during the
Executive's employment by the Bank within ▇▇▇▇▇ County, Georgia and the
contiguous counties thereto.
(d) In addition to all other remedies provided at law or at equity,
the Bank may petition and obtain from a court of law or equity both temporary
and permanent injunctive relief without the necessity of proving actual damages
and without posting bond or other security to prevent a breach by the Executive
of any covenant contained in this Section 6, as well as to an equitable
accounting of all earnings and profits and other benefits arising out of any
such violations.
7. NOTICES. Any notice or other communication required or permitted to
-------
be given hereunder shall be in writing and deemed to have been given when
delivered in person or when dispatched by telegram or electronic facsimile
transfer (confirmed in writing by mail, registered or certified, return receipt
requested, postage prepaid, simultaneously dispatched) to the addresses
specified below.
If to the Executive: C. ▇▇▇▇▇ ▇▇▇▇▇
The Bank of Ocilla
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Bank: The Bank of Ocilla
c/o ABC Bancorp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
or to such other address or fax number as either party may from time to time
designate in writing to the other.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same. No modification, alteration, amendment or recision of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by both parties hereto.
9. GOVERNING LAW. This Agreement and the rights and duties of the
-------------
parties hereunder shall be governed by, construed under and enforced in
accordance with the laws of the State of Georgia.
5
10. ASSIGNMENT. This Agreement shall inure to the benefit of and be
----------
binding upon the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns. The rights, duties and
obligations under this Agreement are assignable by the Bank to a successor of
all or substantially all of the business or assets of the Bank. The rights,
duties and obligations of the Executive under this Agreement shall not be
assignable.
11. SURVIVAL. The respective obligations of the parties under Section 6
--------
hereof shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
delivered, and the Executive has executed and delivered this Agreement, all as
of the day and year first above written.
THE CITIZENS BANK OF TIFTON
By:____________________________
Its:__________________
________________________(SEAL)
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