Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER
dated as of March 26, 2002
among
EAGLE BANCSHARES, INC.,
RBC CENTURA BANKS, INC.
and
ROYAL BANK OF CANADA
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TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions............................................1
1.02 Interpretation.................................................8
ARTICLE II
THE MERGER
2.01 The Merger.....................................................8
2.02 Effective Time.................................................9
ARTICLE III
CONSIDERATION
3.01 Effect on Capital Stock........................................9
3.02 Rights as Shareholders; Stock Transfers.......................10
3.03 Payment for Shares............................................10
3.04 Dissenting Stockholders.......................................11
3.05 Company Stock Awards..........................................11
ARTICLE IV
ACTIONS PENDING THE MERGER
4.01 Forbearances of the Company...................................12
4.02 Forbearances of the Acquiror..................................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules..........................................16
5.02 Standard......................................................16
5.03 Representations and Warranties of the Company.................16
5.04 Representations and Warranties of the Acquiror................29
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ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts.......................................31
6.02 Shareholder Approvals.........................................31
6.03 Proxy Statement...............................................32
6.04 Press Releases................................................32
6.05 Access; Information...........................................33
6.06 Acquisition Proposals.........................................34
6.07 Takeover Laws.................................................35
6.08 No Rights Triggered...........................................35
6.09 Regulatory Applications.......................................35
6.10 Indemnification...............................................36
6.11 Notification of Certain Matters...............................37
6.12 Employee Benefits.............................................38
6.13 Certain Adjustments...........................................39
6.14 Certain Contracts.............................................39
6.15 Regulatory Compliance.........................................39
6.16 Formation of Acquiror Sub.....................................40
6.17 Eagle Real Estate Advisors....................................40
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger....40
7.02 Conditions to Obligation of the Company.......................41
7.03 Conditions to Obligation of the Acquiror......................41
ARTICLE VIII
TERMINATION
8.01 Termination...................................................42
8.02 Effect of Termination and Abandonment.........................43
8.03 Termination Fee...............................................43
ARTICLE IX
MISCELLANEOUS
9.01 Survival......................................................46
9.02 Waiver; Amendment.............................................46
9.03 Counterparts..................................................46
9.04 Governing Law.................................................46
9.05 Expenses......................................................46
9.06 Notices.......................................................46
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9.07 Entire Understanding; No Third-Party Beneficiaries............47
9.08 Assignment....................................................47
EXHIBIT A.........Form of Voting Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of March 26, 2002 (this
"Agreement"), among Eagle Bancshares, Inc. (the "Company"), RBC Centura Banks,
Inc. ("RBC Centura") and Royal Bank of Canada (the "Acquiror").
RECITALS
A. The Company. The Company is a Georgia corporation, having its
principal place of business in Tucker, Georgia.
B. The Acquiror and RBC Centura. The Acquiror is a Canadian chartered
bank, having its principal places of business in Toronto, Ontario and ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇. RBC Centura is a North Carolina corporation, having its
principal place of business in Rocky Mount, North Carolina, and is a wholly
owned subsidiary of the Acquiror.
C. Acquiror Sub. Acquiror Sub ("Acquiror Sub") will be a Georgia
corporation and a direct or indirect wholly owned subsidiary of Acquiror that
will have been organized as of the Closing Date for the purpose of effecting the
Merger in accordance with this Agreement.
D. The Merger. On the terms and subject to the conditions contained in
this Agreement, the parties to this Agreement intend to effect the merger of
Acquiror Sub with and into the Company, with the Company as the surviving
corporation.
E. Voting Agreements. Concurrently with the execution of this
Agreement, each director of the Company has executed a Voting Agreement
(collectively, the "Voting Agreement") in substantially the form of Exhibit A.
F. Board Action. The respective Boards of Directors of each of the
Company, RBC Centura and the Acquiror have adopted resolutions approving this
Agreement and the transactions contemplated by this Agreement and, in the case
of the Board of Directors of the Company, declaring the advisability of this
Agreement in accordance with the Georgia Business Corporation Code, as amended
(the "GBCC").
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings assigned below:
"Acquiror" has the meaning assigned in the preamble to this Agreement.
"Acquiror Sub" has the meaning assigned in Recital C.
"Acquiror Subsidiary" has the meaning assigned in Section 8.03(c)(i).
"Acquisition Proposal" has the meaning assigned in Section 6.06.
"Acquisition Transaction" shall mean (x) a merger or consolidation, or
any similar transaction, involving the Company or any of its Significant
Subsidiaries, provided, however, that in no event shall any merger,
consolidation or similar transaction involving only the Company and one or more
of its Significant Subsidiaries or involving only any two or more of such
Subsidiaries, if such transaction is not in violation of the terms of this
Agreement, be deemed to be an Acquisition Transaction, (y) a purchase, lease or
other acquisition of all or any substantial part of the assets or business
operations of the Company or any of its Significant Subsidiaries, or (z) a
purchase or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 15% or more of the voting
power of the Company or any of its Significant Subsidiaries.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Award Holder" has the meaning assigned in Section 3.05.
"beneficial ownership" has the meaning assigned in Section 8.03(c)(ii).
"Closing Date" has the meaning assigned in Section 2.02.
"Code" means the Internal Revenue Code of 1986.
"Company" has the meaning assigned in the preamble to this Agreement.
"Company Articles" means the Articles of Incorporation of the Company.
"Company Board" means the board of directors of the Company.
"Company By-Laws" means the by-laws of the Company.
"Company Common Stock" means the common stock, $1.00 par value, of the
Company.
"Company IP Rights" has the meaning assigned in Section 5.03(x).
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"Company Meeting" has the meaning assigned in Section 6.02.
"Company Preferred Stock" means the serial preferred stock, $1.00 par
value, of the Company.
"Company Reports" has the meaning assigned in Section 5.03(j).
"Company's SEC Documents" has the meaning assigned in Section 5.03(g).
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"Company Stock Award" has the meaning assigned in Section 3.05.
"Company Stock Option" means each option to purchase shares of Company
Common Stock outstanding under the Company Stock Plans.
"Company Stock Plans" has the meaning assigned in Section 5.03(b).
"Company Stock Resolution" has the meaning assigned in Section 3.05.
"Company Subsidiaries" has the meaning assigned in Section 8.03(c)(i).
"Confidentiality Agreement" means the Mutual Confidentiality Agreement
between the Company and RBC Centura, dated September 27, 2001, as amended
pursuant to the Assignment and Amending Agreement, among the Company, the
Acquiror and RBC Centura, dated February 25, 2002.
"Compensation Plans" has, with respect to any person, the meaning
assigned in Section 5.03(o).
"Consideration" has the meaning assigned in Section 3.01(a).
"Consideration Per Share" has the meaning assigned in Section 3.05.
"Contract" means, with respect to any person, any agreement, indenture,
undertaking, debt instrument, contract, lease or other commitment, whether oral
or in writing, to which such person or any of its Subsidiaries is a party or by
which any of them is bound or to which any of their properties is subject.
"Costs" has the meaning assigned in Section 6.10(a).
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"CRA" means the Community Reinvestment Act of 1977, as amended.
"Disclosure Schedule" has the meaning assigned in Section 5.01.
"Dissenters' Shares" means shares of Company Common Stock the holders
of which shall have perfected their dissenters' rights to payment in accordance
with Sections 14-2-1301 to 1332 of the GBCC as of the moment immediately prior
to the Effective Time.
"Eagle Retirement Plan" has the meaning assigned in Section 6.12(b).
"Eagle Retirement Plan Trust" has the meaning assigned in Section
6.12(b).
"Effective Time" means the date and time at which the Merger becomes
effective.
"Environmental Laws" means any federal, state or local law, regulation,
order, decree, permit, authorization, common law or agency requirement relating
to: (1) the protection or restoration of the environment, health or safety (in
each case as relating to the environment) or natural resources; or (2) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" has, with respect to any person, the meaning assigned
in Section 5.03(o).
"ERISA Affiliate Plan" has the meaning assigned in Section 5.03(o).
"ESOP" has the meaning assigned in Section 6.12(e).
"Exchange Act" means the Securities Exchange Act of 1934 and the rules
and regulations thereunder.
"Fee Payment Event" has the meaning assigned in Section 8.03(d).
"Fee Termination Event" has the meaning assigned in Section 8.03(b).
"GBCC" has the meaning assigned in Recital F.
"GDBF" means the Georgia Department of Banking and Finance.
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"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any substance in any concentration that is:
(1) listed, classified or regulated pursuant to any Environmental Law; (2) any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or
(3) any other substance which is regulated by any Governmental Authority
pursuant to any Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976.
"Indemnified Party" has the meaning assigned in Section 6.10(a).
"Insurance Amount" has the meaning assigned in Section 6.10(b).
"Insurance Policies" has the meaning assigned in Section 5.03(v).
"Intellectual Property Rights" shall mean all worldwide industrial and
intellectual property rights, including patents, patent applications, patent
rights, trademarks, trademark applications, trade names, service marks, service
▇▇▇▇ applications, copyright, copyright applications, franchises, licenses,
inventories, know-how, trade secrets, customer lists, proprietary processes and
formulae, all source and object code, algorithms, architecture, structure,
display screens, layouts, inventions, development tools, software, databases and
all documentation and media constituting, describing or relating to the above,
including manuals, memoranda and records.
"IRS" means the United States Internal Revenue Service.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Listed Termination" has the meaning assigned in Section 8.03(b).
"Loans" means loans, leases, extensions of credit (including
guaranties), commitments to extend credit and other assets.
"Material Adverse Effect" means, with respect to the Acquiror or the
Company, any effect that (1) is materially adverse to the financial position,
results of operations, shareholder's equity or business of the Acquiror and its
Subsidiaries taken as a whole, or the Company and its Subsidiaries taken as a
whole, respectively, other than (A) payments of expenses associated with the
Merger as contemplated by this Agreement, (B) changes in generally accepted
accounting principles applicable to bank holding companies generally in Canada
or the United States, respectively, and (C) any changes resulting primarily from
changes in banking laws or regulations (or interpretations thereof) of general
applicability in Canada or the United States, respectively; or (2) would
materially impair the ability of either the Acquiror or the Company to perform
its obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement.
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"Merger" has the meaning assigned in Section 2.01(a).
"Multiemployer Plan" means, with respect to any person, a multiemployer
plan within the meaning of Section 3(37) of ERISA.
"NCCOB" means the North Carolina Commissioner of Banks.
"OTS" means the Office of Thrift Supervision.
"Paying Agent" has the meaning assigned in Section 3.03.
"Performance Stock Plan" means the Eagle Bancshares, Inc. Performance
Stock Plan, effective as of April 1, 1999 and as amended in its entirety
effective November 6, 2001.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has, with respect to any person, the meaning assigned in
Section 5.03(o).
"person" means any individual, bank, savings bank, corporation,
partnership, limited liability company, association, joint-stock company,
business trust or unincorporated organization.
"Previously Disclosed" means, with respect to the Company or the
Acquiror, information set forth in such party's Disclosure Schedule in a
paragraph or section identified as corresponding to the provision of this
Agreement in respect of which such information has been so set forth.
"Proxy Statement" has the meaning assigned in Section 6.03.
"RBC Centura" has the meaning assigned in the preamble to this
Agreement.
"Related Person" means any person (or family member of such person) (1)
that directly or indirectly, controls, or is under common control with, the
Company or any of its affiliates, (2) that serves as a director, officer,
employee, partner, member, executor, or trustee of the Company or any of its
affiliates or Subsidiaries (or in any other similar capacity), (3) that has, or
is a member of a group having, direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least 5 percent of the outstanding voting power
or equity securities or other equity interests representing at least 5 percent
of the outstanding equity interests (a "Material Interest") in the Company or
any of its affiliates or (4) in which any person (or family member of such
person) that falls under (1), (2) or (3) directly or indirectly above holds a
Material Interest or serves as a director, officer, employee, partner, member,
executor, or trustee (or in any other similar capacity).
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"representatives" means, with respect to any person, such person's
directors, officers, employees, legal or investment or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"Risk Management Contract" has the meaning assigned in Section 5.03(s).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, and the rules and
regulations thereunder.
"Significant Subsidiary" has the meaning assigned to that term Rule
1-02 of Regulation S-X of the SEC.
"Subsidiary" includes either a "subsidiary" as defined in Rule 1-02 of
Regulation S-X of the SEC or a "subsidiary" as defined in Section 225.2(o) of
Title Twelve of the Code of Federal Regulations.
"Superior Proposal" has the meaning assigned in Section 6.06.
"Surviving Corporation" has the meaning assigned in Section 2.01(a).
"Takeover Laws" has the meaning assigned in Section 5.03(d).
"Taxes" means all taxes, charges, fees, levies or other assessments,
however denominated, including all net income, gross income, gross receipts,
sales, use, ad valorem, goods and services, capital, transfer, franchise,
profits, license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, property or other taxes, custom duties,
fees, or charges of any kind whatsoever, together with any interest and any
penalties or additions to tax with respect thereto and with respect to any
information reporting requirements imposed by the Code or any similar provision
of foreign, state or local law and any interest in respect of such additions or
penalties imposed by any taxing authority whether arising before, on or after
the Closing Date.
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"Tax Returns" means all reports and returns required to be filed on or
before the Closing Date with respect to the Taxes of the Company or any of its
Subsidiaries including consolidated federal income tax returns and any
documentation required to be filed with any taxing authority or to be retained
by the Company or any of its Subsidiaries in respect of information reporting
requirements imposed by the Code or any similar foreign, state or local law.
"Tolling Event" has the meaning assigned in Section 8.03(c).
"Treasury Shares" means shares of Company Common Stock owned, directly
or indirectly, by the Company or any of its Subsidiaries.
"Termination Fee" has the meaning assigned in Section 8.03(a).
"Voting Agreement" has the meaning assigned in Recital E.
1.02 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of, or Exhibit or
Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and are
not part of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." No rule of construction against the draftsperson
shall be applied in connection with the interpretation or enforcement of this
Agreement. Whenever this Agreement shall require a party to take an action, such
requirement shall be deemed to constitute an undertaking by such party to cause
its Subsidiaries, and to use its reasonable best efforts to cause its other
affiliates, to take appropriate action in connection therewith. References to
"knowledge" of a person means knowledge after reasonable diligence in the
circumstances. All references to "dollars" or "$" mean the lawful currency of
the United States, and all references to "Canadian dollars" or "C$" mean the
lawful currency of Canada, unless otherwise indicated.
ARTICLE II
THE MERGER
2.01 The Merger. At the Effective Time, on the terms and subject to the
conditions set forth in this Agreement, the following shall occur:
(a) Structure and Effects of the Merger. Acquiror Sub shall merge with
and into the Company, and the separate corporate existence of Acquiror Sub shall
thereupon cease (the "Merger"). The Company shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Georgia, and the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger. The
Merger shall have the effects specified in the GBCC.
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(b) Articles of Incorporation. The articles of incorporation of the
Company shall be the articles of incorporation of the Surviving Corporation.
(c) By-Laws. The by-laws of the Company shall be the by-laws of the
Surviving Corporation.
(d) Directors and Officers. The directors and officers of the Surviving
Corporation shall be the directors and officers of Acquiror Sub immediately
prior to the Effective Time; and such directors shall hold office until such
time as their successors shall be duly elected and qualified.
2.02 Effective Time. The Merger shall become effective upon the filing,
in the office of the Secretary of State of the State of Georgia, of articles of
merger in accordance with Section 14-2-1105 of the GBCC, or at such later date
and time as may be set forth in such articles. Subject to the terms of this
Agreement, the parties shall cause the Merger to become effective (1) on a day
within ten business days after the last of the conditions set forth in Article
VII (other than conditions relating solely to the delivery of documents dated
the Closing Date) shall have been satisfied or waived in accordance with the
terms of this Agreement (or, at the election of the Acquiror, on the last
business day of the month in which such day occurs), or (2) on such date as the
parties may agree in writing (the "Closing Date").
ARTICLE III
CONSIDERATION
3.01 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock:
(a) Conversion of Company Common Stock. Each share of Company Common
Stock outstanding immediately prior to the Effective Time (other than Treasury
Shares and Dissenters' Shares) shall be converted into the right to receive
consideration (the "Consideration") comprising $26.00 in cash. At the Effective
Time, the shares of Company Common Stock shall no longer be outstanding and
shall automatically be cancelled and cease to exist, and from and after the
Effective Time, certificates representing Company Common Stock immediately prior
to the Effective Time shall be deemed for all purposes to represent the
Consideration pursuant to this Section 3.01(a).
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(b) Acquiror Sub Common Stock. Each share of Acquiror Sub common stock
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock par value $1.00 per share, of the
Surviving Corporation.
(c) Treasury and Dissenters' Shares. Each share of Company Common Stock
held as Treasury Shares or Dissenters' Shares immediately prior to the Effective
Time shall be canceled and retired at the Effective Time and, except as set
forth in Section 3.04 with respect to Dissenters' Shares, no consideration shall
be issued in exchange therefor.
3.02 Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of Company Common Stock (other than Dissenters' Shares, if applicable)
shall cease to be, and shall have no rights as, shareholders of the Company,
other than to receive any dividend or other distribution with respect to such
Company Common Stock with a record date occurring prior to the Effective Time
and the right to receive Consideration provided under this Article III. After
the Effective Time, there shall be no transfers on the stock transfer books of
the Surviving Corporation of shares of Company Common Stock (other than
Dissenters' Shares, if applicable).
3.03 Payment for Shares. RBC Centura shall make available or cause to
be made available to such bank as the Acquiror shall appoint (and shall be
reasonably acceptable to the Company), as paying agent (the "Paying Agent"),
amounts sufficient in the aggregate to provide all funds necessary for the
Paying Agent to make payments of Consideration to holders of shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
Promptly after the Effective Time, the Surviving Corporation shall cause the
Paying Agent to mail to each person who was, at the Effective Time, a holder of
record of outstanding shares of Company Common Stock a form (mutually agreed to
by the Acquiror and the Company) of letter of transmittal and instructions for
use in effecting the surrender of the certificates which, immediately prior to
the Effective Time, represented any of such shares in exchange for payment
therefor. Upon surrender to the Paying Agent of such certificates, together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the Surviving Corporation shall promptly cause the Paying
Agent to pay to each person entitled thereto a check in the amount of the
Consideration to which such person is entitled, after giving effect to any
required tax withholdings. No interest will be paid or will accrue on any amount
payable upon the surrender of any such certificate. If payment is to be made to
a person other than the registered holder of the certificate surrendered, it
shall be a condition of such payment that the certificate so surrendered be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment pay any transfer or other taxes required by reason of
the payment to a person other than the registered holder of the certificate
surrendered or establish to the satisfaction of the Surviving Corporation or the
Paying Agent that such tax has been paid or is not applicable. One hundred and
eighty days following the Effective Time, the Surviving Corporation shall be
entitled to cause the Paying Agent to deliver to it any funds (including any
interest or other amounts received with respect thereto) made available to the
Paying Agent that have not been disbursed to holders of certificates formerly
representing shares of Company Common Stock outstanding on the Effective Time,
and thereafter such holders shall be entitled to look to the Surviving
Corporation only as general creditors thereof with respect to the cash payable
upon due surrender of their certificates. Notwithstanding the foregoing, neither
the Paying Agent nor any party hereto shall be liable to any holder of
certificates formerly representing shares of Company Common Stock for any amount
paid to a public official pursuant to any applicable abandoned property, escheat
or similar laws.
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3.04 Dissenting Stockholders. Dissenters' Shares shall be purchased and
paid for in accordance with Sections 14-2-1301 to 1332 of the GBCC. The Company
shall give Acquiror (a) prompt notice of any written demands for fair value
received by the Company, withdrawals of such demands and any other related
instruments served pursuant to the GBCC and received by the Company and (b) the
opportunity to direct all negotiations and proceedings with respect to demands
for fair value under the GBCC. The Company shall not, except with prior written
consent of Acquiror, voluntarily make any payment with respect to any demands
for fair value for Dissenters' Shares or offer to settle, or settle, any such
demands.
3.05 Company Stock Awards. At the Effective Time, each Company Stock
Option, restricted stock award and phantom stock unit or other stock
appreciation right ("Company Stock Award") then outstanding, whether vested or
unvested, exercisable or unexercisable, without any action on the part of the
holder shall be converted into the right to receive payment of an amount in cash
equal to the product of (1) the excess of the Consideration Per Share over the
exercise price per share, if any, subject to such Company Stock Award and (2)
the number of Shares subject to such Company Stock Award immediately prior to
the Effective Time; provided that the Company shall be entitled to withhold from
such cash payment any amounts required to be withheld by applicable law. Each
Company Stock Award to which this paragraph applies will be cancelled and shall
cease to exist by virtue of such payment. For the purposes of this Section 3.05,
"Consideration Per Share" means $26.00 cash. Prior to the Effective Time the
Company shall take all necessary actions, including obtaining (1) consents of
each award holder including employees of the Company and of its Subsidiaries and
each of the directors on the Company Board and each of the directors on the
board of directors of the Company's savings association Subsidiary (each, an
"Award Holder"), in each case, in their individual capacities and (2)
resolutions of the Company Board, of the board of directors of the Company's
savings association Subsidiary or of a committee established under a Company
Stock Plan (collectively, the "Company Stock Resolutions"), if applicable, to
effect the foregoing.
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ARTICLE IV
ACTIONS PENDING THE MERGER
4.01 Forbearances of the Company. Until the Effective Time (or, if
earlier, the termination of this Agreement), except as expressly provided in
this Agreement, without the prior written consent of the Acquiror, the Company
will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Company and its
Subsidiaries other than in the ordinary and usual course or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact their
business organizations and assets and maintain their rights, franchises and
existing relations with customers, suppliers, employees and business associates.
(b) New Activities. Engage in any material new activities or lines of
business or make any material changes to its existing activities or lines of
business.
(c) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (1) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Company Stock or any Rights, (2) permit any additional shares of Company Stock
to become subject to new grants of employee or director stock options, or
stock-based employee rights or arrangements, (3) repurchase, redeem or otherwise
acquire, directly or indirectly, any shares of Company Stock, (4) effect any
recapitalization, reclassification, stock split or like change in
capitalization, or (5) enter into, or take any action to cause any holders of
Company Stock to enter into, any agreement, understanding or commitment relating
to the right of holders of Company Stock to vote any shares of Company Stock, or
cooperate in any formation of any voting trust relating to such shares.
(d) Subsidiaries. Issue, sell or otherwise permit to become
outstanding, transfer, mortgage, encumber or otherwise dispose of or permit the
creation of any Lien in respect of, or amend or modify the terms of, any equity
interests held in a Subsidiary of the Company.
(e) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend, other than dividends from wholly owned Subsidiaries to the Company or
to another wholly owned Subsidiary of the Company or pursuant to the Amended and
Restated Trust Agreement among the Company, SunTrust Bank, Atlanta, Wilmington
Trust Company and the Administrative Trustees named therein, dated as of July 2,
1998, as applicable, on or in respect of, or declare or make any distribution on
any shares of its capital stock or split, combine, redeem, reclassify, purchase
or otherwise acquire, any shares of its capital stock.
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(f) Compensation; Employment Contracts; Etc. Enter into, amend, modify,
renew or terminate any employment, consulting, severance or similar Contracts
with any directors, officers, employees of, or independent contractors with
respect to, the Company or its Subsidiaries, or grant any salary, wage or other
increase or increase any employee benefit (including incentive or bonus
payments), except (1) for changes that are required by applicable law, (2) to
satisfy Previously Disclosed Contracts existing on the date hereof, (3) for
merit-based or annual salary increases in the ordinary course of business and in
accordance with past practice or (4) for employment arrangements for newly hired
non-executive employees in the ordinary and usual course of business consistent
with past practice, provided that total annual guaranteed compensation for any
such newly hired non-executive employee shall not exceed U.S. $50,000.
(g) Benefit Plans. Enter into, establish, adopt, amend, modify or
terminate any pension, retirement, stock option, stock purchase, savings, profit
sharing, employee stock ownership, deferred compensation, consulting, bonus,
group insurance or other employee benefit, incentive or welfare Contract, plan
or arrangement, or any trust agreement (or similar arrangement) related thereto,
in respect of any current or former directors, officers, employees, former
employees of, or independent contractors with respect to, the Company or its
Subsidiaries (or any dependent or beneficiary of any of the foregoing persons),
including taking any action that accelerates the vesting or exercisability of or
the payment or distribution with respect to, stock options, restricted stock or
other compensation or benefits payable thereunder, except, in each such case,
(1) as may be required by applicable law, (2) to satisfy Previously Disclosed
Contracts existing on the date hereof or (3) as provided herein.
(h) Dispositions. Except (1) pursuant to Previously Disclosed Contracts
existing on the date hereof, or (2) for sales of debt securities or similar
investments in the ordinary and usual course of business consistent with past
practice, sell, transfer, mortgage, lease, encumber or otherwise dispose of or
permit the creation of any Lien (except for a Lien for Taxes not yet due and
payable) in respect of, or discontinue any material portion of, its assets,
business or properties.
(i) Acquisitions. Except (1) pursuant to Previously Disclosed Contracts
existing on the date hereof, or (2) by way of foreclosures in satisfaction of
debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice, acquire any material
amount, taken individually and in the aggregate, of assets, properties or
deposits of another person in any one transaction or a series of related
transactions.
(j) Governing Documents. Amend (or suffer to be amended) the Company
Articles, the Company By-laws or the articles of incorporation, by-laws,
partnership agreements or limited liability company agreements (or other
governing documents) of any of the Company's Subsidiaries.
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(k) Accounting Methods. Implement or adopt any change in the accounting
principles, practices or methods used by the Company and its Subsidiaries, other
than as may be required by generally accepted accounting principles.
(l) Contracts. Except in the ordinary course of business consistent
with past practice or pursuant to Section 6.14, (i) enter into, amend, renew or
terminate any material Contract or any agreement that provides for aggregate
payments of $50,000 or more or (ii) amend or modify in any material respect any
of its existing material Contracts.
(m) Claims. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually and in the aggregate for all such settlements, not more than U.S.
$50,000 and which would not reasonably be expected to establish an adverse
precedent or reasonable basis for subsequent settlements or require material
changes in business practices.
(n) Risk Management. Except as required by applicable law or
regulation: (1) implement or adopt any material change in its credit risk and
interest rate risk management and hedging policies, procedures or practices; (2)
fail to follow its existing policies or practices with respect to managing its
exposure to credit and interest rate risk; or (3) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure to
interest rate risk.
(o) Indebtedness. Other than in the ordinary course of business
(including by way of creation of deposit liabilities, entry into repurchase
agreements, purchases or sales of federal funds, Federal Home Loan Bank
advances, and sales of certificates of deposit) consistent with past practice,
(1) incur any indebtedness for borrowed money, (2) assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other person, or (3) cancel, release, assign or modify any material amount of
indebtedness of any other person.
(p) Loans. (1) Make any Loan or advance other than in the ordinary
course of business consistent with lending policies as in effect on the date
hereof; (2) make any commercial real estate Loan or advance in excess of
$2,500,000, or any other Loan or advance in excess of $2,000,000; provided that
the Company or any of its Subsidiaries may make any such Loan or advance in the
event (A) the Company or any of its Subsidiaries has delivered to the Acquiror
or its designated representative a notice of its intention to make such Loan or
advance and such additional information as the Acquiror or its designated
representative may reasonably require and (B) the Acquiror or its designated
representative shall not have reasonably objected to such Loan or advance by
giving notice of such objection within five business days following the actual
receipt by the Acquiror of the applicable notice of intention; or (3) sell,
transfer, mortgage, encumber or otherwise dispose of, or permit the creation of,
any Lien in respect of mezzanine loans made by the Company or any Subsidiary of
the Company.
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(q) Adverse Actions. (1) Subject to Section 6.06, take any action that
is intended or is reasonably likely to result in (A) any of its representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect at any time at or prior to the Effective Time, (B) any of the
conditions to the Merger set forth in Article VII not being satisfied or (C) a
material breach of any provision of this Agreement; except, in each case, as may
be required by applicable law, or (2) engage in any new line of business or make
any acquisition that would not be permissible for a United States bank holding
company (as defined in the Bank Holding Company Act of 1956) or would subject
the Acquiror, the Company or any Subsidiary of either to material regulation by
a Governmental Authority that does not presently regulate such company or to
regulation by a Governmental Authority that is materially different from current
regulation.
(r) Tax Elections. Make any election with respect to Taxes.
(s) Related Person Transactions. (1) Except pursuant to Previously
Disclosed legally binding Contracts entered into in the ordinary course of
business before the date of this Agreement and Previously Disclosed, make any
payment of cash or other consideration to, or make any Loan to or on behalf of,
or (2) enter into, amend or grant a consent or waiver under, or fail to enforce,
any Contract with, any Related Person.
(t) Capital Expenditures. Make any capital expenditures in excess of
$50,000 in any one case or $125,000 in the aggregate or enter into any agreement
contemplating capital expenditures in excess of $50,000 for any twelve (12)
month period.
(u) Commitments. Agree or commit to do, or enter into any Contract
regarding, anything that would be precluded by clauses (a) through (u) without
first obtaining the Acquiror's consent.
4.02 Forbearances of the Acquiror. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of the Company, the Acquiror will not, and will cause each
of its Subsidiaries not to take any action that is intended or is reasonably
likely to result in (A) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (B) any of the conditions to the Merger set
forth in Article VII not being satisfied or (C) a material breach of any
provision of this Agreement; except, in each case, as may be required by
applicable law.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, the Company
has delivered to the Acquiror and the Acquiror has delivered to the Company a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either (a) in
response to an express disclosure requirement contained in a provision hereof or
(b) as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04, respectively, or to one or more of its covenants contained
in Article IV; provided that the inclusion of an item in a Disclosure Schedule
as an exception to a representation or warranty shall not be deemed an admission
by the disclosing party that such item (or any undisclosed item or information
of comparable or greater significance) represents a material exception or fact,
event or circumstance with respect to the Company or the Acquiror, respectively.
5.02 Standard. No representation or warranty of the Company or the
Acquiror contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect,
and no party hereto shall be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact, event or circumstance
unless such fact, event or circumstance, (a) is not Previously Disclosed and (b)
individually or taken together with all other facts, events or circumstances
that should have been Previously Disclosed with respect to any one or more
representations or warranties contained in Section 5.03 (other than Section
5.03(h)) or 5.04, has had or is reasonably likely to have a Material Adverse
Effect with respect to the Company or the Acquiror, respectively.
5.03 Representations and Warranties of the Company. Except as
Previously Disclosed, the Company represents and warrants to the Acquiror, RBC
Centura and Acquiror Sub as set forth in its Disclosure Schedules and as
follows:
(a) Organization, Standing and Authority. The Company is duly
organized, validly existing and in good standing as a corporation under the laws
of Georgia, and is duly qualified to do business and is in good standing in all
the jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) Company Stock. As of the date hereof, the authorized capital stock
of the Company consists solely of 20,000,000 shares of Company Common Stock, of
which not more than 5,712,135 shares are outstanding as of March 25, 2002, and
5,000,000 shares of Company Preferred Stock, no shares of which are outstanding.
The outstanding shares of Company Stock have been duly authorized and are
validly issued, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights). Except as
Previously Disclosed, there are no shares of Company Stock reserved for
issuance, the Company does not have any Rights issued or outstanding with
respect to Company Stock, and the Company does not have any commitment to
authorize, issue or sell any Company Stock or Rights, except pursuant to this
Agreement. The Company has Previously Disclosed a list of each Compensation Plan
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under which any shares of capital stock of the Company or any Rights with
respect thereto have been or may be awarded or issued ("Company Stock Plans").
As of March 25, 2002, the Company has outstanding Company Stock Options
representing the right to acquire no more than 419,820 shares of Company Common
Stock and no phantom stock units or other stock appreciation rights. Except as
described in the immediately preceding sentence, the Company has no Company
Common Stock authorized for issuance pursuant to any Company Stock Plans. The
Company has no shares or units outstanding under the Company's Performance Stock
Plan and will not be required to grant any shares or units or make any payments
under such plan, either based on performance prior to the date hereof or as a
result of the consummation of the transactions contemplated herein. The Company
does not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the shareholders of
the Company on any matter.
(c) Subsidiaries. (1)(A) The Company has Previously Disclosed a list of
all its Subsidiaries together with the jurisdiction of organization of each such
Subsidiary, (B) the Company owns, directly or indirectly, all the outstanding
equity securities of each of its Subsidiaries, (C) no equity securities of any
of its Subsidiaries are or may become required to be issued (other than to the
Company or its Subsidiaries), (D) there are no contracts, commitments,
understandings or arrangements by which any of such Subsidiaries is or may be
bound to sell or otherwise transfer any equity securities of any such
Subsidiaries (other than to the Company or its Subsidiaries), (E) there are no
contracts, commitments, understandings, or arrangements relating to its rights
to vote or to dispose of such securities (other than to the Company or its
Subsidiaries), and (F) all the equity securities of each such Subsidiary held by
the Company or its Subsidiaries are fully paid and nonassessable and are owned
by the Company or its Subsidiaries free and clear of any Liens.
(2) The Company has Previously Disclosed, as of the date
hereof, a list of all equity securities it or one of its Subsidiaries
holds involving, in the aggregate, beneficial ownership or control by
the Company or any such Subsidiary of 5% or more of any class of the
issuer's voting securities or 25% or more of any class of the issuer's
securities, including a description of any such issuer and the
percentage of the issuer's voting and/or non-voting securities and, as
of the Effective Time, no additional persons would need to be included
on such a list. The Company has Previously Disclosed a list, as of the
date hereof, of all partnerships, limited liability companies, joint
ventures or similar entities, in which it owns or controls an equity,
partnership or membership interest, directly or indirectly, and the
nature and amount of each such interest, and as of the Effective Time,
no additional persons would need to be included on such a list.
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(3) Each of the Company's Subsidiaries has been duly organized
and is validly existing and in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business
and in good standing in all the jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires
it to be so qualified.
(d) Corporate Power. The Company and each of its Subsidiaries has the
requisite power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
(e) Corporate Authority and Action. (1) The Company has taken all
corporate action necessary in order (A) to authorize the execution and delivery
of, and performance of its obligations under, this Agreement and (B) subject
only to receipt of the approval of the plan of merger contained in this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock, to consummate the Merger. This Agreement is a valid and legally
binding obligation of the Company, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
(2) The Company has taken all action required to be taken by
it in order to exempt this Agreement, the Voting Agreement and the
transactions contemplated hereby from, and this Agreement, the Voting
Agreement and the transactions contemplated hereby each is exempt from,
the requirements of (A) any applicable "moratorium," "control share,"
"fair price," or other antitakeover laws and regulation of any state
(collectively, "Takeover Laws"), including Sections 14-2-1110 to 1113
and Sections 14-2-1131 to 1133 of the GBCC.
(3) The Company has received the opinion of Trident
Securities, a division of McDonald Investments, Inc., dated the date of
this Agreement, to the effect that, as of the date of this Agreement,
the Consideration to be received in the Merger by the shareholders of
the Company is fair to the shareholders of the Company from a financial
point of view.
(f) Regulatory Filings; No Defaults. (1) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any third
party are required to be made or obtained by the Company or any of its
Subsidiaries in connection with the execution, delivery or performance by the
Company of this Agreement, or to consummate the Merger or the other transactions
contemplated hereby, except for (A) the filing with the SEC of the Proxy
Statement in definitive form, (B) the filing of applications and notices, as
applicable, with the Federal Reserve System, the OTS, the NCCOB and the GDBF
with respect to the Merger, (C) the filing of a notification, if required, and
expiration of the related waiting period under the HSR Act, (D) the filing of
articles of merger with the Secretary of State of the State of Georgia pursuant
to the GBCC, and (E) the filings of applications and notices, as applicable,
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required to be made pursuant to the Bank Act (Canada). As of the date hereof,
the Company is not aware of any reason why the approvals of all Governmental
Authorities necessary to permit consummation of the transactions contemplated by
this Agreement will not be received without the imposition of a condition or
requirement described in Section 7.01(b).
(2) Subject to receipt of the regulatory approvals, and
expiration of the waiting periods, referred to in the preceding
paragraph and the making of required filings under federal and state
securities laws, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
do not and will not (A) constitute a breach or violation of, or a
default under, or give rise to any Lien, any acceleration of remedies
or any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or Contract of
the Company or of any of its Subsidiaries or to which the Company or
any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, the Company
Articles or the Company By-laws, or (C) require any consent or approval
under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or Contract.
(g) SEC Documents; Financial Statements. The Company's Annual Reports
on Form 10-K for the fiscal years ended March 31, 1999, 2000 and 2001, and all
other reports, registration statements, definitive proxy statements or
information statements filed or to be filed by the Company or any of its
Subsidiaries subsequent to March 31, 2001 under the Securities Act, or under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed or to
be filed (collectively, the "Company's SEC Documents") with the SEC, as of the
date filed, (A) complied or will comply in all material respects as to form with
the applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not (or if amended or superseded by a filing prior to
the date of this Agreement, then did not as of the date of such filing) 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 to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and each of the balance sheets contained in or incorporated by reference into
any such SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of the Company and its
Subsidiaries as of its date, and each of the statements of income and changes in
shareholders' equity and cash flows or equivalent statements in such SEC
Documents (including any related notes and schedules thereto) fairly presents,
or will fairly present, the results of operations, changes in shareholders'
equity and changes in cash flows, as the case may be, of the Company and its
Subsidiaries for the periods to which they relate, in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements.
-19-
(h) Absence of Undisclosed Liabilities and Changes. (1) Except as
disclosed in the Company's SEC Documents filed prior to the date hereof, none of
the Company or its Subsidiaries has any obligation or liability (contingent or
otherwise), that, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect with respect to the Company and, since March
31, 2001, on a consolidated basis the Company and its Subsidiaries have not
incurred any liability other than in the ordinary course of business.
(2) Since March 31, 2001, except for execution of this
Agreement and performance of its obligations hereunder, (A) the Company
and its Subsidiaries have conducted their respective businesses in the
ordinary and usual course consistent with past practice and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, events and circumstances (described in
any paragraph of Section 5.03 or otherwise), has had or is reasonably
likely to have a Material Adverse Effect with respect to the Company.
(i) Litigation. Except as disclosed in the Company's SEC Documents
filed before the date hereof, no litigation, claim or other proceeding before
any court, arbitrator or Governmental Authority is pending against the Company
or any of its Subsidiaries and, to the Company's knowledge, no such litigation,
claim or other proceeding has been threatened.
(j) Compliance with Laws. (1) The Company and each of its Subsidiaries
and, to the knowledge of the Company, their respective officers and employees:
(A) conducts its business in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or
to the employees conducting such businesses, including applicable fair
lending laws and other laws relating to discriminatory business
practices and the USA PATRIOT Act of 2001;
(B) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities required in order to permit them to
own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
the Company's knowledge, no suspension or cancellation of any of them
is threatened;
(C) has received, since December 31, 1997, no notification or
communication from any Governmental Authority (i) asserting that the
Company or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances that such Governmental Authority
enforces or (ii) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to the Company's knowledge, do
grounds for any of the foregoing exist), or (iii) restricting or
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disqualifying their activities (except for restrictions generally
imposed by rule, regulation or administrative policy on banking
organizations generally);
(D) is not aware of any pending or threatened investigation,
review or disciplinary proceedings by any Governmental Authority
against the Company, any of its Subsidiaries or any officer, director
or employee thereof;
(E) is not subject to any order or decree issued by, or a
party to any agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or subject to any
order or directive by, or a recipient of any supervisory letter from,
and has not adopted any board resolutions at the request of any
Governmental Authority or been advised by any Governmental Authority
that it is considering issuing or requesting any such agreement or
other action; and
(F) since December 31, 1997, has timely filed all reports,
registrations and statements, together with any amendments required to
be made with respect thereto, that were required to be filed under any
applicable law, regulation or rule, with any applicable Governmental
Authority (collectively, the "Company Reports"). As of their respective
dates, the Company Reports complied with the applicable statutes,
rules, regulations and orders enforced or promulgated by the regulatory
authority with which they were filed.
(2) None of the Company or its Subsidiaries has engaged in any
of the practices listed in Office of the Comptroller of the Currency Advisory
Letter AL 2000-7 as "indications that an institution may be engaging in abusive
lending practices" or as practices that "may suggest the potential for fair
lending violations" or has originated, owned or serviced or currently owns or
services any Loan subject to the requirements of Section 226.32 of title 12 of
the Code of Federal Regulations as will be in effect on October 1, 2002.
(k) Material Contracts; Defaults. The Company has Previously Disclosed
a complete and accurate list of all material Contracts (and in the case of
material Contracts constituting Loans by the Company or any of its Subsidiaries,
the total amounts committed and outstanding under such Loans as of the date
hereof) to which the Company or any of its Subsidiaries is a party, including
the following:
(1) any Contract not constituting a Loan that (A) is not
terminable at will both without cost or other liability to the Company
or any of its Subsidiaries and upon notice of thirty (30) days or less
and (B) provides for fees or other payments in excess of $50,000 per
annum or in excess of $100,000 for the remaining term of the Contract;
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(2) any Loan by the Company or any of its Subsidiaries
involving a Subsidiary of the Company engaged in real estate
development;
(3) to the extent not covered under Clause (2) of this Section
5.03(k), any Loan by the Company or any of its Subsidiaries pursuant to
which total amounts committed or outstanding under such Loan exceed
$2,000,000;
(4) any Contract with a term beyond the Effective Time under
which the Company or any of its Subsidiaries created, incurred,
assumed, or guaranteed (or may create, incur, assume, or guarantee)
indebtedness for borrowed money (including capitalized lease
obligations);
(5) any Contract to which the Company or any of its
Subsidiaries is a party, on the one hand, and under which any
affiliate, officer, director, employee or equity holder or other
Related Person of the Company or any of its Subsidiaries, on the other
hand, is a party or beneficiary;
(6) any Contract with respect to the employment of, or payment
to, any present or former directors, officers, employees or
consultants;
(7) any Contract involving the purchase or sale of assets with
a book value greater than $25,000 entered into since December 31, 1997;
and
(8) any Contract involving a capital expenditure in excess of
$50,000 in a twelve (12) month period or $125,000 in the aggregate.
Neither the Company nor any of its Subsidiaries nor, to the Company's knowledge,
any other party thereto is in default under any such Contract and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default. The Contracts referred to in Section 5.03(k)(3)
above are on arm's-length terms or terms more favorable to the Company and its
Subsidiaries.
(l) Activities. Since January 1, 2001, neither the Company nor any of
its Subsidiaries has engaged in real estate development activities (other than
to complete real estate development projects existing as of such date) or
mezzanine lending activities (other than to service mezzanine loans existing as
of such date), and since such date, neither the Company nor any of its
Subsidiaries has acquired more than 5% of any class of equity securities of any
Person engaged in either of such activities.
(m) Non-Competition/Non-Solicitation. Neither the Company nor any of
its Subsidiaries is a party to or bound by any non-competition or
non-solicitation agreement or any other agreement or obligation (1) which
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limits, purports to limit, or would limit in any respect the manner in which, or
the localities in which, any business of the Company or its affiliates is or
could be conducted or the types of business that the Company or its affiliates
conducts or may conduct, (2) which would reasonably be understood to limit or
purport to limit in any respect the manner in which, or the localities in which,
any business of the Acquiror or its affiliates is or could be conducted or the
types of business that the Acquiror or its affiliates conducts or may conduct or
(3) which limits, purports to limit or would limit in any way the ability of the
Company and its Subsidiaries to solicit prospective employees or would so limit
or purport to limit the ability of Acquiror or its affiliates to do so.
(n) Properties. Except as disclosed in the financial statements filed
in its SEC Documents on or before the date hereof, the Company and its
Subsidiaries have good and marketable title, free and clear of all Liens (other
than Liens for current taxes not yet delinquent, mechanics liens, materialmen
liens, or other inchoate liens) to the properties and assets, tangible or
intangible, reflected in such financial statements as being owned by the Company
and its Subsidiaries as of the dates thereof. All buildings and all fixtures,
equipment, and other property and assets which are material to its business and
are held under leases or subleases by any of the Company and its Subsidiaries
are held under valid leases or subleases enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and to general equity principles).
(o) Employee Benefit Plans. (1) The Company has Previously Disclosed a
complete list of all bonus, vacation, deferred compensation, commission-based,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock appreciation and stock
option plans, all employment or severance contracts, all medical, dental,
disability, severance, health and life plans, all other employee benefit and
fringe benefit plans, contracts or arrangements and any "change of control" or
similar provisions in any plan, contract or arrangement maintained or
contributed to by the Company or any of its Subsidiaries for the benefit of
current or former officers, employees or directors or the beneficiaries or
dependents of any of the foregoing (collectively, the "Compensation Plans").
(2) With respect to each Compensation Plan, if applicable, the
Company has provided to the Acquiror, true and complete copies of the
existing: (A) Compensation Plan documents and amendments thereto; (B)
trust instruments and insurance contracts; and (C) two most recent
Forms 5500 filed with the IRS.
(3) Each of the Compensation Plans has been administered and
operated in accordance with the terms thereof and with applicable law,
including ERISA, the Code and the Securities Act. Each of the
Compensation Plans which is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified under Section 401(a) of the Code has received
a favorable determination letter from the IRS, and the Company is not
aware of any circumstances that would likely result in the revocation
or denial of any such favorable determination letter. None of the
Company, any of its Subsidiaries or an Indemnified Party has engaged in
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any transaction with respect to any Compensation Plan that has
subjected, or (assuming the taxable period with respect to the
transaction expired as of the date hereof) could subject the Company or
any of its Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502 of ERISA in an amount which would be
material. There is no pending or, to the Company's knowledge,
threatened litigation or governmental audit, examination or
investigation relating to the Company's Compensation Plans. There are
no outstanding Loans made to the Company's employee stock ownership
plan.
(4) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its
Subsidiaries with respect to any "single-employer plan" (within the
meaning of Section 4001 (a)(15) of ERISA) or Multiemployer Plan
currently or formerly maintained or contributed to by any of them, or
the single-employer plan or Multiemployer Plan of any entity (an "ERISA
Affiliate") which is considered one employer with the Company under
Section 4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an
"ERISA Affiliate Plan"). 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 or extended, other than pursuant to
PBGC Reg. Section 4043.66, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof. The PBGC has not instituted proceedings to
terminate any Pension Plan or ERISA Affiliate Plan and, to the
Company's knowledge, no condition exists that presents a material risk
that such proceedings will be instituted. The Company and its
Subsidiaries have not incurred and do not expect to incur any
withdrawal liability with respect to a Multiemployer Plan under
Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate).
(5) All contributions, premiums and payments required to have
been made under the terms of any of the Compensation Plans or
applicable law have been timely made or reflected in the Company's SEC
Documents. Neither any of the Pension Plans nor ERISA Affiliate Plans
has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA. None of
the Company, any of its Subsidiaries or any ERISA Affiliate has
provided, or is required to provide, security to any Pension Plan or
any ERISA Affiliate Plan pursuant to Section 401(a)(29) or Section
412(n) of the Code.
(6) Under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the
plan's most recent actuarial valuation), did not exceed the then
current value of the assets of such plan. Under each of the Pension
Plans, there has been no adverse change in the financial condition of
any Pension Plan (with respect to either assets or benefits) since the
last day of the most recent plan year.
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(7) There is no material pending or, to the knowledge of the
Company threatened, litigation relating to the Compensation Plans.
Neither the Company nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Compensation Plan, except as
Previously Disclosed. The Company or the Subsidiaries may amend or
terminate any such plan providing retiree health and life benefits at
any time without incurring any liability thereunder. There has been no
communication to employees, former employees or their spouses,
beneficiaries or dependents by the Company or any of its Subsidiaries
that promised or guaranteed such employees retiree health or life
insurance or other retiree death benefits on a permanent basis or
promised or guaranteed that any such benefits could not be modified,
eliminated or terminated.
(8) Since March 31, 2001, there has been no amendment to,
announcement by the Company or any of its Subsidiaries relating to, or
change in employee participation or coverage under, any Compensation
Plan which would increase the expense of maintaining such plan above
the level of the expense incurred therefor for the most recent fiscal
year (other than as a result of normal increase and decrease in the
number and compensation of the plan participants through attrition and
hiring in the ordinary course of business of the Company). Neither the
execution of this Agreement, shareholder approval of this Agreement nor
the consummation of the transactions contemplated hereby will (v)
entitle any employees of the Company or any of its Subsidiaries to
severance pay or any increase in severance pay upon any termination of
employment after the date hereof, (w) accelerate the time of payment or
vesting or trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of
the Compensation Plans, (x) limit or restrict the right of the Company
to merge, amend or terminate any of the Compensation Plans (except as
provided in Sections 401(k)(10) and 411(d)(6) of the Code and Section
204(g) of ERISA), (y) cause the Company or any of its Subsidiaries to
record additional compensation expense on its income statement with
respect to any outstanding stock option or other equity-based award or
(z) result in payments under any of the Compensation Plans which would
not be deductible under Section 162(m) or Section 280G of the Code.
(9) The Company has furnished the Acquiror a complete list
stating the current base salary, 2001 earned incentive compensation and
2002 target incentive compensation for all current officers, employees
and directors of the Company or any of its Subsidiaries.
(p) Labor Matters. Each of the Company and its Subsidiaries is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including the
Immigration Reform and Control Act, any such laws respecting employment
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discrimination, disability rights or benefits, equal opportunity, affirmative
action, workers' compensation, employee benefits, severance payments, labor
relations, employee leave issues, wage and hour standards, occupational safety
and health requirements and unemployment insurance and related matters. Neither
the Company nor any of its Subsidiaries is a party to or is bound by any
collective bargaining Contract or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of a
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel the Company or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any strike or
other labor dispute involving it or any of its Subsidiaries pending or, to the
Company's knowledge, threatened, nor is the Company aware of any activity
involving it or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational activity.
(q) Environmental Matters. (1) The Company and each of its Subsidiaries
has complied at all times with all applicable Environmental Laws; (2) no
property (including soils, groundwater, buildings and any other structures)
currently or formerly owned or operated by the Company or any of its
Subsidiaries or in which the Company or any of its Subsidiaries has a Lien, has
been contaminated with, or has had any release of, any Hazardous Substance; (3)
neither the Company nor any of its Subsidiaries could be deemed the owner or
operator under any Environmental Law of any property in connection with any
Loans or in which it has currently or formerly held a Lien or security interest;
(4) neither the Company nor any of its Subsidiaries is subject to liability for
any Hazardous Substance disposal or contamination on any other third-party
property; (5) neither the Company nor any of its Subsidiaries has received any
notice, demand letter, claim or request for information relating to any
violation of, or liability under, any Environmental Law; (6) neither the Company
nor any of its Subsidiaries is subject to any order, decree, injunction or other
agreement with any Governmental Authority or any third party relating to any
Environmental Law; (7) there are no other circumstances or conditions involving
the Company or any of its Subsidiaries, any currently or formerly owned or
operated property, or any Lien held by the Company or any of its Subsidiaries
(including the presence of asbestos, underground storage tanks, contamination,
polychlorinated biphenyls or gas station sites) that could be expected to result
in any claims, liability or investigations or result in any restrictions on the
ownership, use, or transfer of any property pursuant to any Environmental Law;
and (8) the Company has made available to the Acquiror copies of all
environmental reports, studies, sampling data, correspondence, filings and other
environmental information in its possession or reasonably available to it
relating to the Company, any of its Subsidiaries, any currently or formerly
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owned or operated property or any property in which the Company or any of its
Subsidiaries has held a Lien and could be deemed an owner or operator of such
property pursuant to any Environmental Law.
(r) Tax Matters. (1) All Tax Returns that are required to be filed with
respect to the Company or any of its Subsidiaries, have been or will be timely
filed, or requests for extensions have been timely filed and have not expired;
(2) all Tax Returns filed by the Company and its Subsidiaries are complete and
accurate; (3) all Taxes shown to be due and payable (without regard to whether
such Taxes have been assessed) on such Tax Returns (or, with respect to Tax
Returns for which an extension has been timely filed, will be required to be
shown as due and payable when such Tax Returns are filed) have been paid or
adequate reserves have been established for the payment of such Taxes; (4) all
state and federal income Tax Returns referred to in clause (1) have been
examined by the Internal Revenue Service or the appropriate state taxing
authority or the period for assessment of the Taxes for which such return has
been filed has expired; (5) no audit or examination or refund litigation with
respect to any such Tax Return is pending or, to the Company's knowledge, has
been threatened; (6) all deficiencies asserted or assessments made as a result
of any examination of a Tax Return of the Company or any of its Subsidiaries,
have been paid in full or are being contested in good faith; (7) no waivers of
statute of limitations have been given by or requested with respect to any Taxes
of the Company or its Subsidiaries for any currently open taxable period; (8)
the Company and each of its Subsidiaries has in its respective files all Tax
Returns that it is required to retain in respect of information reporting
requirements imposed by the Code or any similar foreign, state or local law; (9)
the Company and its Subsidiaries have never been a member of an affiliated,
combined, consolidated or unitary Tax group for purposes of filing any Tax
Return (other than a consolidated group of which the Company was the common
parent); (10) no closing agreements, private letter rulings, technical advice
memoranda or similar agreement or rulings have been entered into or issued by
any taxing authority with respect to the Company or any of its Subsidiaries;
(11) no tax is required to be withheld pursuant to Section 1445 of the Code as a
result of the transfer contemplated by this Agreement; (12) the Company and its
Subsidiaries are not bound by any tax indemnity, tax sharing or tax allocation
agreement or arrangement; and (13) all Taxes that the Company or any Subsidiary
is or was required by law to withhold or collect have been duly withheld or
collected and, to the extent required by applicable law, have been paid to the
proper Governmental Authority or other person.
(s) Risk Management; Allowance for Loan Losses. (1) All swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for the Company's own account, or
for the account of one or more of the Company's Subsidiaries or their customers
(each a "Risk Management Contract"), were entered into (A) in accordance with
prudent business practices and all applicable laws, rules, regulations and
regulatory policies and (B) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or one of its Subsidiaries, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
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bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and are in full force and effect. The Company
has Previously Disclosed all Risk Management Contracts that have been entered
into as of the date hereof. Neither the Company nor its Subsidiaries, nor to the
Company's knowledge any other party thereto, is in breach of any of its
obligations under any Risk Management Contract.
(2) The allowances for loan losses reflected on the
consolidated balance sheets included in the Company's SEC Documents
are, in the reasonable judgment of the Company's management, adequate
as of their respective dates under the requirements of generally
accepted accounting principles and applicable regulatory requirements
and guidelines.
(t) Books and Records. The books and records of the Company and its
Subsidiaries have been properly and accurately maintained, and there are no
inaccuracies or discrepancies contained or reflected therein.
(u) Accounting Controls. Each of the Company and its Subsidiaries has
devised and maintained systems of internal accounting controls sufficient to
provide reasonable assurances, in the judgment of the Board of Directors of the
Company, that (a) all material transactions are executed in accordance with
management's general or specific authorization; (b) all material transactions
are recorded as necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principals consistently applied
with respect to any criteria applicable to such statements, (c) access to the
material property and assets of the Company and its Subsidiaries is permitted
only in accordance with management's general or specific authorization; and (d)
the recorded accountability for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any
differences.
(v) Insurance. The Company has made available to the Acquiror all of
the insurance policies, binders, or bonds maintained by or for the benefit of
the Company or its Subsidiaries ("Insurance Policies") or their representatives.
The Company and its Subsidiaries are insured with reputable insurers against
such risks and in such amounts as the management of the Company reasonably has
determined to be prudent in accordance with industry practices. All of the
Insurance Policies are in full force and effect; the Company and its
Subsidiaries are not in default thereunder; and all claims thereunder have been
filed in due and timely fashion.
(w) No Brokers. No action has been taken by the Company that would give
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions contemplated
by this Agreement, except that the Company has employed Trident Securities, a
division of McDonald Investments, Inc., in connection with this transaction and
has furnished the Acquiror a copy of the engagement letter entered into in
connection therewith.
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(x) Intellectual Property. The Company and its Subsidiaries own or have
the right to use all material Intellectual Property Rights necessary or required
for the operation of their business as currently conducted (collectively,
"Company IP Rights"), and have the right to use, license, sublicense or assign
the same without material liability to, or any requirement of consent from, any
other person or party. The Company's use of the Company IP Rights does not
infringe any Intellectual Property Rights of any person; there is no pending or,
to the knowledge of the Company, threatened litigation, adversarial proceeding,
administrative action or other challenge or claim relating to any Company IP
Rights; to the knowledge of the Company, there is currently no infringement by
any person of any Company IP Rights; and the Company IP Rights owned, used or
possessed by the Company and its Subsidiaries are sufficient and adequate to
conduct the business of the Company and its Subsidiaries to the full extent as
such business is currently conducted.
(y) Disclosure. The information Previously Disclosed or otherwise
provided to the Acquiror in connection with this Agreement, when taken together
with the representations and warranties contained herein, does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained therein, in the light of the
circumstances in which they are being made, not misleading. The copies of all
documents furnished to the Acquiror hereunder are true and complete.
5.04 Representations and Warranties of the Acquiror. Except as
Previously Disclosed in a paragraph of its Disclosure Schedule corresponding to
the relevant paragraph below, the Acquiror represents and warrants to the
Company, as set forth in its Disclosure Schedule and as follows:
(a) Organization, Standing and Authority. The Acquiror is duly
organized, validly existing and in good standing under the laws of Canada. RBC
Centura is duly organized, validly existing and in good standing under the laws
of North Carolina. Following its formation, Acquiror Sub will be duly organized,
validly existing and in good standing under the laws of Georgia. The Acquiror
and RBC Centura are, and Acquiror Sub will be, following its formation, duly
qualified to do business and in good standing in the jurisdictions where the
ownership or leasing of property or assets or the conduct of business requires
such qualification.
(b) Corporate Power. Each of Acquiror and RBC Centura and each of their
Significant Subsidiaries has, and Acquiror Sub will have, as of the Closing
Date, the requisite power and authority to carry on its business as it is now
being or, in the case of Acquiror Sub, will be, conducted and to own all its
properties and assets; the Acquiror and RBC Centura each has, and Acquiror Sub
will have, as of the date it executes a supplement to this Agreement, the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and, in the case of Acquiror Sub, to adopt the plan of
merger contained in this Agreement and, in accordance therewith, to consummate
the transactions contemplated hereby.
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(c) Corporate Authority and Action. Each of the Acquiror and RBC
Centura has, and Acquiror Sub will have, as of the date Acquiror Sub executes a
supplement to this Agreement, taken all corporate action necessary in order to
authorize the execution and delivery of, and performance of its obligations
under, this Agreement and to consummate the Merger. This Agreement is a valid
and legally binding agreement of the Acquiror and RBC Centura, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles). Upon the execution of a supplement to this agreement by Acquiror
Sub, this Agreement will be the valid and binding agreement of Acquiror Sub,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, and similar laws
of general applicability relating to or affecting creditors' rights or by
general equity principles).
(d) Regulatory Approvals; No Defaults. (1) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any third
party are required to be made or obtained by the Acquiror or any of its
Subsidiaries in connection with the execution, delivery or performance by the
Acquiror of this Agreement or to consummate the Merger or the other transactions
contemplated hereby except for (A) the filing of applications and notices, as
applicable, with the Federal Reserve System, the OTS, the NCCOB and the GDBF
with respect to the Merger; (B) the filing of a notification, if required, and
expiration of the related waiting period under the HSR Act, (C) the filing of
articles of merger with the Secretary of State of the State of Georgia pursuant
to the GBCC; and (D) approval by the Minister of Finance and the Office of the
Superintendent of Financial Institutions under the Bank Act (Canada). As of the
date hereof, the Acquiror is not aware of any reason why the approvals of all
Governmental Authorities necessary to permit consummation of the transactions
contemplated hereby will not be received without the imposition of a condition
or requirement described in Section 7.01(b).
(2) Subject to receipt of the regulatory approvals, and
expiration of the waiting periods, referred to in the preceding
paragraph and the making of all required filings under federal and
state securities laws, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
do not and will not (A) constitute a breach or violation of, or a
default under, or give rise to any Lien, any acceleration of remedies
-30-
or any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or Contract of
the Acquiror or of any of its Subsidiaries or to which the Acquiror or
any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, the articles
of incorporation or by-laws (or similar governing documents) of the
Acquiror or any of its Subsidiaries, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(e) Funds. At the Effective Time, Acquiror will have the funds
necessary to consummate the Merger and pay the Consideration in accordance with
the terms of this Agreement.
(f) Interim Operations of Acquiror Sub. Acquiror Sub will be formed
solely for the purpose of engaging in the transactions contemplated hereby and,
as of the Closing Date, will have engaged in no business other than in
connection with the transactions contemplated by this Agreement. Acquiror Sub
will be a direct or indirect wholly owned subsidiary of Acquiror.
(g) No Brokers. No action has been taken by the Acquiror, RBC Centura
or Acquiror Sub that would give rise to any valid claim against any party hereto
for a brokerage commission, finder's fee or other, like payment with respect to
the transactions contemplated by this Agreement, except that the Acquiror has
employed RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. in connection with this transaction.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. (a) Subject to the terms and conditions
of this Agreement, each of the Company, the Acquiror, RBC Centura and Acquiror
Sub agrees to use its reasonable best efforts in good faith to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable laws, so as to permit
consummation of the Merger as promptly as practicable and otherwise to enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the other party hereto to that end.
(b) Without limiting the generality of Section 6.01(a), the Company
agrees to use its reasonable best efforts to obtain the consent or approval of
all persons party to a Contract with the Company or any of its Subsidiaries, to
the extent such consent or approval is required in order to consummate the
Merger or for the Surviving Corporation to receive the benefits of such
Contract.
6.02 Shareholder Approvals. The Company agrees to take, in accordance
with applicable law, applicable stock exchange rules, the Company Articles and
the Company By-Laws, all action necessary to convene an appropriate meeting of
shareholders of the Company to consider and vote upon the approval of this
Agreement and any other matters required to be approved by the Company's
shareholders for consummation of the Merger and the transactions contemplated
hereby (including any adjournment or postponement, the "Company Meeting"), and
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to solicit shareholder approval, as promptly as practicable after the date
hereof. The Company Board has adopted a resolution contemplated by GBCC ss.
14-2-1103, recommending that the shareholders approve this Agreement (and will
keep such resolution in effect) and take any other action required to permit
consummation of the transactions contemplated hereby. The obligation of the
Company to hold the Company Meeting shall not be affected by any Acquisition
Proposal or other event or circumstance.
6.03 Proxy Statement. (a) The Acquiror and the Company will cooperate
in the preparation of a proxy statement and other proxy solicitation materials
of the Company (the "Proxy Statement"). The Company agrees to file the Proxy
Statement in preliminary form with the SEC as promptly as reasonably
practicable. The Company will advise Acquiror promptly of the time when the
Proxy Statement and any amendment or supplement to the Proxy Statement has been
filed, and of any request by the SEC for amendment of the Proxy Statement or
comments thereon and responses thereto or requests by the SEC for additional
information. The Company agrees to use its reasonable best efforts, after
consultation with the Acquiror, to respond promptly to all such comments of and
requests by the SEC.
(b) Each of the Company and the Acquiror agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in the Proxy Statement and any amendment
or supplement thereto will, at the date of mailing to shareholders and at the
time of the Company Meeting, contain any untrue statement which, at the time and
in the light of the circumstances under which such statement is made, is false
or misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any earlier statement in the Proxy Statement or any
amendment or supplement thereto. Each of the Company and the Acquiror further
agrees that if it shall become aware prior to the Effective Time of any
information furnished by it that would cause any of the statements in the Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) The Company will use its reasonable best efforts to cause the
definitive Proxy Statement and all required amendments and supplements thereto
to be mailed to its shareholders as promptly as practicable after the date
hereof.
6.04 Press Releases. The initial press release concerning the Merger
and the other transactions contemplated by this Agreement shall be a joint press
release in such form agreed to in advance by the parties, and thereafter each of
the Company and the Acquiror agrees that it will not, without the prior approval
of the other party, issue any press release or written statement for general
circulation relating to the transactions contemplated hereby (except for any
release or statement that, in the written opinion of outside counsel to the
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Company or the Acquiror, as the case may be, is required by law or regulation
and as to which the Company or the Acquiror, as the case may be, has used its
best efforts to discuss with the other in advance, provided that such release or
statement has not been caused by, or is not the result of, a previous disclosure
by or at the direction of the Company or the Acquiror, as the case may be, or
any of its representatives that was not permitted by this Agreement).
6.05 Access; Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, the Company shall
afford the Acquiror and its officers, employees, counsel, accountants and other
authorized representatives, such access during normal business hours throughout
the period prior to the Effective Time to the books, records (including credit
files, tax returns and work papers of independent auditors), properties,
personnel and to such other information as it may reasonably request and, during
such period, the Company shall furnish promptly (1) a copy of each material
report, schedule and other document filed by it pursuant to the requirements of
federal or state securities or banking laws, and (2) all other information
concerning its business, properties and personnel as the other may reasonably
request.
(b) Each of the Company and the Acquiror agrees that it will not, and
will cause its representatives not to, use any information obtained pursuant to
this Section 6.05 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the requirements of law,
each party will keep confidential, and will cause its representatives to keep
confidential, all information and documents obtained pursuant to this Section
6.05, and, with respect to the Company, in connection with the transactions
contemplated hereby, unless such information (1) was already known to such
party, (2) becomes available to such party from other sources not known by such
party to be bound by a confidentiality obligation, (3) is disclosed with the
prior written approval of the party to which such information pertains or (4) is
or becomes readily ascertainable from published information or trade sources. In
the event that this Agreement is terminated or the transactions contemplated by
this Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information and
data as to another party hereto to be returned to the party which furnished the
same, or at the other party's request, destroyed.
(c) No investigation by either party of the business and affairs of the
other shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
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6.06 Acquisition Proposals. The Company agrees that it shall not, and
shall cause its Subsidiaries and its and its Subsidiaries' representatives not
to, solicit or encourage inquiries or proposals with respect to, or engage in
any negotiations concerning, or provide any confidential information to, or have
any discussions with, any person relating to, any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving the
Company or any of its Subsidiaries or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the assets
or deposits of, the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement (any of the foregoing, an
"Acquisition Proposal"); provided that nothing contained in this Agreement shall
prevent the Company Board from (i) making any disclosure to its shareholders if,
in the good faith judgment of the Company Board, failure so to disclose would be
inconsistent with its obligations under applicable law; (ii) before the date of
the Company Meeting, providing (or authorizing the provision of) information to,
or engaging in (or authorizing) such discussions or negotiations with, any
person who has made a bona fide written Acquisition Proposal received after the
date hereof which did not result from a breach of this Section 6.06; or (iii)
recommending such an Acquisition Proposal to its shareholders if and only to the
extent that, in the case of actions referred to in clause (ii) or (iii), (x)
such Acquisition Proposal is a Superior Proposal, (y) the Company Board, after
having consulted with and considered the advice of outside counsel to the
Company Board, determines in good faith that providing such information or
engaging in such negotiations or discussions, or making such recommendation is
required in order to discharge the directors' fiduciary duties in accordance
with the GBCC and (z) the Company receives from such person a confidentiality
agreement substantially in the form of the Confidentiality Agreement. For
purposes of this Agreement, a "Superior Proposal" means any Acquisition Proposal
by a third party on terms that the Company Board determines in its good faith
judgment, after receiving the advice of its financial advisors (the substance of
whose advice shall be communicated to the Acquiror), to be materially more
favorable from a financial point of view to its shareholders than the Merger and
the other transactions contemplated hereby, after taking into account the
likelihood of consummation of such transaction on the terms set forth therein,
taking into account all legal, financial (including the financing terms of any
such proposal), regulatory and other aspects of such proposal and any other
relevant factors permitted under applicable law, after giving the Acquiror at
least five business days to respond to such third-party Acquisition Proposal
once the Board has notified the Acquiror that in the absence of any further
action by the Acquiror it would consider such Acquisition Proposal to be a
Superior Proposal, and then taking into account any amendment or modification to
this Agreement proposed by the Acquiror. The Company also agrees immediately to
cease and cause to be terminated any activities, discussions or negotiations
conducted prior to the date of this Agreement with any parties other than the
Acquiror, with respect to any of the foregoing. The Company shall promptly
(within 24 hours) advise the Acquiror following the receipt by it of any
Acquisition Proposal and the material terms thereof (including the identity of
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the person making such Acquisition Proposal), and advise the Acquiror of any
developments (including any change in such terms) with respect to such
Acquisition Proposal promptly upon the occurrence thereof.
Nothing contained in this Section 6.06 or any other provision of this
Agreement will prohibit the Company or the Company Board from notifying any
third party that contacts the Company on an unsolicited basis after the date
hereof concerning an Acquisition Proposal of the Company's obligations under
this Section 6.06.
6.07 Takeover Laws. No party shall knowingly take any action that would
cause the transactions contemplated by this Agreement or the Voting Agreement to
be subject to requirements imposed by any Takeover Law and each of them shall
take all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.08 No Rights Triggered. The Company shall take all reasonable steps
necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated hereby, do not
and will not result in the grant of any rights to any person (a) under the
Company Articles or the Company By-Laws or (b) under any material Contract to
which it or any of its Subsidiaries is a party except, in each case, as
contemplated by this Agreement and the Stock Option Agreement.
6.09 Regulatory Applications. (a) The Acquiror and the Company and
their respective Subsidiaries shall cooperate and use their respective
reasonable best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties and Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement. The Acquiror shall have the right to review in
advance, and to the extent practicable to consult with the Company, subject to
applicable laws relating to the exchange of information, with respect to, all
material written information submitted to any third party or any Governmental
Authority in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, the Acquiror agrees to act reasonably and as
promptly as practicable. Each of the Acquiror and the Company agrees that it
will consult with the other party hereto with respect to the obtaining of all
material consents, registrations, approvals, permits and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
other party apprised of the status of material matters relating to completion of
the transactions contemplated hereby.
(b) Each of the Acquiror and the Company agrees, upon request, to
furnish the other party with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its Subsidiaries
to any third party or Governmental Authority.
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6.10 Indemnification. (a) Following the Effective Time, the Acquiror
shall, or shall cause the Surviving Corporation to, indemnify, defend and hold
harmless the present and former directors and officers of the Company and its
Subsidiaries (each, an "Indemnified Party") against all costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, with respect to which a notice of claim is
provided hereunder within six (6) years of the Effective Date, arising out of
actions or omissions occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement), whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent that the Company is
permitted to indemnify its directors and officers under applicable law, the
Company Articles and the Company By-Laws as in effect on the date hereof (and
the Acquiror shall, or shall cause the Surviving Corporation to, also advance
expenses as incurred to the fullest extent permitted under applicable law
provided the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification); provided that any determination required to be
made with respect to whether such an officer's or director's conduct complies
with the standards set forth under the GBCC, the Company Articles and the
Company By-Laws shall be made by independent counsel reasonably acceptable to
both the Indemnified Party and the Surviving Corporation.
(b) For a period of four years from the Effective Time, the Acquiror
shall use its reasonable best efforts to provide (or cause the Surviving
Corporation to provide) that portion of director's and officer's liability
insurance that serves to reimburse the present and former officers and directors
of the Company or any of its Subsidiaries (determined as of the Effective Time)
with respect to claims against such directors and officers arising from facts or
events which occurred before the Effective Time, which insurance shall contain
at least the same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by the Company; provided,
however, that in no event shall the Acquiror be required to expend more than
twice the current amount spent by the Company (the "Insurance Amount") to
maintain or procure such directors' and officers' insurance coverage; provided,
further, that if the Acquiror is unable to maintain or obtain the insurance
called for by this Section 6.10(b), the Acquiror shall use its reasonable best
efforts to obtain as much comparable insurance as is available for the Insurance
Amount; provided, further, that officers and directors of the Company or any
Subsidiary may be required to make application and provide customary
representations and warranties to the Acquiror's insurance carrier for the
purpose of obtaining such insurance.
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(c) Any Indemnified Party wishing to claim indemnification under
Section 6.10(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify the Acquiror thereof;
provided that the failure so to notify shall not affect the obligations of the
Acquiror under Section 6.10(a) unless and to the extent that the Acquiror is
actually prejudiced as a result of such failure. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (1) the Acquiror or the Surviving Corporation shall have the
right to assume the defense thereof and the Acquiror shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Acquiror or the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties advises
that there are issues that raise conflicts of interest between the Acquiror or
the Surviving Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and the Acquiror or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that the Acquiror shall be obligated pursuant to this paragraph (c) to
pay for only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present such
counsel with a conflict of interest, (2) the Indemnified Parties will cooperate
in the defense of any such matter and (3) the Acquiror shall not be liable for
any settlement effected without its prior written consent, which consent shall
not be unreasonably withheld; and provided, further, that the Acquiror shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and non-appealable, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(d) If the Acquiror or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of the Acquiror shall
assume the obligations set forth in this Section 6.10.
6.11 Notification of Certain Matters.
(a) Each of the Company and the Acquiror shall give prompt notice to
the other of any fact, event or circumstance known to it that (1) is reasonably
likely, individually or taken together with all other facts, events and
circumstances known to it, to result in any Material Adverse Effect with respect
to it or (2) would cause or constitute a material breach of any of its
representations, warranties, covenants or agreements contained herein.
(b) Prior to the Closing Date, the Company and each of its Subsidiaries
shall notify its insurers in writing of all known incidents, events and
circumstances which could give rise to a claim against the Company or its
Subsidiaries, as applicable.
6.12 Employee Benefits.
(a) Following the Effective Time, the Acquiror agrees to permit or
cause the Company or its Subsidiaries to honor all Compensation Plans in
accordance with their terms.
(b) Prior to the Effective Time, the Company will amend the Third
Amended and Restated ▇▇▇▇▇▇ Federal Bank Directors' Retirement Plan (the "Eagle
Retirement Plan") to eliminate the provision requiring an irrevocable
contribution to the Trust (as defined in the Eagle Retirement Plan, the "Eagle
Retirement Plan Trust") upon a Change of Control (as defined in the Eagle
Retirement Plan). In addition, prior to the Effective Time, the Company will
revoke the Eagle Retirement Plan Trust established by the Eagle Retirement Plan.
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(c) Following the Effective Time, the employees of the Company and its
Subsidiaries will be subject to the policies of RBC Centura that are applicable
to similarly situated employees of RBC Centura and its Subsidiaries and will be
provided employee retirement, welfare and other benefits, fringes, and
perquisites that are generally comparable in the aggregate to those provided by
RBC Centura to similarly situated employees of RBC Centura and its Subsidiaries.
(d) Acquiror will cause each employee benefit plan of RBC Centura and
its Subsidiaries in which employees of the Company and its Subsidiaries are
eligible to participate to take into account for purposes of eligibility and
vesting thereunder, but not for purposes of benefit accrual, the prior service
of such employees with the Company and its Subsidiaries as if such service were
with RBC Centura and its Subsidiaries, to the same extent that such service was
credited under a comparable plan of the Company. Employees of the Company and
its Subsidiaries shall not be subject to any waiting periods or pre-existing
condition limitations under the medical, dental and health plans of RBC Centura
and its Subsidiaries in which they are eligible to participate. Employees of the
Company and its Subsidiaries will retain credit for vacation pay which has been
accrued as of the Effective Time and for purposes of determining the entitlement
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of such employees to vacation pay following the Effective Time, the service of
such employees with the Company and its Subsidiaries shall be treated as if such
service was with RBC Centura and its Subsidiaries.
(e) Prior to the Effective Time, the Company shall take all actions
necessary to satisfy the Acquiror's requests with respect to the treatment of
the Eagle Bancshares, Inc. 401(k) Savings and Employee Stock Ownership Plan (the
"ESOP") and the related loan and shall make such amendments to the ESOP as may
be necessary or desirable, as determined by Acquiror, including to effect the
independent voting of Company Stock held in the ESOP, to effect proper
procedures to pay off the related loan, and to terminate the ESOP effective
immediately prior to the Effective Time. Prior to the Effective Time, the
Company will provide to the Acquiror a list of every participant termination and
the amount of each forfeited account since plan year 1997.
(f) The Company shall be responsible for providing or discharging any
and all notifications, benefits and liabilities to employees and Governmental
Authorities required by the Workers Adjustment and Retraining Notification Act
of 1988 (WARN Act) or by any other applicable law relating to plant closings or
employee separations or severance pay that are required to be provided before
the Effective Time as a result of the transactions contemplated by this
Agreement and RBC Centura shall be responsible for any and all such matters
following the Effective Time. The Company shall cooperate in preparing and
distributing any notices that RBC Centura may desire to provide prior to the
Effective Time, in connection with actions by RBC Centura after the Effective
Time would result in a notice requirement under such laws.
6.13 Certain Adjustments. Upon the request of the Acquiror, the Company
shall (a) consistent with generally accepted accounting principles and
regulatory accounting principles, use its best efforts to record any accounting
adjustments required to conform the (x) loan, litigation and other reserves
(including loan classifications and levels of reserves) and (y) real estate and
securities valuation policies and practices of the Company and its Subsidiaries
so as to reflect consistently on a mutually satisfactory basis the policies and
practices of the Acquiror and (b) make reasonable adjustments to the corporate
structure of the Company or its direct or indirect subsidiaries and transfer
assets or liabilities between the Company and its Subsidiaries or between
Subsidiaries; provided, however, that the Company shall not be obligated to
record any such accounting adjustments (1) unless and until the Company shall be
satisfied that the conditions to the obligation of the parties to consummate the
Merger will be satisfied or waived on or before the Closing Date, and (2) in no
event until the day prior to the Closing Date.
6.14 Certain Contracts. Prior to the Effective Time, the Company will
use its reasonable best efforts to cause the Contracts with third parties that
are identified by Acquiror to be terminated or not renewed (effective prior to
or as of the Effective Time) without any penalty or other adverse consequences
to the Company or to be amended in the manner reasonably requested by Acquiror.
6.15 Regulatory Compliance. In consultation with the Acquiror, the
Company will take all reasonable measures to ensure that the Surviving
Corporation's subsidiary depository institutions will perform at a level of at
least "satisfactory" under the CRA and that the Surviving Corporation and its
subsidiary depository institutions should be deemed "well managed" by their
"appropriate Federal banking agency" (as such term is defined in Section 3(q) of
the Federal Deposit Insurance Act).
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6.16 Formation of Acquiror Sub. As soon as practicable following the
date of this Agreement, Acquiror shall cause Acquiror Sub to be duly organized
as a direct or indirect wholly owned Subsidiary of Acquiror and to become a
party to this Agreement by executing and delivering a supplement hereto.
6.17 Eagle Real Estate Advisors. The Acquiror acknowledges the
Company's intention to wind down the operations of its Eagle Real Estate
Advisors subsidiary and that, in this regard, the Company intends to seek
consent from the Acquiror, pursuant to Section 4.01 hereof to enter into one or
more Contracts with officers of Eagle Real Estate Advisors. The Acquiror agrees
to consider any such proposed Contracts but shall not be under any obligation to
approve any such proposed Contracts.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
obligation of each of the Acquiror, RBC Centura, Acquiror Sub and the Company to
consummate the Merger is subject to the fulfillment or written waiver by the
Acquiror and the Company prior to the Effective Time of each of the following
conditions:
(a) Shareholder Approval. This Agreement shall have been duly approved
and adopted and a plan of merger shall have been duly approved by the
affirmative vote of the holders of the requisite number of the outstanding
shares of Company Common Stock entitled to vote thereon in accordance with
applicable law, the Company Articles and the Company By-laws.
(b) Governmental and Regulatory Consents. All approvals and
authorizations of, filings and registrations with, and notifications to, all
Governmental Authorities required for the consummation of the Merger, and for
the prevention of any termination of any material right, privilege, license or
agreement of either the Acquiror or the Company or their respective
Subsidiaries, shall have been obtained or made and shall be in full force and
effect and all waiting periods required by law shall have expired; provided,
however, that none of the preceding shall be deemed obtained or made if it shall
be subject to any condition or restriction the effect of which, together with
any other such conditions or restrictions, would be reasonably expected to have
a Material Adverse Effect on the Surviving Corporation or the Acquiror or its
operations in the U.S. after the Effective Time.
(c) Third Party Consents. All consents or approvals of all persons,
other than Governmental Authorities, required for or in connection with the
execution, delivery and performance of this Agreement and the consummation of
the Merger shall have been obtained and shall be in full force and effect,
unless the failure to obtain any such consent or approval is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Surviving Corporation.
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(d) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Agreement.
7.02 Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Acquiror set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct only as of such date), and the Company shall have received a
certificate, dated the Closing Date, signed on behalf of the Acquiror by a
senior officer of the Acquiror to such effect.
(b) Performance of Obligations of the Acquiror. The Acquiror shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and the Company shall
have received a certificate, dated the Closing Date, signed on behalf of the
Acquiror by a senior officer of the Acquiror to such effect.
7.03 Conditions to Obligation of the Acquiror. The obligations of the
Acquiror, RBC Centura and Acquiror Sub to consummate the Merger are also subject
to the fulfillment or written waiver by the Acquiror prior to the Effective Time
of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct only as of such date) and the Acquiror shall have received a
certificate, dated the Closing Date, signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to such
effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and the Acquiror
shall have received a certificate, dated the Closing Date, signed on behalf of
the Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
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(c) Environmental Assessments. The Company shall have caused ASTM 1527
"Phase I" environmental site assessment reports to be prepared at the Acquiror's
cost and direction for each of the real properties owned by the Company or any
of the Company's Subsidiaries in a form and substance reasonably acceptable to
the Acquiror and, as a result of such assessments, no conditions shall be
revealed or discovered that would be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company.
(d) Stock Award Consents. The Company shall have obtained (1) consents
to the treatment under this Agreement of the Company Stock Awards from each
Award Holder, in each case, in their individual capacities and (2) Company Stock
Resolutions, if applicable, to effect such treatment.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated and the Merger may
be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of the Acquiror and the Company, if the Board of Directors of
each so determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by the Acquiror or
the Company, in each case if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either: (1) a
breach by the other party of any representation or warranty contained herein,
which breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach; or (2) a breach by the
other party of any of the covenants or agreements contained herein, which breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach and which breach, individually or
in the aggregate with other such breaches, would cause the conditions set forth
in Section 7.03(a) or (b), in the case of a breach or breaches by the Company,
or Section 7.02(a) or (b), in the case of a breach or breaches by the Acquiror,
not to be satisfied or would reasonably be expected to prevent, materially delay
or materially impair the ability of the Company or the Acquiror to consummate
the Merger and the other transactions contemplated by this Agreement.
(c) Delay. At any time prior to the Effective Time, by the Acquiror or
the Company, in each case if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event that the Merger is not
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consummated by October 31, 2002, except to the extent that the failure of the
Merger then to be consummated arises out of or results from the action or
inaction of the party seeking to terminate pursuant to this Section 8.01(c).
(d) No Approval. By the Company or the Acquiror, in each case if its
Board of Directors so determines by a vote of a majority of the members of its
entire Board, in the event the approval of any Governmental Authority required
for consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority.
(e) Failure to Recommend, Etc. By the Acquiror, if (i) at any time
prior to the receipt of the approval of the Company's shareholders contemplated
by Section 7.01(a), the Company Board shall not recommend that the shareholders
give such approval, or (ii) the Company Board takes any of the actions described
in clause (ii) or (iii) of the proviso to Section 6.06.
8.02 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (a) as set forth in Sections 8.03 and 9.01
and (b) that termination will not relieve a breaching party from liability for
any willful breach of this Agreement giving rise to such termination.
8.03 Termination Fee. (a) In addition to any other rights that the
Acquiror has under this Agreement and/or otherwise, the Company shall pay to the
Acquiror U.S. $8,500,000 (the "Termination Fee") (it being understood that such
fee is not intended as liquidated damages), if either:
(i) this Agreement is terminated by the Acquiror pursuant to (A)
Section 8.01(b) with respect to a breach of Section 6.01, 6.02 or 6.06 on the
part of the Company, or (at a time when a Tolling Event has occurred) any
knowing, willful or intentional breach on the part of the Company or (B) Section
8.01(e), provided, however, that the Acquiror shall not be in material breach of
any of its covenants or agreements contained in this Agreement such that the
Company shall be entitled to terminate this Agreement pursuant to Section
8.01(b); or
(ii) a Fee Payment Event shall have occurred prior to the occurrence of
a Fee Termination Event; provided that the Company has not previously paid a
Termination Fee to the Acquiror pursuant to clause (i) of this Section 8.03(a).
(b) Each of the following shall be a "Fee Termination Event": (i) the
Effective Time; (ii) termination of this Agreement in accordance with its terms,
other than a Listed Termination, if such termination occurs prior to the
occurrence of a Tolling Event; or (iii) the passage of eighteen (18) months
after termination of this Agreement if such termination follows the occurrence
of a Tolling Event or is a Listed Termination. The term "Listed Termination"
shall mean a termination by the Acquiror pursuant to Section 8.01(b) (unless the
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breach giving rise to such right of termination is wholly not volitional on the
part of Company, its Affiliates or representatives).
(c) The term "Tolling Event" shall mean any of the following events or
transactions occurring on or after the date hereof:
(i) The Company or any of its Significant Subsidiaries, without having
received the Acquiror's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction with any person other than the
Acquiror or any of its Subsidiaries (each an "Acquiror Subsidiary"), or the
Company Board shall have recommended that the shareholders of the Company
approve or accept any Acquisition Transaction with any person other than the
Acquiror or an Acquiror Subsidiary.
(ii) Any person other than the Acquiror or any Acquiror Subsidiary
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of 15% or more of the outstanding shares of Company Common Stock (the
term "beneficial ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);
(iii) The shareholders of the Company shall have voted and failed to
approve this Agreement at a meeting which has been held for that purpose or any
adjournment or postponement thereof, or such meeting shall not have been held or
shall have been canceled prior to termination of this Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have been
canceled, prior to such termination), it shall have been publicly announced that
any person (other than the Acquiror or any of its Subsidiaries) shall have made,
or disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction;
(iv) The Company Board shall have withdrawn, modified or qualified (or
publicly announced its intention to withdraw, modify or qualify) in any manner
adverse in any respect to the Acquiror its recommendation that the shareholders
of the Company approve the transactions contemplated by this Agreement in
anticipation of engaging in an Acquisition Transaction, or Company shall have
authorized, recommended, proposed (or publicly announced its intention to
authorize, recommend or propose) an agreement to engage in an Acquisition
Transaction with any person other than the Acquiror or a Acquiror Subsidiary;
(v) Any person other than the Acquiror or any Acquiror Subsidiary shall
have filed with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with the SEC
with respect to a potential vote by its shareholders to approve the issuance of
shares to be offered in such an exchange offer); (vi) The Company shall have
willfully breached any covenant or obligation contained in this Agreement after
an overture is made by a third party to Company or its shareholders to engage in
an Acquisition Transaction, and following such breach the Acquiror would be
entitled to terminate this Agreement (whether immediately or after the giving of
notice or passage of time or both); or
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(vii) Any person other than the Acquiror or any Acquiror Subsidiary,
without Acquiror's prior written consent, shall have filed an application or
notice with any regulatory or antitrust authority regarding an Acquisition
Transaction.
(d) The term "Fee Payment Event" shall mean any of the following events
or transactions occurring after the date hereof:
(i) The acquisition by any person (other than the Acquiror or any
Acquiror Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Company Common Stock; or
(ii) The occurrence of the Tolling Event described in clause (i) of the
definition of the term "Tolling Event", except that the percentage referred to
in clause (z) of the definition of the term "Acquisition Transaction" shall be
25%.
(e) Any payment required to be made under Section 8.03(a) shall be
payable, without setoff, by wire transfer in immediately available funds, to an
account specified by the Acquiror, within three business days following such
termination.
(f) The Company acknowledges that the agreements contained in this
Section 8.03 are an integral part of the transactions contemplated by this
Agreement and are cumulative with, and not intended to limit, other remedies
that may be available, and that, without these agreements, the Acquiror would
not enter into this Agreement; accordingly, if the Company fails promptly to pay
any amount due pursuant to this Section 8.03, and, in order to obtain such
payment, the Acquiror commences a suit which results in a judgment against the
Company for the payment set forth in this Section 8.03, the Company shall pay
the Acquiror's costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on any amount due pursuant to this Section
8.03 from the date such amount becomes payable until the date of such payment at
the prime rate of Citibank N.A. in effect on the date such payment was required
to be made plus two (2) percent.
(g) The Company shall notify the Acquiror promptly in writing of the
occurrence of any Tolling Event or Fee Payment Event, it being understood that
the giving of such notice by the Company shall not be a condition to the
Acquiror's rights pursuant to this Section 8.03.
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ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement (1) other than those contained in Sections 6.05(b),
8.02, and 8.03 and in this Article IX, shall survive the termination of this
Agreement if this Agreement is terminated prior to the Effective Time, or (2)
other than those contained in Sections 6.10 and in this Article IX, shall
survive the Effective Time.
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (a) waived by the party benefitted by the provision, or
(b) amended or modified at any time, by an agreement in writing executed by both
parties, except that, after approval of the Merger by the shareholders of the
Company, no amendment may be made which under applicable law requires further
approval of such shareholders without obtaining such required further approval.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
9.05 Expenses. Subject to Section 8.03, each party hereto will bear all
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that printing and postage expenses and any other
fees and expenses related to the Proxy Statement shall be shared equally between
the Company and the Acquiror. Acquiror shall be entitled to select a printing
company of its choice.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given (a) on the date of
delivery, if personally delivered or telecopied (with confirmation), (b) on the
first business day following the date of dispatch, if delivered by a recognized
next-day courier service, or (c) on the third business day following the date of
mailing, if mailed by registered or certified mail (return receipt requested),
in each case to such party at its address or telecopy number set forth below or
such other address or numbers as such party may specify by notice to the parties
hereto.
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If to the Company, to:
Eagle Bancshares, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇.▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇.▇.▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Acquiror, RBC Centura or Acquiror Sub, to:
Royal Bank of Canada
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Tower
Royal Bank Plaza
Toronto, Ontario
Canada M5J 2J5
Attention: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.07 Entire Understanding; No Third-Party Beneficiaries. This Agreement
(together with the Disclosure Schedules, the Stock Option Agreement and the
Exhibits hereto) represents the entire understanding of the parties hereto with
reference to all the matters encompassed or contemplated herein or agreed to in
contemplation hereof and this Agreement supersedes any and all other oral or
written agreements heretofore made. Except for Section 6.10, insofar as such
Section expressly provides certain rights to the Indemnified Parties named
therein, nothing in this Agreement, expressed or implied, is intended to confer
upon any person, other than the parties hereto or their respective successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated, in whole or
in part (except by operation of law), by any of the parties hereto without the
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prior written consent of each other party hereto, except that the Acquiror, RBC
Centura and Acquiror Sub may assign or delegate in their sole discretion any or
all of their rights, interests or obligations under this Agreement to any direct
or indirect, wholly owned subsidiary of the Acquiror, but no such assignment
shall relieve the Acquiror of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by, the parties hereto and their respective successors and
assigns.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ROYAL BANK OF CANADA
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice Chairman
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice Chairman
& Chief Financial Officer
RBC CENTURA BANKS, INC.
By: /s/ Shaumeen ▇▇▇▇▇▇
-----------------------------------------
Name: Shaumeen ▇▇▇▇▇▇
Title: President
By: /s/ H. ▇▇▇ ▇▇▇▇▇▇ III
-----------------------------------------
Name: H. ▇▇▇ ▇▇▇▇▇▇ III
Title: Chief Executive Officer
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EAGLE BANCSHARES, INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: C. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman
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