Exhibit 2
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AGREEMENT AND PLAN OF MERGER
Between
THE SOUTH FINANCIAL GROUP, INC.
and
GULF WEST BANKS, INC.
Dated as of March 21, 2002
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TABLE OF CONTENTS
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Page
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ARTICLE I
THE MERGER
1.1 The Merger.......................................................................1
1.2 Effective Time...................................................................2
1.3 Effects of the Merger............................................................2
1.4 Conversion of Company Common Stock...............................................2
1.5 Election Procedures..............................................................5
1.6 Stock Options....................................................................8
1.7 Parent Common Stock..............................................................9
1.8 Articles of Incorporation........................................................9
1.9 Bylaws...........................................................................9
1.10 Directors and Officers...........................................................9
1.11 Tax Consequences................................................................10
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available.................................................10
2.2 Exchange of Shares..............................................................10
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules............................................................13
3.2 Standards.......................................................................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Corporate Organization..........................................................14
4.2 Capitalization..................................................................15
4.3 Authority; No Violation.........................................................16
4.4 Consents and Approvals..........................................................17
4.5 SEC Reports.....................................................................18
4.6 Regulatory Reports..............................................................18
4.7 Financial Statements............................................................18
4.8 Broker's Fees...................................................................19
4.9 Absence of Certain Changes or Events............................................19
4.10 Legal Proceedings...............................................................20
4.11 Taxes...........................................................................20
4.12 Employees.......................................................................21
4.13 Company Information.............................................................22
4.14 Compliance with Applicable Law..................................................22
4.15 Certain Contracts...............................................................23
4.16 Agreements with Regulatory Agencies.............................................23
4.17 Environmental Matters...........................................................24
4.18 Opinion.........................................................................25
4.19 Approvals.......................................................................25
4.20 Loan Portfolio..................................................................25
4.21 Property........................................................................26
4.22 Reorganization..................................................................26
4.23 State Takeover Laws and Charter Provisions......................................26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
5.1 Corporate Organization..........................................................27
5.2 Capitalization..................................................................28
5.3 Authority; No Violation.........................................................29
5.4 Consents and Approvals..........................................................30
5.5 SEC Reports.....................................................................30
5.6 Regulatory Reports..............................................................31
5.7 Financial Statements............................................................31
5.8 Broker's Fees...................................................................32
5.9 Absence of Certain Changes or Events............................................32
5.10 Legal Proceedings...............................................................32
5.11 Taxes...........................................................................32
5.12 Employees.......................................................................33
5.13 Parent Information..............................................................34
5.14 Compliance with Applicable Law..................................................34
5.15 Ownership of Company Common Stock; Affiliates and Associates....................34
5.16 Agreements with Regulatory Agencies.............................................34
5.17 Environmental Matters...........................................................35
5.18 Financing.......................................................................36
5.19 Approvals.......................................................................36
5.20 Loan Portfolio..................................................................36
5.21 Property........................................................................37
5.22 Reorganization..................................................................37
5.23 Certain Contracts...............................................................37
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company........................................................38
6.2 Covenants of Parent.............................................................41
6.3 Conduct of Parent's Business....................................................41
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters..............................................................42
7.2 Access to Information...........................................................43
7.3 Certain Actions.................................................................44
7.4 Stockholder Meetings............................................................45
7.5 Legal Conditions to Merger......................................................45
7.6 Affiliates......................................................................46
7.7 Stock Exchange Listing..........................................................46
7.8 Employee Benefit Plans; Existing Agreements.....................................46
7.9 Indemnification.................................................................47
7.10 Additional Agreements...........................................................49
7.11 Employee Stock Purchase Plan....................................................49
7.12 Appointment of Directors........................................................49
7.13 Execution and Authorization of Bank Merger Agreement............................50
7.14 Advisory Board..................................................................51
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger......................51
8.2 Conditions to Obligations of Parent.............................................52
8.3 Conditions to Obligations of the Company........................................53
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination.....................................................................54
9.2 Effect of Termination...........................................................57
9.3 Amendment.......................................................................59
9.4 Extension; Waiver...............................................................59
ARTICLE X
GENERAL PROVISIONS
10.1 Closing.........................................................................59
10.2 Nonsurvival of Representations, Warranties and Agreements.......................60
10.3 Expenses........................................................................60
10.4 Notices.........................................................................60
10.5 Interpretation..................................................................61
10.6 Counterparts....................................................................61
10.7 Entire Agreement................................................................61
10.8 Governing Law...................................................................62
10.9 Enforcement of Agreement........................................................62
10.10 Severability....................................................................62
10.11 Publicity.......................................................................62
10.12 Assignment; No Third Party Beneficiaries........................................62
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
March 21, 2002, between The South Financial Group, Inc., a South Carolina
corporation ("Parent"), and Gulf West Banks, Inc., a Florida corporation
(the "Company").
WHEREAS, the Boards of Directors of Parent and the Company have
determined that it is in the best interests of their respective companies
and their shareholders to consummate the business combination transaction
provided for herein in which the Company will, subject to the terms and
conditions set forth herein, merge (the "Merger") with and into Parent;
WHEREAS, as soon as practicable after the execution and
delivery of this Agreement, Citrus Bank, a Florida-chartered commercial
bank and a wholly-owned subsidiary of Parent ("Parent Bank") and
Mercantile Bank, a Florida-chartered commercial bank and a wholly-owned
subsidiary of the Company (the "Company Bank"), will enter into an
Agreement and Plan of Merger (the "Bank Merger Agreement"), pursuant to
which the Company Bank shall merge with the Parent Bank (the "Bank
Merger"), and it is intended that the Bank Merger be consummated immediately
following the consummation of the Merger; and
WHEREAS, the parties desire to make certain
representations, warranties and agreements in connection with the Merger
and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Florida Business Corporation Act (the
"FBCA") and the South Carolina Business Corporation Act ("SCBCA"), at the
Effective Time (as defined in Section 1.2 hereof), the Company shall merge
with and into Parent. Parent shall be the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") in the Merger,
and shall continue its corporate existence under the laws of the State of
South Carolina. The name of the Surviving Corporation shall continue to be
"The South Financial Group, Inc." Upon consummation of the Merger, the
separate corporate existence of the Company shall terminate.
1.2 Effective Time. Subject to the provisions of this
Agreement, articles of merger complying with the FBCA (the "Florida
Articles of Merger") shall be duly prepared, executed and delivered for
filing by the Department of State of the State of Florida (the "Florida
Department") as provided in the FBCA, and articles of merger complying with
the SCBA (the "South Carolina Articles of Merger") shall be duly prepared,
executed and delivered for filing by the Secretary of State of the State of
South Carolina (the "South Carolina Secretary"), in each case on the
Closing Date. The Merger shall become effective at such time (the
"Effective Time") as the later of the following has occurred: (i) the
Florida Articles of Merger are filed by the Florida Department, (ii) the
South Carolina Articles of Merger are filed by the South Carolina
Secretary; or (iii) at such time specified in the Florida Articles of
Merger and/or the South Carolina Articles of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in the FBCA and the SCBCA.
1.4 Conversion of Company Common Stock.
(a) At the Effective Time, subject to the other provisions of
this Article I, and Sections 2.2(e) and 9.1(h) hereof, each share of common
stock, par value $1.00 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time
(other than shares of Company Common Stock held directly or indirectly by
Parent or the Company or any of their respective Subsidiaries (as defined
below) (except for Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(d) hereof)) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into and
exchangeable for the right to receive, at the election of the holder
thereof as provided in and subject to the provisions of Section 1.5, either
(i) a number of shares of common stock, par value $1.00 per share, of
Parent ("Parent Common Stock") (together with the number of Parent Rights
(as defined in Section 5.2 hereof) associated therewith) equal to the Per
Share Stock Consideration or (ii) cash in an amount equal to the Per Share
Consideration (the "Per Share Cash Consideration"; the Per Share Stock
Consideration and the Per Share Cash Consideration are referred to herein
collectively as the "Merger Consideration").
For purposes of this Section 1.4(a):
"Per Share Stock Consideration" shall mean the quotient, rounded
to the nearest ten-thousandth, obtained by dividing the Per Share
Consideration by the Final Parent Stock Price.
"Per Share Consideration" shall mean the quotient, rounded to the
nearest ten-thousandth, obtained by dividing the Aggregate Consideration
by the Common Stock Deemed Outstanding.
"Aggregate Consideration" shall mean the sum of (x) the Total
Stock Consideration and (y) the Total Cash Amount.
"Total Stock Consideration" shall mean the product obtained by
multiplying (x) the Total Stock Amount and (y) the Final Parent Stock
Price.
"Total Stock Amount" shall mean the product of (i) 0.6950 and (ii)
6,424,664.
"Total Cash Amount" shall mean an amount equal to $32,400,178.
"Total Outstanding Options" shall mean the number of shares of
Company Common Stock issuable upon exercise of all options granted by the
Company to purchase shares of Company Common Stock pursuant to the Company
1995 Nonstatutory Stock Option Plan and outstanding as of the close of
business on the Determination Date.
"Common Stock Deemed Outstanding" shall mean the sum of (x) the
total number of shares of Company Common Stock outstanding as of the close
of business on the Determination Date and (y) the Total Outstanding
Options.
"Final Parent Stock Price" shall mean the average of the closing
sale prices of Parent Common Stock as reported on the Nasdaq Stock Market's
National Market (the "NASDAQ/NMS") during the Valuation Period.
"Valuation Period" shall mean the ten consecutive trading days
during which the shares of Parent Common Stock are traded on the NASDAQ/NMS
ending on the third calendar day immediately prior to the Effective Time
(such day, the "Determination Date").
(b) All of the shares of Company Common Stock converted into
the Merger Consideration pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist,
and each holder of a certificate (each a "Certificate") previously
representing any such shares of Company Common Stock shall thereafter cease
to have any rights with respect to such securities, except the right to
receive (i) the Merger Consideration, (ii) any dividends and other
distributions in accordance with Section 2.2(b) hereof, and (iii) any cash
to be paid in lieu of any fractional share of Parent Common Stock in
accordance with Section 2.2(e) hereof.
(c) If, between the date of this Agreement and the Effective
Time, the shares of Parent Common Stock shall be changed into a different
number or class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record
date within such period, appropriate adjustments shall be made to the Per
Share Cash Consideration and the Per Share Stock Consideration.
(d) At the Effective Time, all shares of Company Common Stock
that are owned directly or indirectly by Parent or the Company or any of
their respective Subsidiaries (other than shares of Company Common Stock
(x) held directly or indirectly in trust accounts, managed accounts and the
like or otherwise held in a fiduciary capacity for the benefit of third
parties (any such shares, and shares of Parent Common Stock which are
similarly held, whether held directly or indirectly by Parent or the
Company, as the case may be, being referred to herein as "Trust Account
Shares") and (y) held by Parent or the Company or any of their respective
Subsidiaries in respect of a debt previously contracted (any such shares of
Company Common Stock, and shares of Parent Common Stock which are similarly
held, whether held directly or indirectly by Parent or the Company, being
referred to herein as "DPC Shares")) shall be cancelled and shall cease to
exist and no stock of Parent, cash or other consideration shall be
delivered in exchange therefor. All shares of Parent Common Stock that are
owned by the Company or any of its Subsidiaries (other than Trust Account
Shares and DPC Shares) shall become treasury stock of Parent.
(e) The calculations required by Section 1.4(a) shall be
prepared jointly by Parent and the Company prior to the Closing Date.
1.5 Election Procedures.
(a) An election form and other appropriate and customary
transmittal materials (which shall specify that delivery shall be effected,
and risk of loss and title to the certificates theretofore representing
shares of Company Common Stock shall pass, only upon proper delivery of
such certificates to the Exchange Agent) in such form as Parent and the
Company shall mutually agree (the "Election Form") shall be mailed
thirty-five days prior to the anticipated Effective Date or on such other
date as the Company and Parent shall mutually agree (the "Mailing Date") to
each holder of record of Company Common Stock as of the close of business
on the fifth business day prior to the Mailing Date (the "Election Form
Record Date").
(b) Each Election Form shall permit the holder (or the
beneficial owner through appropriate and customary documentation and
instructions) to elect to receive (i) the Per Share Stock Consideration in
respect of all of such holder's Company Common Stock ("Stock Election
Shares"), (ii) the Per Share Cash Consideration in respect of all of such
holder's Company Common Stock ("Cash Election Shares"), (iii) the Per Share
Stock Consideration in respect of that portion of such holder's shares of
Company Common Stock equal to the Stock Percentage (as defined below),
rounded to the nearest whole share (the "Mixed Stock Shares"), and the Per
Share Cash Consideration in respect of that portion of such holder's shares
of Company Common Stock equal to the Cash Percentage (as defined below),
rounded to the nearest whole share (the "Mixed Cash Shares," and together
with the Mixed Stock Shares, the "Mixed Election Shares"), or to make no
election with respect to such holder's Company Common Stock ("No Election
Shares"). Any Company Common Stock with respect to which the Exchange Agent
has not received an effective, properly completed Election Form on or
before 5:00 p.m., on the 33rd day following the Mailing Date (or such other
time and date as Parent and the Company may mutually agree) (the "Election
Deadline") shall also be deemed to be "No Election Shares." "Cash
Percentage" shall mean the quotient, rounded to the nearest thousandth,
obtained by dividing (A) the quotient obtained by dividing the Total Cash
Amount by the Per Share Consideration, by (B) the total number of shares of
Company Common Stock outstanding as of the close of business on the
Determination Date. "Stock Percentage" shall mean the amount equal to one
(1) minus the Cash Percentage.
(c) Parent shall make available one or more Election Forms as
may reasonably be requested from time to time by all persons who become
holders (or beneficial owners) of Company Common Stock between the Election
Form Record Date and the close of business on the business day prior to the
Election Deadline, and the Company shall provide to the Exchange Agent all
information reasonably necessary for it to perform as specified herein.
(d) Any such election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed Election
Form by the Election Deadline. An Election Form shall be deemed properly
completed only if accompanied by one or more certificates (or customary
affidavits and indemnification regarding the loss or destruction of such
certificates or the guaranteed delivery of such certificates) representing
all shares of Company Common Stock covered by such Election Form, together
with duly executed transmittal materials included in the Election Form. Any
Election Form may be revoked or changed by the person submitting such
Election Form at or prior to the Election Deadline. In the event an
Election Form is revoked prior to the Election Deadline, the shares of
Company Common Stock represented by such Election Form shall become No
Election Shares and Parent shall cause the certificates representing
Company Common Stock to be promptly returned without charge to the Person
submitting the Election Form upon written request to that effect from the
holder who submitted the Election Form. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard immaterial defects
in the Election Forms, and any good faith decisions of Parent regarding
such matters shall be binding and conclusive. Neither Parent nor the
Exchange Agent shall be under any obligation to notify any person of any
defect in an Election Form.
(e) Within ten business days after the Election Deadline,
unless the Effective Time has not yet occurred, in which case as soon
thereafter as practicable, Parent shall cause the Exchange Agent to effect
the allocation among the holders of Company Common Stock of rights to
receive Parent Common Stock or cash in the Merger in accordance with the
Election Forms as follows:
(i) Cash Election Shares and Mixed Cash Shares More Than
Total Cash Amount. If the aggregate cash amount that would be paid
upon the conversion in the Merger of the Cash Election Shares and
the Mixed Cash Shares is greater than the Total Cash Amount, then:
(A) all Mixed Stock Shares, Stock Election Shares
and No Election Shares shall be converted into the right to
receive the Per Share Stock Consideration,
(B) the Exchange Agent shall then select from
among the Cash Election Shares, by a pro rata selection
process, a sufficient number of shares ("Stock Designated
Shares") such that the aggregate cash amount that will be
paid in the Merger equals as closely as practicable the
Total Cash Amount, and all Stock Designated Shares shall
be converted into the right to receive the Per Share
Stock Consideration, and
(C) the Cash Election Shares that are not Stock
Designated Shares and all Mixed Cash Shares will be
converted into the right to receive the Per Share Cash
Consideration.
(ii) Cash Election Shares Plus Mixed Cash Shares Less
Than Total Cash Amount. If the aggregate cash amount that would be
paid upon conversion in the Merger of the Cash Election Shares
and the Mixed Cash Shares is less than the Total Cash Amount,
then:
(A) all Cash Election Shares and Mixed Cash
Shares shall be converted into the right to receive the
Per Share Cash Consideration,
(B) the Exchange Agent shall then select first
from among the No Election Shares and then (if necessary)
from among the Stock Election Shares, by a pro rata
selection process, a sufficient number of shares ("Cash
Designated Shares") such that the aggregate cash amount
that will be paid in the Merger equals as closely as
practicable the Total Cash Amount, and all Cash
Designated Shares shall be converted into the right to
receive the Per Share Cash Consideration, and
(C) the Stock Election Shares and the No
Election shares that are not Cash Designated Shares and
all Mixed Stock Shares shall be converted into the right
to receive the Per Share Stock Consideration.
(iii) Cash Election Shares and Mixed Cash Shares Equal to
Total Cash Amount. If the aggregate cash amount that would be paid
upon conversion in the Merger of the Cash Election Shares and the
Mixed Cash Shares is equal or nearly equal (as determined by the
Exchange Agent) to the Total Cash Amount, then subparagraphs (i)
and (ii) above shall not apply and all Cash Election Shares and
Mixed Cash Shares shall be converted into the right to receive the
Per Share Cash Consideration and all Stock Election Shares,
Mixed Stock Shares and No Election Shares shall be converted into
the right to receive the Per Share Stock Consideration.
(f) The pro rata selection process to be used by the Exchange
Agent shall consist of such equitable pro ration processes as shall be
mutually determined by Parent and the Company.
1.6 Stock Options. (a) At the Effective Time, each option
granted by the Company to purchase shares of Company Common Stock, other
than options granted under the ESPP (as defined in Section 4.2) (each a
"Company Option"), which is outstanding and unexercised immediately prior
thereto shall cease to represent a right to acquire shares of Company
Common Stock and shall be converted automatically into a fully-vested
option to purchase shares of Parent Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject to the
terms of the Company's 1995 Nonstatutory Stock Option Plan, as amended (the
"Company Option Plan"), the agreements evidencing grants thereunder and any
other agreements between the Company and an optionee regarding Company
Options):
(1) the number of shares of Parent Common Stock to be
subject to the new option shall be equal to the product of the
number of shares of Company Common Stock subject to the original
option and the Per Share Stock Consideration, provided that any
fractional shares of Parent Common Stock resulting from such
multiplication shall be rounded down to the nearest whole share;
and
(2) the exercise price per share of Parent Common Stock
under the new option shall be equal to the exercise price per
share of Company Common Stock under the original option divided by
the Per Share Stock Consideration, provided that such exercise
price shall be rounded up to the nearest cent.
(b) Prior to the Effective Time, Parent shall reserve for
issuance the number of shares of Parent Common Stock necessary to satisfy
Parent's obligations under this Section 1.6. Parent shall file with the
Securities and Exchange Commission (the "SEC"), no later than two business
days after the Effective Time, a registration statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Parent Common Stock subject to options to
acquire Parent Common Stock issued pursuant to Section 1.6(a) hereof, and
shall use its best efforts to maintain the current status of the prospectus
contained therein, as well as comply with applicable state securities or
"blue sky" laws, for so long as such options remain outstanding; provided,
however, that Parent shall only be required to file and maintain the
effectiveness of such registration statement with respect to options that
are eligible to be registered on a Form S-8.
(c) Prior to the Effective Time, Parent and the Company shall
take all such steps as may be required to cause any acquisitions of Parent
equity securities (including derivative securities with respect to any
Parent equity securities) and dispositions of Company equity securities
(including derivative securities with respect to any Company equity
securities) resulting from the transactions contemplated by this Agreement
by each individual who is anticipated to be subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") with respect to Parent or who is subject to
the reporting requirements of Section 16(a) of the Exchange Act with
respect to the Company, to be exempt under Rule 16b-3 promulgated under the
Exchange Act.
1.7 Parent Common Stock. Except for shares of Parent Common
Stock owned by the Company or any of its Subsidiaries (other than Trust
Account Shares and DPC Shares), which shall be converted into treasury
stock of Parent as contemplated by Section 1.4 hereof, the shares of Parent
Common Stock issued and outstanding immediately prior to the Effective Time
shall be unaffected by the Merger and such shares shall remain issued and
outstanding.
1.8 Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Parent, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation.
1.9 Bylaws. At the Effective Time, the Bylaws of Parent, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with
applicable law.
1.10 Directors and Officers.
(a) At and after the Effective Time, the directors of Parent
shall consist of all of the directors of Parent serving immediately prior
to the Effective Time and the additional person who shall become a
director of Parent in accordance with Section 7.12 hereof, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation until their respective successors are duly elected
or appointed and qualified.
(b) The officers of Parent immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
1.11 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and that this
Agreement shall constitute a plan of reorganization for the purposes of
Section 368 of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares and Cash Available. At or prior to
the Effective Time, Parent shall deposit, or shall cause to be deposited,
with a bank or trust company (which may be a Subsidiary of Parent) (the
"Exchange Agent") selected by Parent and reasonably satisfactory to the
Company, for the benefit of the holders of Certificates, for exchange in
accordance with this Article II, (i) certificates representing the shares
of Parent Common Stock to be issued pursuant to Section 1.4 and Section
2.2(a) in exchange for outstanding shares of Company Common Stock, (ii)
such cash as shall be necessary to pay the Per Share Cash Consideration in
accordance with Section 1.4 and 2.2(a) hereof, and (iii) the cash in lieu
of fractional shares to be paid in accordance with Section 2.2(e) hereof.
Such cash and certificates for shares of Parent Common Stock, together with
any dividends or distributions with respect thereto, are hereinafter
referred to as the "Exchange Fund."
2.2 Exchange of Shares. (a) As soon as practicable after the
Effective Time, and in no event more than five business days thereafter,
the Exchange Agent shall mail to each holder of record of a Certificate or
Certificates who theretofore has not submitted such holder's Certificate or
Certificates with an Election Form, a form letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent) and instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. The Company
shall have the right to review both the letter of transmittal and the
instructions prior to the Effective Time and provide reasonable comments
thereon. After completion of the allocation procedure set forth in Section
1.5 and upon surrender of a Certificate or Certificates for exchange and
cancellation to the Exchange Agent, together with a properly executed
letter of transmittal or Election Form, as the case may be, the holder of
such Certificate or Certificates shall be entitled to receive in exchange
therefor (x) a certificate representing that number of whole shares of
Parent Common Stock which such holder of Company Common Stock became
entitled to receive pursuant to the provisions of Article I hereof and/or
(y) a check representing the aggregate Per Share Cash Consideration and/or
the amount of cash in lieu of fractional shares, if any, which such holder
has the right to receive in respect of the Certificate or Certificates
surrendered pursuant to the provisions of Article I, and the Certificate or
Certificates so surrendered shall forthwith be cancelled. No interest will
be paid or accrued on the Per Share Cash Consideration, the cash in lieu of
fractional shares or the unpaid dividends and distributions, if any,
payable to holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Parent Common Stock and payable to the
holders of record thereof shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to
shares of Parent Common Stock represented by such Certificate.
(c) If any certificate representing shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of
the issuance thereof that the Certificate so surrendered shall be properly
endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other
taxes required by reason of the issuance of a certificate representing
shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or required for any other reason, or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common
Stock which were issued and outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Exchange Agent, they shall be cancelled
and exchanged for certificates representing shares of Parent Common Stock
or cash or both, as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Parent Common
Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to Parent Common Stock shall be
payable on or with respect to any fractional share, and such fractional
share interests shall not entitle the owner thereof to vote or to any other
rights of a shareholder of Parent. In lieu of the issuance of any such
fractional share, Parent shall pay to each former stockholder of the
Company who otherwise would be entitled to receive a fractional share of
Parent Common Stock an amount in cash determined by multiplying (i) the
average of the closing sale prices of Parent Common Stock on the NASDAQ/NMS
as reported by The Wall Street Journal for the five trading days
immediately preceding the date on which the Effective Time shall occur by
(ii) the fraction of a share of Parent Common Stock which such holder
would otherwise be entitled to receive pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of the Company for twelve months after the Effective Time
shall be paid to Parent. Any stockholders of the Company who have not
theretofore complied with this Article II shall thereafter look only to
Parent for payment of the Merger Consideration, the cash in lieu of
fractional shares and/or the unpaid dividends and distributions on the
Parent Common Stock deliverable in respect of each share of Company Common
Stock such stockholder holds as determined pursuant to this Agreement, in
each case, without any interest thereon. Notwithstanding the foregoing,
none of Parent, the Company, the Exchange Agent or any other person shall
be liable to any former holder of shares of Company Common Stock for any
amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by Parent, the posting by such person of a bond in such amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules. Prior to the execution and delivery
of this Agreement, the Company has delivered to Parent, and Parent has
delivered to the Company, a schedule (in the case of the Company, the
"Company Disclosure Schedule," and in the case of Parent, the "Parent
Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate either in response to an
express disclosure requirement contained in a provision hereof or as an
exception to one or more of such party's representations or warranties
contained in Article IV, in the case of the Company, or Article V, in the
case of Parent, or to one or more of such party's covenants contained in
Article VI; provided, however, that notwithstanding anything in this
Agreement to the contrary (a) no such item is required to be set forth in
the Disclosure Schedule as an exception to a representation or warranty if
its absence would not result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section
3.2, and (b) the mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission
by a party that such item represents a material exception or material fact,
event or circumstance or that such item has had or would have a Material
Adverse Effect (as defined herein) with respect to either the Company or
Parent, respectively.
3.2 Standards. (a) No representation or warranty of the Company
contained in Article IV or of Parent contained in Article V shall be deemed
untrue or incorrect for any purpose under this Agreement, and no party
hereto shall be deemed to have breached a representation or warranty for
any purpose under this Agreement, in any case as a consequence of the
existence or absence of any fact, circumstance or event unless such fact,
circumstance or event, individually or when taken together with all other
facts, circumstances or events inconsistent with any representations or
warranties contained in Article IV, in the case of the Company, or Article
V, in the case of Parent, has had a Material Adverse Effect with respect to
the Company or Parent, respectively.
(b) As used in this Agreement, the term "Material Adverse
Effect" means, with respect to Parent or the Company, as the case may be, a
material adverse effect on (i) the business, results of operations or
financial condition of such party and its Subsidiaries taken as a whole,
other than any such effect attributable to or resulting from (v) any change
in banking or similar laws, rules or regulations of general applicability
or interpretations thereof by courts or governmental authorities, (w) any
change in GAAP (as defined herein) or regulatory accounting principles
applicable to banks, thrifts or their holding companies generally, (x)
changes attributable to or resulting from changes in general economic
conditions, including changes in the prevailing level of interest rates,
(y) any action or omission of the Company or Parent or any Subsidiary of
either of them taken with the prior written consent of the other party
hereto, or (z) any expenses incurred by such party in connection with this
Agreement or the transactions contemplated hereby or (ii) the ability of
such party and its Subsidiaries to consummate the transactions contemplated
hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, the Company hereby represents and
warrants to Parent as follows:
4.1 Corporate Organization. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. The Company has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business as
it is now being conducted, and is duly licensed or qualified to do business
in each jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. The Company is duly
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the "BHC Act"). The Articles of Incorporation and Bylaws
of the Company, copies of which have previously been made available to
Parent, are true and correct copies of such documents as in effect as of
the date of this Agreement. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes.
(b) The Company Bank is a Florida-chartered stock commercial
bank duly organized, validly existing and in good standing under the laws
of Florida. The deposit accounts of the Company Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") through the Savings
Association Insurance Fund or the Bank Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. Each of the Company's other
Subsidiaries is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization. Each of the
Company's Subsidiaries has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it
is now being conducted and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or
the character or the location of the properties and assets owned or leased
by it makes such licensing or qualification necessary. Except as may be set
forth on Section 4.1(b) of the Company Disclosure Schedule, the articles of
incorporation, bylaws and similar governing documents of each Subsidiary of
the Company, copies of which have previously been made available to Parent,
are true and correct copies of such documents as in effect as of the date
of this Agreement.
(c) The minute books of the Company and each of its
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1999 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
4.2 Capitalization. (a) The authorized capital stock of the
Company consists of 25,000,000 shares of Company Common Stock, and
1,000,000 shares of Class A Preferred stock, par value $5.00 per share (the
"Company Preferred Stock"). As of the date of this Agreement, there were
7,941,221 shares of Company Common Stock issued and outstanding (including
9,046 shares held in escrow by the Company's transfer agent representing
shares to be issued to former stockholders of Citizens National Bank and
Trust Company ("Citizens") in connection with the Amended and Restated
Agreement and Plan of Merger, dated October 16, 1997, by and among the
Company, the Company Bank and Citizens), no shares of Company Common Stock
held by the Company as treasury stock and no shares of Company Preferred
Stock issued or outstanding. As of the date of this Agreement, there were
no shares of Company Common Stock reserved for issuance upon exercise of
outstanding stock options or otherwise except for (x) 865,809 shares of
Company Common Stock reserved pursuant to the Company Option Plan, and (y)
22,000 shares of Company Common Stock reserved pursuant to the Company's
employee stock purchase plan ("ESPP"). All of the issued and outstanding
shares of Company Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except as referred
to above or reflected in Section 4.2(a) of the Company Disclosure Schedule,
the Company does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Company
Common Stock or any other equity security of the Company or any securities
representing the right to purchase or otherwise receive any shares of
Company Common Stock or any other equity security of the Company. The names
of the optionees, the date of each option to purchase Company Common Stock
granted, the number of shares subject to each such option, the expiration
date of each such option, and the price at which each such option may be
exercised under the Company Option Plan are set forth in Section 4.2(a) of
the Company Disclosure Schedule.
(b) Section 4.2(b) of the Company Disclosure Schedule sets
forth a true and correct list of all of the Subsidiaries of the Company.
Except as set forth in Section 4.2(b) of the Company Disclosure Schedule,
the Company owns, directly or indirectly, all of the issued and outstanding
shares of the capital stock of each of such Subsidiaries, free and clear of
all liens, charges, encumbrances and security interests whatsoever, and all
of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subsidiary of the Company has or is
bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of
such Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security
of such Subsidiary.
4.3 Authority; No Violation. (a) The Company has full corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of the Company.
The Board of Directors of the Company has directed that this Agreement and
the transactions contemplated hereby be submitted to the Company's
stockholders for approval at a meeting of such stockholders and, except for
the adoption of this Agreement by the requisite vote of the Company's
stockholders, no other corporate proceedings on the part of the Company are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and (assuming due authorization, execution and
delivery by Parent) this Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by general principles
of equity whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Except as may be set forth in Section 4.3(b) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement
by the Company, nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with any of the terms
or provisions hereof, will (i) violate any provision of the Articles of
Incorporation or Bylaws of the Company or the articles of incorporation,
bylaws or similar governing documents of any of its Subsidiaries, or (ii)
assuming that the consents and approvals referred to in Section 4.4 hereof
are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Company or any of its Subsidiaries, or any of their respective properties
or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or result in
the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of the Company
or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
4.4 Consents and Approvals. Except for (a) the filing with the
SEC of a proxy statement in definitive form relating to the meeting of the
Company's stockholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Proxy Statement"), (b) the approval
of this Agreement by the requisite vote of the stockholders of the Company,
(c) the filing of applications and notices, as applicable, with the FDIC
under the Bank Merger Act, Federal Deposit Insurance Act and the rules and
regulations of the FDIC, and approval of such applications and notices, (d)
the filing of such applications, filings, authorizations, orders and
approvals as may be required under applicable state law (the "State Banking
Approvals"), and (e) such filings, authorizations or approvals as may be
set forth in Section 4.4 of the Company Disclosure Schedule, no consents or
approvals of or filings or registrations with any court, administrative
agency or commission or other governmental authority or instrumentality
(each a "Governmental Entity") or with any third party are required to be
made by the Company in connection with (1) the execution and delivery by
the Company of this Agreement and (2) the consummation by the Company of
the Merger and the other transactions contemplated hereby.
4.5 SEC Reports. The Company has previously made available to
Parent a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
December 31, 1999 by the Company with the SEC pursuant to the Securities
Act or the Exchange Act (the "Company Reports") and (b) communication
mailed by the Company to its shareholders since December 31, 1999, and no
such Company Report (when filed and at their respective effective time, if
applicable) or communication (when mailed) contained any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading, except
that information as of a later date shall be deemed to modify information
as of an earlier date. The Company has timely filed all Company Reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act since December 31, 1999, and, as of their respective dates,
all Company Reports complied with the published rules and regulations of
the SEC with respect thereto.
4.6 Regulatory Reports. The Company and each of its
Subsidiaries have timely filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that
they were required to file since December 31, 1999 with (i) the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), (ii)
the FDIC, (iii) the Office of the Comptroller of the Currency (the "OCC"),
(iv) any state banking commissions or any other state bank regulatory
authority (each a "State Regulator") and (v) any other self- regulatory
organization ("SRO") (collectively, the "Regulatory Agencies"), and have
paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of the Company and its Subsidiaries, and
except as may be set forth in Section 4.6 of the Company Disclosure
Schedule, no Regulatory Agency has initiated any proceeding or, to the
knowledge of the Company, investigation into the business or operations of
the Company or any of its Subsidiaries since December 31, 1999. There is no
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of the
Company or any of its Subsidiaries.
4.7 Financial Statements. The Company has previously made
available to Parent copies of the consolidated balance sheets of the
Company and its Subsidiaries as of December 31 for the fiscal years 2000
and 2001, and the related consolidated statements of earnings,
stockholders' equity and cash flows for the fiscal years 1999 through 2001,
inclusive, as reported in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 filed with the SEC under the Exchange
Act, accompanied by the audit report of Hacker, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ PA,
independent public accountants with respect to the Company. The December
31, 2001 consolidated balance sheet of the Company (including the related
notes, where applicable) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and
the other financial statements referred to in this Section 4.7 (including
the related notes, where applicable) fairly present, and the financial
statements to be filed with the SEC after the date hereof will fairly
present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the
consolidated operations and consolidated financial position of the Company
and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) complies, and the financial statements to
be filed with the SEC after the date hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements to
be filed with the SEC after the date hereof will be, prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC.
The books and records of the Company and its Subsidiaries have been, and
are being, maintained in accordance with GAAP and any other applicable
legal and accounting requirements.
4.8 Broker's Fees. Neither the Company nor any Subsidiary of
the Company nor any of their respective officers or directors has employed
any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement, except that the Company has engaged, and
will pay a fee or commission to, Sandler ▇'▇▇▇▇▇ & Partners, L.P. ("Sandler
▇'▇▇▇▇▇") in accordance with the terms of a letter agreement between
Sandler ▇'▇▇▇▇▇ and the Company, a true and correct copy of which has been
previously made available by the Company to Parent.
4.9 Absence of Certain Changes or Events. (a) Except as may be
set forth in Section 4.9(a) of the Company Disclosure Schedule, or as
disclosed in any Company Report (as defined in Section 4.5) filed with the
SEC prior to the date of this Agreement, since December 31, 2001 there has
been no change or development or combination of changes or developments
which, individually or in the aggregate, has had a Material Adverse Effect
on the Company.
(b) Except as may be set forth in Section 4.9(b) of the Company
Disclosure Schedule or any Company Report filed with the SEC prior to the
date of this Agreement, since December 31, 2001 the Company and its
Subsidiaries have carried on their respective businesses in the ordinary
course consistent with their past practices.
(c) Except as may be set forth in Section 4.9(c) of the Company
Disclosure Schedule, since December 31, 2001 neither the Company nor any of
its Subsidiaries has (i) increased the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in effect as of
December 31, 2001, granted any severance or termination pay, entered into
any contract to make or grant any severance or termination pay, or paid
any bonus (except for salary increases and bonus payments made in the
ordinary course of business consistent with past practices), (ii) suffered
any strike, work stoppage, slow-down, or other labor disturbance, (iii)
been a party to a collective bargaining agreement, contract or other
agreement or under standing with a labor union or organization, or (iv) had
any union organizing activities.
4.10 Legal Proceedings. (a) Except as may be set forth in
Section 4.10 of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries is a party to any, and there are no pending or, to
the Company's knowledge, threatened, legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature against the Company or any of its Subsidiaries
or challenging the validity or propriety of the transactions contemplated
by this Agreement.
(b) Except as may be set forth in Section 4.10(b) of the
Company Disclosure Schedule, there is no injunction, order, judgment or
decree imposed upon the Company, any of its Subsidiaries or the assets of
the Company or any of its Subsidiaries.
4.11 Taxes. (a) Except as may be set forth in Section 4.11(a)
of the Company Disclosure Schedule, each of the Company and its
Subsidiaries has (i) duly and timely filed (including applicable extensions
granted without penalty) all material Tax Returns (as hereinafter defined)
required to be filed at or prior to the Effective Time, and all such Tax
Returns are true and correct, and (ii) paid in full or made adequate
provision in the financial statements of the Company (in accordance with
GAAP) for all material Taxes (as hereinafter defined) shown to be due on
such Tax Returns. Except as set forth in Section 4.11(a) of the Company
Disclosure Schedule, (i) as of the date hereof neither the Company nor any
of its Subsidiaries has requested any extension of time within which to
file any Tax Returns in respect of any fiscal year which have not since
been filed and no request for waivers of the time to assess any Taxes are
pending or outstanding, and (ii) as of the date hereof, with respect to
each taxable period of the Company and its Subsidiaries, the federal and
state income Tax Returns of the Company and its Subsidiaries have been
audited by the Internal Revenue Service ("IRS") or appropriate state tax
authorities or the time for assessing and collecting income Tax with
respect to such taxable period has closed and such taxable period is not
subject to review.
(b) For the purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies, penalties or other assessments imposed by any
United States federal, state, local or foreign taxing authority, including,
but not limited to income, excise, property, sales, transfer, franchise,
payroll, withholding, social security or other taxes, including any
interest, penalties or additions attributable thereto. For purposes of
this Agreement, "Tax Return" shall mean any return, report, information
return or other document (including any related or supporting information)
with respect to Taxes.
4.12 Employees. (a) Section 4.12(a) of the Company Disclosure
Schedule sets forth a true and correct list of each deferred compensation
plan, incentive compensation plan, equity compensation plan, "welfare"
plan, fund or program (within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")); "pension"
plan, fund or program (within the meaning of section 3(2) of ERISA); each
employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that
is sponsored, maintained or contributed to or required to be contributed to
by the Company, any of its Subsidiaries or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), all of which together
with the Company would be deemed a "single employer" within the meaning of
Section 4001 of ERISA, for the benefit of any employee or former employee
of the Company, any Subsidiary or any ERISA Affiliate (the "Plans").
(b) The Company has heretofore made available to Parent with
respect to each of the Plans true and correct copies of each of the
following documents, if applicable: (i) the Plan document; (ii) the
actuarial report for such Plan for each of the last two years, (iii) the
most recent determination letter from the IRS for such Plan and (iv) the
most recent summary plan description and related summaries of material
modifications.
(c) Except as may be set forth in Section 4.12(c) of the
Company Disclosure Schedule: each of the Plans is in compliance with the
applicable provisions of the Code and ERISA; each of the Plans intended to
be "qualified" within the meaning of section 401(a) of the Code has
received a favorable determination letter from the IRS; no Plan has an
accumulated or waived funding deficiency within the meaning of section 412
of the Code; neither the Company nor any ERISA Affiliate has incurred,
directly or indirectly, any liability to or on account of a Plan pursuant
to Title IV of ERISA (other than PBGC premiums); to the knowledge of the
Company no proceedings have been instituted to terminate any Plan that is
subject to Title IV of ERISA; no "reportable event," as such term is
defined in section 4043(c) of ERISA, has occurred with respect to any Plan
(other than a reportable event with respect to which the thirty day notice
period has been waived); and no condition exists that presents a material
risk to the Company of incurring a liability to or on account of a Plan
pursuant to Title IV of ERISA; no Plan is a multiemployer plan (within the
meaning of section 4001(a)(3) of ERISA and no Plan is a multiple employer
plan as defined in Section 413 of the Code; and there are no pending, or to
the knowledge of the Company, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Plans
or any trusts related thereto.
4.13 Company Information. The information relating to the
Company and its Subsidiaries which is provided to Parent by the Company for
inclusion in the Proxy Statement and the registration statement on Form S-4
(the "S-4") in which the Proxy Statement will be included as a prospectus,
or in any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances in which they are made, not
misleading. The Proxy Statement (except for such portions thereof that
relate to Parent or any of its Subsidiaries) will comply with the
provisions of the Exchange Act and the rules and regulations thereunder.
4.14 Compliance with Applicable Law. The Company and each of
its Subsidiaries holds, and has at all times held, all licenses,
franchises, permits and authorizations necessary for the lawful conduct of
their respective businesses under and pursuant to all, and have complied
with and are not in default in any respect under any, applicable law,
statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries has received notice of any
violations of any of the above.
4.15 Certain Contracts. (a) Except as set forth in Section
4.15(a) of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is a party to or bound by any contract (whether written
or oral) (i) with respect to the employment of any directors, officers,
employees or consultants, (ii) which, upon the consummation of the
transactions contemplated by this Agreement, will (either alone or upon the
occurrence of any additional acts or events) result in any payment or
benefits (whether of severance pay or otherwise) becoming due, or the
acceleration or vesting of any rights to any payment or benefits, from
Parent, the Company, the Surviving Corporation or any of their respective
Subsidiaries to any officer, director, employee or consultant of the
Company or any of its Subsidiaries, (iii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed
after the date of this Agreement, regardless of whether the contract has
been filed or incorporated by reference in the Company Reports, (iv) which
is a consulting agreement (including data processing, software programming
and licensing contracts) not terminable on 90 days or less notice involving
the payment of more than $250,000 per annum, or (v) which materially
restricts the conduct of any line of business by the Company or any of its
Subsidiaries. Each contract, arrangement, commitment or understanding of
the type described in this Section 4.15(a), whether or not set forth in
Section 4.15(a) of the Company Disclosure Schedule, is referred to herein
as a "Company Contract". The Company has previously delivered or made
available to Parent true and correct copies of each contract, arrangement,
commitment or understanding of the type described in this Section 4.15(a).
(b) Except as set forth in Section 4.15(b) of the Company
Disclosure Schedule, (i) each Company Contract is valid and binding and in
full force and effect, (ii) the Company and each of its Subsidiaries has
performed all obligations required to be performed by it to date under each
Company Contract, (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a default on the
part of the Company or any of its Subsidiaries under any Company Contract,
and (iv) no other party to any Company Contract is, to the knowledge of the
Company, in default in any respect thereunder.
4.16 Agreements with Regulatory Agencies. Except as may be set
forth in Section 4.16 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of (each, whether
or not set forth on Section 4.16 of the Company Disclosure Schedule, a
"Regulatory Agreement"), any Regulatory Agency that restricts the conduct
of its business or that in any manner relates to its capital adequacy, its
credit policies, its management or its business, nor has the Company or any
of its Subsidiaries been advised by any Regulatory Agency that it is
considering issuing or requesting any Regulatory Agreement.
4.17 Environmental Matters. Except as may be set forth in
Section 4.17 of the Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries and, to the
knowledge of the Company, each of the Participation Facilities and the Loan
Properties (each as hereinafter defined), are in compliance with all
applicable federal, state and local laws, including common law, regulations
and ordinances, and with all applicable decrees, orders and contractual
obligations relating to pollution or the discharge of, or exposure to,
Hazardous Materials (as hereinafter defined) in the environment or
workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding, pending or,
to the knowledge of the Company, threatened, before any Governmental Entity
or other forum in which the Company, any of its Subsidiaries, any
Participation Facility or any Loan Property, has been or, with respect to
threatened proceedings, may be, named as a defendant (x) for alleged
noncompliance (including by any predecessor) with any Environmental Laws,
or (y) relating to the release, threatened release or exposure to any
Hazardous Material whether or not occurring at or on a site owned, leased
or operated by the Company or any of its Subsidiaries, any Participation
Facility or any Loan Property; and
(c) To the knowledge of the Company, during the period of (x)
the Company's or any of its Subsidiaries' ownership or operation of any of
their respective current or former properties, (y) the Company's or any of
its Subsidiaries' participation in the management of any Participation
Facility, or (z) the Company's or any of its Subsidiaries' interest in a
Loan Property, there has been no release of Hazardous Materials in, on,
under or affecting any such property. To the knowledge of the Company,
prior to the period of (x) the Company's or any of its Subsidiaries'
ownership or operation of any of their respective current or former
properties, (y) the Company's or any of its Subsidiaries' participation in
the management of any Participation Facility, or (z) the Company's or any
of its Subsidiaries' interest in a Loan Property, there was no release of
Hazardous Materials in, on, under or affecting any such property,
Participation Facility or Loan Property.
The following definitions apply for purposes of this Section
4.17: (x) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated
substances or materials, (y) "Loan Property" means any property in which
the Company or any of its Subsidiaries holds a security interest, and,
where required by the context, such term means the owner or operator of
such property; and (z) "Participation Facility" means any facility in which
the Company or any of its Subsidiaries participates in the management and,
where required by the context, such term means the owner or operator of
such property.
4.18 Opinion. Prior to the execution of this Agreement, the
Company has received an opinion from Sandler ▇'▇▇▇▇▇ to the effect that as
of the date thereof and based upon and subject to the matters set forth
therein, the Merger Consideration to be received by the stockholders of the
Company is fair to such stockholders from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement.
4.19 Approvals. As of the date of this Agreement, the Company
knows of no reason why all regulatory approvals required for the
consummation of the transactions contemplated hereby (including, without
limitation, the Merger) should not be obtained.
4.20 Loan Portfolio. (a) Except as may be set forth in Section
4.20 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any written or oral (i) loan agreement, note or
borrowing arrangement (including, without limitation, leases, credit
enhancements, commitments, guarantees and interest-bearing assets)
(collectively, "Loans"), other than Loans the unpaid principal balance of
which does not exceed $250,000, under the terms of which the obligor was,
as of February 28, 2002, over 90 days delinquent in payment of principal
or interest or in default of any other provision, or (ii) Loan with any
director, executive officer or five percent or greater stockholder of the
Company or any of its Subsidiaries, or to the knowledge of the Company, any
person, corporation or enterprise controlling, controlled by or under
common control with any of the foregoing. Section 4.20 of the Company
Disclosure Schedule sets forth (i) all of the Loans of the Company or any
of its Subsidiaries that as of February 28, 2002, were classified by any
bank examiner (whether regulatory or internal) as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned Loans", "Watch
List" or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the
borrower thereunder, and (ii) each asset of the Company that as of February
28, 2002, was classified as "Other Real Estate Owned" and the book value
thereof.
(b) Each Loan in original principal amount in excess of
$250,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to
the extent secured, has been secured by valid liens and security interests
which have been perfected and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
4.21 Property. Each of the Company and its Subsidiaries has
good and marketable title free and clear of all liens, encumbrances,
mortgages, pledges, charges, defaults or equitable interests to all of the
properties and assets, real and personal, tangible or intangible, which are
reflected on the consolidated balance sheet of the Company as of December
31, 2001 or acquired after such date, except (i) liens for taxes not yet
due and payable or contested in good faith by appropriate proceedings, (ii)
pledges to secure deposits and other liens incurred in the ordinary course
of business, (iii) such imperfections of title, easements and encumbrances,
if any, as do not interfere with the use of the respective property as such
property is used on the date of this Agreement, (iv) for dispositions of or
encumbrances on such properties or assets in the ordinary course of
business or (v) mechanics', materialmen's, workmen's, repairmen's,
warehousemen's, carrier's and other similar liens and encumbrances arising
in the ordinary course of business. All leases pursuant to which the
Company or any Subsidiary of the Company, as lessee, leases real or
personal property are valid and enforceable in accordance with their
respective terms and neither the Company nor any of its Subsidiaries nor,
to the knowledge of the Company, any other party thereto, is in default
thereunder.
4.22 Reorganization. As of the date of this Agreement, the
Company has no reason to believe that the Merger will fail to qualify as a
reorganization under Section 368(a) of the Code.
4.23 State Takeover Laws and Charter Provisions. Assuming the
accuracy of the representations and warranties of Parent set forth in
Section 5.15 hereof, the Company has taken all necessary action to exempt
the transactions contemplated by this Agreement from any restrictive
provision of (i) any applicable moratorium, control share, fair price,
business combination, or other anti-takeover laws and regulations
(including, without limitation, Sections 607.0901 and 607.0902 of the
FBCA), or (ii) the Articles of Incorporation or Bylaws of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Subject to Article III, Parent hereby represents and warrants
to the Company as follows:
5.1 Corporate Organization. (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of South Carolina. Parent has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. Parent is
duly registered as a bank holding company under the BHC Act. The Articles
of Incorporation and Bylaws of Parent, copies of which have previously
been made available to the Company, are true and correct copies of such
documents as in effect as of the date of this Agreement.
(b) Each Subsidiary of Parent is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. Each Subsidiary of Parent has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary. The deposit accounts of each Subsidiary of Parent that is a bank
are insured by the FDIC through the Bank Insurance Fund or the Savings
Association Insurance Fund to the fullest extent permitted by law, and all
premiums and assessments required in connection therewith have been paid
when due. The charter documents and bylaws of each Subsidiary of Parent
that is a "Significant Subsidiary" (within the meaning of Rule 1-02 of
Regulation S-X of the SEC), copies of which have previously been made
available to the Company, are true and correct copies of such documents as
in effect as of the date of this Agreement.
(c) The minute books of Parent and each of its Subsidiaries
contain true and correct records of all meetings and other corporate
actions held or taken since December 31, 1999 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
5.2 Capitalization. (a) The authorized capital stock of Parent
consists of 100,000,000 shares of Parent Common Stock and 10,000,000 shares
of preferred stock, no par value per share ("Parent Preferred Stock"). As
of the date of this Agreement, there were 41,296,522 shares of Parent
Common Stock and no shares of Parent Preferred Stock issued and
outstanding, and no shares of Parent Common Stock held in Parent's
treasury. As of the date of this Agreement, no shares of Parent Common
Stock or Parent Preferred Stock were reserved for issuance, except that (i)
6,415,373 shares of Parent Common Stock were reserved for issuance upon the
exercise of stock options pursuant to the stock plans listed on Attachment
A-1 to Section 5.2(a) of the Parent Disclosure Schedule (collectively, the
"Parent Stock Plans"), and (ii) 20,614,488 shares of Parent Common Stock
were reserved for issuance upon exercise of the rights (the "Parent
Rights") distributed to holders of Parent Common Stock pursuant to the
Amended and Restated Shareholder Rights Agreement, dated as of November 9,
1993, between Parent and Carolina First Bank, as Rights Agent (the "Parent
Shareholder Rights Agreement"). All of the issued and outstanding shares of
Parent Common Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this
Agreement, except as referred to above or reflected in Section 5.2(a) of
the Parent Disclosure Schedule and except for the Parent Shareholder Rights
Agreement, Parent does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Parent
Common Stock or any other equity securities of Parent or any securities
representing the right to purchase or otherwise receive any shares of
Parent Common Stock or Parent Preferred Stock or any other equity
securities of Parent. The shares of Parent Common Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at
the Effective Time, all such shares will be fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof.
(b) Section 5.2(b) of the Parent Disclosure Schedule sets forth
a true and correct list of all of the Parent Subsidiaries as of the date of
this Agreement. Except as may be set forth in Section 5.2(b) of the Parent
Disclosure Schedule, as of the date of this Agreement, Parent owns,
directly or indirectly, all of the issued and outstanding shares of capital
stock of each of the Subsidiaries of Parent, free and clear of all liens,
charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, no
Subsidiary of Parent has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character with
any party calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary.
5.3 Authority; No Violation. (a) Parent has full corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of Parent, and no
other corporate proceedings on the part of Parent are necessary to approve
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent and
(assuming due authorization, execution and delivery by the Company) this
Agreement constitutes a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Except as may be set forth in Section 5.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of this Agreement
by Parent, nor the consummation by Parent of the transactions contemplated
hereby, nor compliance by Parent with any of the terms or provisions
hereof, will (i) violate any provision of the Articles of Incorporation or
Bylaws of Parent, or the articles of incorporation or bylaws or similar
governing documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 5.4 are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Parent or any of its Subsidiaries
or any of their respective properties or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Parent or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation
to which Parent or any of its Subsidiaries is a party, or by which they or
any of their respective properties or assets may be bound or affected.
5.4 Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Federal Reserve Board
under the BHC Act, and approval of such applications and notices, (b) the
filing with the SEC of the Proxy Statement and the filing and declaration
of effectiveness of the S-4, (c) the filing of the Florida Articles of
Merger with the Florida Department and the South Carolina Articles of
Merger with the South Carolina Secretary, (d) the filing of applications
and notices, as applicable, with the FDIC under the Bank Merger Act,
Federal Deposit Insurance Act and the rules and regulations of the FDIC,
and approval of such applications and notices, (e) the State Banking
Approvals, (f) such filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of Parent Common Stock pursuant
to this Agreement, (g) approval of the listing of the Parent Common Stock
to be issued in the Merger on the NASDAQ/NMS, and (h) such filings,
authorizations or approvals as may be set forth in Section 5.4 of the
Parent Disclosure Schedule, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are
required to be made by Parent in connection with (1) the execution and
delivery by Parent of this Agreement and (2) the consummation by Parent of
the Merger and the other transactions contemplated hereby.
5.5 SEC Reports. Parent has previously made available to the
Company a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
December 31, 1999 by Parent with the SEC pursuant to the Securities Act or
the Exchange Act (the "Parent Reports") and (b) communication mailed by
Parent to its shareholders since December 31, 1999, and no such Parent
Report (when filed and at their respective effective time, if applicable)
or communication (when mailed) contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as of
an earlier date. Parent has timely filed all Parent Reports and other
documents required to be filed by it under the Securities Act and the
Exchange Act since December 31, 1999, and, as of their respective dates,
all Parent Reports complied with the published rules and regulations of the
SEC with respect thereto.
5.6 Regulatory Reports. Parent and each of its Subsidiaries
have timely filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that they were
required to file since December 31, 1999 with any Regulatory Agency, and
have paid all fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a Regulatory Agency
in the regular course of the business of Parent and its Subsidiaries, and
except as may be set forth in Section 5.6 of Parent Disclosure Schedule, no
Regulatory Agency has initiated any proceeding or, to the knowledge of
Parent, investigation into the business or operations of Parent or any of
its Subsidiaries since December 31, 1999. There is no unresolved
violation, criticism, or exception by any Regulatory Agency with respect
to any report or statement relating to any examinations of Parent or any of
its Subsidiaries.
5.7 Financial Statements. Parent has previously made available
to the Company copies of the consolidated balance sheets of Parent and its
Subsidiaries as of December 31 for the fiscal year 2001 and 2000 and the
related consolidated statements of income, changes in shareholders' equity
and comprehensive income, and cash flows for the fiscal years 1999 through
2001, inclusive, as reported in Parent's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 filed with the SEC under the Exchange
Act, accompanied by the audit report of KPMG LLP, independent public
accountants with respect to Parent. The December 31, 2001 consolidated
balance sheet of Parent (including the related notes, where applicable)
fairly presents the consolidated financial position of Parent and its
Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 5.7 (including the related notes, where
applicable) fairly present and the financial statements to be filed with
the SEC after the date hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature
and amount), the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of Parent and its
Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth; each of such statements (including the related
notes, where applicable) complies, and the financial statements to be filed
with the SEC after the date hereof will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes,
where applicable) has been, and the financial statements to be filed with
the SEC after the date hereof will be, prepared in accordance with GAAP
consistently applied during the periods involved, except as indicated in
the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC. The books and records of Parent and its Subsidiaries
have been, and are being, maintained in accordance with GAAP and any other
applicable legal and accounting requirements.
5.8 Broker's Fees. Neither Parent nor any Subsidiary of Parent,
nor any of their respective officers or directors, has employed any broker
or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by
this Agreement, except that Parent has engaged, and will pay a fee or
commission to, SunTrust ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Capital Markets.
5.9 Absence of Certain Changes or Events. Except as may be set
forth in Section 5.9 of the Parent Disclosure Schedule, or as disclosed in
any Parent Report (as defined in Section 5.5) filed with the SEC prior to
the date of this Agreement, since December 31, 2001, there has been no
change or development or combination of changes or developments which,
individually or in the aggregate, has had a Material Adverse Effect on
Parent.
5.10 Legal Proceedings. (a) Except as may be set forth in
Section 5.10 of the Parent Disclosure Schedule, neither Parent nor any of
its Subsidiaries is a party to any and there are no pending or, to Parent's
knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
of any nature against Parent or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment or decree imposed
upon Parent, any of its Subsidiaries or the assets of Parent or any of its
Subsidiaries.
5.11 Taxes. Except as may be set forth in Section 5.11 of the
Parent Disclosure Schedule, each of Parent and its Subsidiaries has (i)
duly and timely filed (including applicable extensions granted without
penalty) all material Tax Returns required to be filed at or prior to the
Effective Time, and all such Tax Returns are true and correct, and (ii)
paid in full or made adequate provision in the financial statements of
Parent (in accordance with GAAP) for all material Taxes shown to be due on
such Tax Returns. Except as set forth in Section 5.11 of the Parent
Disclosure Schedule, (i) as of the date hereof, neither Parent nor any of
its Subsidiaries has requested any extension of time within which to file
any Tax Returns in respect of any fiscal year which have not since been
filed and no request for waivers of the time to assess any Taxes are
pending or outstanding, and (ii) as of the date hereof, with respect to
each taxable period of Parent and its Subsidiaries, the federal and state
income Tax Returns of Parent and its Subsidiaries have been audited by the
IRS or appropriate state tax authorities or the time for assessing and
collecting income Tax with respect to such taxable period has closed and
such taxable period is not subject to review.
5.12 Employees. (a) Section 5.12(a) of the Parent Disclosure
Schedule sets forth a true and correct list of each deferred compensation
plan, incentive compensation plan, equity compensation plan, "welfare"
plan, fund or program (within the meaning of section 3(1) of the ERISA);
"pension" plan, fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each
other employee benefit plan, fund, program, agreement or arrangement, in
each case, that is sponsored, maintained or contributed to or required to
be contributed to as of the date of this Agreement by Parent, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a
"Parent ERISA Affiliate"), all of which together with Parent would be
deemed a "single employer" within the meaning of Section 4001 of ERISA, for
the benefit of any employee or former employee of Parent, any Subsidiary or
any Parent ERISA Affiliate (the "Parent Plans").
(b) Except as may be set forth in Section 5.12(b) of the Parent
Disclosure Schedule: each of the Parent Plans is in compliance with the
applicable provisions of the Code and ERISA; each of the Parent Plans
intended to be "qualified" within the meaning of section 401(a) of the Code
has received a favorable determination letter from the IRS; no Parent Plan
has an accumulated or waived funding deficiency within the meaning of
section 412 of the Code; neither Parent nor any Parent ERISA Affiliate has
incurred, directly or indirectly, any liability to or on account of a
Parent Plan pursuant to Title IV of ERISA (other than PBGC premiums); to
the knowledge of Parent no proceedings have been instituted to terminate
any Parent Plan that is subject to Title IV of ERISA; no "reportable
event," as such term is defined in section 4043(c) of ERISA, has occurred
with respect to any Parent Plan (other than a reportable event with respect
to which the thirty day notice period has been waived); and no condition
exists that presents a material risk to Parent of incurring a liability to
or on account of a Parent Plan pursuant to Title IV of ERISA; no Parent
Plan is a multiemployer plan (within the meaning of section 4001(a)(3) of
ERISA and no Parent Plan is a multiple employer plan as defined in Section
413 of the Code; and there are no pending, or, to the knowledge of Parent,
threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of or against any of the Parent Plans or any trusts related
thereto.
5.13 Parent Information. The information relating to Parent and
its Subsidiaries to be contained in the Proxy Statement and the S-4, or in
any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Proxy
Statement (except for such portions thereof that relate to the Company or
any of its Subsidiaries) will comply with the provisions of the Exchange
Act and the rules and regulations thereunder. The S-4 will comply with the
provisions of the Securities Act and the rules and regulations thereunder.
5.14 Compliance with Applicable Law. Parent and each of its
Subsidiaries holds, and has at all times held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and
are not in default in any respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to Parent or any of its Subsidiaries and neither Parent nor any of
its Subsidiaries has received notice of any violations of any of the above.
5.15 Ownership of Company Common Stock; Affiliates and
Associates.
(a) Neither Parent nor any of its affiliates or associates (as
such terms are defined under the Exchange Act) (i) beneficially owns,
directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
any shares of capital stock of the Company (other than Trust Account
Shares); and
(b) Neither Parent nor any of its Subsidiaries is a "Principal
Shareholder" (as such term is defined in Article X of the Company's
Articles of Incorporation), or an "interested shareholder" or an
"associate" or "affiliate" of any "interested shareholder" (as such terms
are defined in Section 607.0901 of the FBCA).
5.16 Agreements with Regulatory Agencies. Except as may be set
forth in Section 5.16 of the Parent Disclosure Schedule or as disclosed in
Parent's Annual Report on Form 10-K for the year ended December 31, 2001,
neither Parent nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at the
request of (each, whether or not set forth in Section 5.16 of the Parent
Disclosure Schedule, a "Parent Regulatory Agreement"), any Regulatory
Agency that restricts the conduct of its business or that in any manner
relates to its capital adequacy, its credit policies, its management or its
business, nor has Parent or any of its Subsidiaries been advised by any
Regulatory Agency that it is considering issuing or requesting any Parent
Regulatory Agreement.
5.17 Environmental Matters. Except as may be set forth in
Section 5.17 of the Parent Disclosure Schedule:
(a) Each of Parent and its Subsidiaries and, to the knowledge
of Parent, each of the Participation Facilities and the Loan Properties
(each as hereinafter defined), are in compliance with all Environmental
Laws;
(b) There is no suit, claim, action or proceeding, pending or,
to the knowledge of Parent, threatened, before any Governmental Entity or
other forum in which Parent, any of its Subsidiaries, any Participation
Facility or any Loan Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (y) relating
to the release, threatened release or exposure to any Hazardous Material
(as defined in Section 4.17) whether or not occurring at or on a site
owned, leased or operated by Parent or any of its Subsidiaries, any
Participation Facility or any Loan Property; and
(c) To the knowledge of Parent during the period of (x)
Parent's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) Parent's or any of its
Subsidiaries' participation in the management of any Participation
Facility, or (z) Parent's or any of its Subsidiaries' interest in a Loan
Property, there has been no release of Hazardous Materials in, on, under or
affecting any such property. To the knowledge of Parent, prior to the
period of (x) Parent's or any of its Subsidiaries' ownership or operation
of any of their respective current or former properties, (y) Parent's or
any of its Subsidiaries' participation in the management of any
Participation Facility, or (z) Parent's or any of its Subsidiaries'
interest in a Loan Property, there was no release of Hazardous Materials
in, on, under or affecting any such property, Participation Facility or
Loan Property.
The following definitions apply for purposes of this Section
5.17: (x) "Loan Property" means any property in which Parent or any of its
Subsidiaries holds a security interest, and, where required by the context,
such term means the owner or operator of such property; and (y)
"Participation Facility" means any facility in which Parent or any of its
Subsidiaries participates in the management and, where required by the
context, such term means the owner or operator of such property.
5.18 Financing. Parent has available sufficient cash and cash
equivalents on hand to pay the Total Cash Amount as contemplated by Section
1.4 hereof.
5.19 Approvals. As of the date of this Agreement, Parent knows
of no reason why all regulatory approvals required for the consummation of
the transactions contemplated hereby (including, without limitation, the
Merger) should not be obtained.
5.20 Loan Portfolio. (a) Except as may be set forth in Section
5.20 of Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is a party to any written or oral (i) Loan, other than Loans
the unpaid principal balance of which does not exceed $500,000, under the
terms of which the obligor was, as of January 31, 2002, over 90 days
delinquent in payment of principal or interest or in default of any other
provision, or (ii) Loan with any director, executive officer or five
percent or greater stockholder of Parent or any of its Subsidiaries, or to
the knowledge of Parent, any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing. Section
5.20 of Parent Disclosure Schedule sets forth (i) all of the Loans in
original principal amount in excess of $500,000 of Parent or any of its
Subsidiaries that as of January 31, 2002, were classified by any bank
examiner (whether regulatory or internal) as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned Loans", "Watch
List" or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the
borrower thereunder, (ii) by category of Loan (i.e., commercial, consumer,
etc.), all of the other Loans of Parent and its Subsidiaries that as of
January 31, 2002, were classified as such, together with the aggregate
principal amount of and accrued and unpaid interest on such Loans by
category, and (iii) each asset of Parent that as of January 31, 2002, was
classified as "Other Real Estate Owned" and the book value thereof.
(b) Each Loan in original principal amount in excess of
$500,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to
the extent secured, has been secured by valid liens and security interests
which have been perfected and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
5.21 Property. Each of Parent and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages,
pledges, charges, defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible, and which are
reflected on the consolidated balance sheet of Parent as of December 31,
2001 or acquired after such date, except (i) liens for taxes not yet due
and payable or contested in good faith by appropriate proceedings, (ii)
pledges to secure deposits and other liens incurred in the ordinary course
of business, (iii) such imperfections of title, easements and encumbrances,
if any, as do not interfere with the use of the respective property as such
property is used on the date of this Agreement, (iv) for dispositions of or
encumbrances on such properties or assets in the ordinary course of
business or (v) mechanics', materialmen's, workmen's, repairmen's,
warehousemen's, carrier's and other similar liens and encumbrances arising
in the ordinary course of business. All leases pursuant to which Parent or
any Subsidiary of Parent, as lessee, leases real or personal property are
valid and enforceable in accordance with their respective terms and neither
Parent nor any of its Subsidiaries nor, to the knowledge of Parent, any
other party thereto is in default thereunder.
5.22 Reorganization. As of the date of this Agreement, Parent
has no reason to believe that the Merger will fail to qualify as a
reorganization under Section 368(a) of the Code.
5.23 Certain Contracts. (a) Except as set forth in Section
5.23(a) of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is a party to or bound by any contract (whether written or
oral) (i) with respect to the employment of any directors, officers,
employees or consultants, (ii) which is a material contract (as defined in
Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the
date of this Agreement, regardless of whether the contract has been filed
or incorporated by reference in the Company Reports, or (iii) which
materially restricts the conduct of any line of business by Parent or any
of its Subsidiaries. Each contract, arrangement, commitment or
understanding of the type described in this Section 5.23(a), whether or not
set forth in Section 5.23(a) of the Parent Disclosure Schedule, is referred
to herein as a "Parent Contract". Parent has previously delivered or made
available to the Company true and correct copies of each contract,
arrangement, commitment or understanding of the type described in this
Section 5.23(a).
(b) Except as set forth in Section 5.23(b) of the Parent
Disclosure Schedule, (i) each Parent Contract is valid and binding and in
full force and effect, (ii) Parent and each of its Subsidiaries has
performed all obligations required to be performed by it to date under each
Parent Contract, (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a default on the
part of Parent or any of its Subsidiaries under any Parent Contract, and
(iv) no other party to any Parent Contract is, to the knowledge of Parent,
in default in any respect thereunder.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement or with the prior
written consent of Parent, the Company and its Subsidiaries shall carry on
their respective businesses in the ordinary course consistent with past
practice. Without limiting the generality of the foregoing, and except as
set forth in Section 6.1 of the Company Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by Parent, the
Company shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any
dividends on, or make other distributions in respect of, any of its capital
stock, other than the Company's normal annual dividend not in excess of
$0.10 per share of Company Common Stock;
(b) (i) repurchase, redeem or otherwise acquire (except for the
acquisition of Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(d) hereof) any shares of the capital stock of the
Company or any Subsidiary of the Company, or any securities convertible
into or exercisable for any shares of the capital stock of the Company or
any Subsidiary of the Company, (ii) split, combine or reclassify any shares
of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (iii) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with
respect to any of the foregoing other than pursuant to the ESPP, except, in
the case of clauses (ii) and (iii), for the issuance of Company Common
Stock upon the exercise or fulfillment of rights or options issued or
existing pursuant to employee benefit plans, programs or arrangements, all
to the extent outstanding and in existence on the date of this Agreement
and in accordance with their present terms;
(c) amend its Articles of Incorporation, Bylaws or other
similar governing documents;
(d) make any capital expenditures other than those which (i)
are made in the ordinary course of business or are necessary to maintain
existing assets in good repair and (ii) in any event are in an amount of no
more than $100,000 in the aggregate;
(e) enter into any new line of business;
(f) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire any assets, which would be material,
individually or in the aggregate, to the Company, other than in connection
with foreclosures, settlements in lieu of foreclosure or troubled loan or
debt restructurings in the ordinary course of business consistent with past
practices;
(g) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth
in this Agreement being or becoming untrue, or in any of the conditions to
the Merger set forth in Article VIII not being satisfied;
(h) change its methods of accounting in effect at December 31,
2001, except as required by changes in GAAP or regulatory accounting
principles as concurred to by the Company's independent auditors;
(i) (i) except as set forth in Section 7.8 hereof, as required
by applicable law or as required to maintain qualification pursuant to the
Code, adopt, amend, or terminate any employee benefit plan (including,
without limitation, any Plan) or any agreement, arrangement, plan or policy
between the Company or any Subsidiary of the Company and one or more of its
current or former directors, officers or employees or any "affiliate" of
any such person (as such term is used in Rule 12b-2 under the Exchange
Act), except that the Company may adopt the retention and severance
programs and make the pro-rata bonus payments, in each case as described in
Section 6.1(i) of the Company Disclosure Schedule, or (ii) except for
normal increases in the ordinary course of business consistent with past
practice or except as required by applicable law, increase in any manner
the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any Plan or agreement as in effect as of
the date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares).
(j) other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose
of, any of its material assets, properties or other rights or agreements;
(k) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become responsible for
the obligations of any other individual, corporation or other entity;
(l) file any application to relocate or terminate the
operations of any banking office of it or any of its Subsidiaries;
(m) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract,
agreement or lease for goods, services or office space to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or their respective properties is bound, other than the
renewal in the ordinary course of business of any lease the term of which
expires prior to the Closing Date;
(n) take or cause to be taken any action which would or could
reasonably be expected to prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code; or
(o) agree to do any of the foregoing.
6.2 Covenants of Parent. Except as set forth in Section 6.2 of
the Parent Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to in writing by the Company, Parent shall not, and
shall not permit any of its Subsidiaries to:
(a) solely in the case of Parent, declare or pay any dividends
on or make any other distributions in respect of any of its capital stock
other than its current quarterly dividends; provided, however, that nothing
contained herein shall prohibit Parent from increasing the quarterly cash
dividend on the Parent Common Stock in a manner consistent with past
practice;
(b) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth
in this Agreement being or becoming untrue, or in any of the conditions to
the Merger set forth in Article VIII not being satisfied;
(c) take any action or enter into any agreement that could
reasonably be expected to jeopardize or materially delay the receipt of any
Requisite Regulatory Approval (as defined in Section 8.1(c));
(d) change its methods of accounting in effect at December 31,
2001, except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by Parent's independent auditors;
(e) take or cause to be taken any action which would or could
reasonably be expected to prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code; or
(f) agree to do any of the foregoing.
6.3 Conduct of Parent's Business. Parent shall, and Parent
shall cause its Subsidiaries to, conduct their business in substantially
the same manner as heretofore conducted.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. (a) The Company shall promptly prepare
and file with the SEC the Proxy Statement and Parent shall promptly prepare
and file with the SEC the S-4, in which the Proxy Statement will be
included as a prospectus. Each of the Company and Parent shall use its
reasonable best efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and the
Company shall thereafter mail the Proxy Statement to its stockholders.
Parent shall also use its reasonable best efforts to obtain all necessary
state securities law or "Blue Sky" permits and approvals required to carry
out the transactions contemplated by this Agreement.
(b) The parties hereto shall cooperate with each other and use
their reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings,
and to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger). The Company and Parent
shall have the right to review in advance, and to the extent practicable
each will consult the other on, in each case subject to applicable laws
relating to the exchange of information, all the information relating to
the Company or Parent, as the case may be, and any of their respective
Subsidiaries, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with
the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult
with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) Parent and the Company shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement,
the S-4 or any other statement, filing, notice or application made by or on
behalf of Parent, the Company or any of their respective Subsidiaries to
any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
(d) Parent and the Company shall promptly furnish each other
with copies of written communications received by Parent or the Company, as
the case may be, or any of their respective Subsidiaries, Affiliates or
Associates (as such terms are defined in Rule 12b-2 under the Exchange Act
as in effect on the date of this Agreement) from, or delivered by any of
the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
7.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information, each
party shall, and shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel and other representatives of the
other party, access, during normal business hours during the period prior
to the Effective Time, to all its properties, books, contracts,
commitments, records, officers, employees, accountants, counsel and other
representatives and, during such period, it shall, and shall cause its
Subsidiaries to, make available to the other party all information
concerning its business, properties and personnel as the other party may
reasonably request. Neither party nor any of its Subsidiaries shall be
required to provide access to or to disclose information where such access
or disclosure would violate or prejudice the rights of its customers,
jeopardize any attorney-client privilege or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement. The parties hereto will
make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) All information furnished to Parent or the Company by the
other party hereto pursuant to Section 7.2(a) shall be subject to, and the
parties shall hold all such information in confidence in accordance with,
the provisions of the confidentiality agreement, dated January 23, 2002
(the "Confidentiality Agreement"), between Parent and the Company.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other set forth herein.
7.3 Certain Actions. (a) Except with respect to this Agreement
and the transactions contemplated hereby, neither the Company nor any of
its directors, officers, agents, affiliates (as such term is used in Rule
12b-2 under the Exchange Act) or representatives (collectively,
"Representatives") shall, directly or indirectly, initiate, solicit,
encourage or knowingly facilitate (including by way of furnishing
information) any inquiries with respect to or the making of any Acquisition
Proposal (as defined below).
(b) Notwithstanding anything herein to the contrary, the
Company and its Board of Directors shall be permitted (i) to comply with
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to
an Acquisition Proposal, (ii) to engage in any discussions or negotiations
with, or provide any information to, any person in response to an
unsolicited bona fide written Acquisition Proposal by any such person, if
and only to the extent that (a) the Company's Board of Directors concludes
in good faith and consistent with its fiduciary duties to the Company's
stockholders under applicable law that such Acquisition Proposal would
reasonably be expected to result in a Superior Proposal (as defined below),
(b) prior to providing any information or data to any person in connection
with an Acquisition Proposal by any such person, the Company's Board of
Directors receives from such person an executed confidentiality agreement
containing terms at least as stringent as those contained in the
Confidentiality Agreement (as defined in Section 7.2(b)), and (c) prior to
providing any information or data to any person or entering into
discussions or negotiations with any person, the Company's Board of
Directors notifies Parent promptly of such inquiries, proposals, or offers
received by, any such information requested from, or any such discussions
or negotiations sought to be initiated or continued with, any of its
Representatives indicating, in connection with such notice, the name of
such person and the material terms and conditions of any inquiries,
proposals or offers.
(c) The Company agrees that it will, and will cause its
Representatives to, immediately cease and cause to be terminated any
activities, discussions, or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any
Acquisition Proposal.
(d) For purposes of this Section 7.3:
(i) The term "Acquisition Proposal" means any tender offer
or exchange offer or any proposal for a merger, reorganization,
consolidation, share exchange, recapitalization, liquidation,
dissolution or other business combination involving the Company or
the Company Bank or any proposal or offer to acquire a substantial
equity interest in, or a substantial portion of the assets of, the
Company or the Company Bank, other than the transaction contemplated
or permitted by this Agreement.
(ii) The term "Superior Proposal" means, with respect to
the Company, any written Acquisition Proposal made by a person other
than Parent which is for (i) (a) a merger, reorganization,
consolidation, share exchange, business combination, recapitalization
or similar transaction involving the Company, (b) a sale, lease,
exchange, transfer, or other disposition of at least 50% of the
assets of the Company and its Subsidiaries, taken as a whole, in a
single transaction or a series of related transactions, or (c) the
acquisition, directly or indirectly, by a person of beneficial
ownership of 50% or more of the Company Common Stock whether by
merger, consolidation, share exchange, business combination, tender,
or exchange offer or otherwise, and (ii) which is otherwise on terms
which the Board of Directors of the Company in good faith concludes
(after consultation with its financial advisors and outside counsel),
taking into account, among other things, all legal, financial,
regulatory, and other aspects of the proposal and the person making
the proposal, (a) would, if consummated, result in a transaction that
is more favorable to its stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement, and (b) is reasonably capable of
being completed.
7.4 Stockholder Meetings. The Company shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders to be held as soon as is reasonably practicable after the date
on which the S-4 becomes effective for the purpose of voting upon the
approval of this Agreement and the consummation of the transactions
contemplated hereby. The Company shall, through its Board of Directors,
subject to the fiduciary duties of such board, recommend to its
stockholders approval of this Agreement and the transactions contemplated
hereby and such other matters as may be submitted to its stockholders in
connection with this Agreement.
7.5 Legal Conditions to Merger. Each of Parent and the Company
shall, and shall cause its Subsidiaries to, use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be
imposed on such party or its Subsidiaries with respect to the Merger and,
subject to the conditions set forth in Article VIII hereof, to consummate
the transactions contemplated by this Agreement and (b) to obtain (and to
cooperate with the other party to obtain) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity and any other
third party which is required to be obtained by the Company or Parent or
any of their respective Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement, and to comply with the
terms and conditions of such consent, authorization, order or approval.
7.6 Affiliates. The Company shall use its reasonable best
efforts to cause each director, executive officer and other person who is
an "affiliate" (for purposes of Rule 145 under the Securities Act) of the
Company to deliver to Parent, as soon as practicable after the date of this
Agreement, a written agreement, in the form of Exhibit 7.6 hereto.
7.7 Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for listing on the NASDAQ/NMS as of the Effective Time.
7.8 Employee Benefit Plans; Existing Agreements. (a) As of the
Effective Time, the employees of the Company and its Subsidiaries (the
"Company Employees") shall be eligible to participate in employee benefit
plans of Parent or its Subsidiaries in which similarly situated employees
of Parent or its Subsidiaries participate, to the same extent that
similarly situated employees of Parent or its Subsidiaries participate (it
being understood that inclusion of Company Employees in Parent's employee
benefit plans may occur at different times with respect to different plans).
(b) With respect to each Parent Plan for which length of
service is taken into account for any purpose, service with the Company or
any of its Subsidiaries (or predecessor employers to the extent the Company
provides past service credit) shall be treated as service with Parent for
purposes of determining eligibility to participate, vesting, and
entitlement to benefits, including for severance benefits and vacation
entitlement (but not for accrual of defined benefit pension benefits);
provided however, that such service shall not be recognized to the extent
that such recognition would result in a duplication of benefits. Such
service also shall apply for purposes of satisfying any waiting periods,
evidence of insurability requirements, or the application of any
preexisting condition limitations. Each Parent Plan shall waive
pre-existing condition limitations to the same extent waived under the
applicable Company Plan. Company Employees shall be given credit for
amounts paid under a corresponding benefit plan during the same period for
purposes of applying deductibles, copayments and out-of-pocket maximums as
though such amounts had been paid in accordance with the terms and
conditions of the Parent Plan.
(c) As of the Effective Time, Parent shall assume and honor and
shall cause the appropriate Subsidiaries of Parent to assume and to honor
in accordance with their terms all agreements listed in Section 7.8 of the
Company Disclosure Schedule (the "Benefit Agreements"). Parent acknowledges
and agrees that the Merger will constitute a merger, sale or a change in
control of the Company for all purposes under such agreements. The
provisions of this Section 7.8(c) are intended to be for the benefit of,
and shall be enforceable by, each director, officer or employee that is a
party to any Benefit Agreement.
(d) Parent and the Company agree that, prior to the Effective
Time, the company may adopt a severance plan (the "Severance Plan") and a
change in control retention plan (the "Retention Plan"), each substantially
as provided in Section 6.1(i) of the Company Disclosure Schedule.
Notwithstanding any other provision of this Agreement, any Plan or
otherwise, Parent agrees to maintain in full force and effect, without
amendment or modification, (i) for a period of no less than one year
following the Closing Date, the Severance Plan and (ii) the Retention Plan
until such time as all Parent or Company obligations are fulfilled
thereunder.
7.9 Indemnification. (a) In the event of any threatened or
actual claim, action, suit, proceeding or investigation, whether civil,
criminal or administrative, in which any person who is now, or has been at
any time prior to the date of this Agreement, or who becomes prior to the
Effective Time, a director, officer or employee of the Company or any of
its Subsidiaries (the "Indemnified Parties") is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a director, officer
or employee of the Company, any of the Subsidiaries of the Company or any
of their respective predecessors or affiliates or (ii) this Agreement or
any of the transactions contemplated hereby, whether in any case asserted
or arising before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and respond thereto.
It is understood and agreed that after the Effective Time, Parent shall
indemnify and hold harmless, as and to the fullest extent permitted by law,
each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party to the fullest extent permitted
by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Parent; provided, however,
that (1) Parent shall have the right to assume the defense thereof and upon
such assumption Parent shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred
by any Indemnified Party in connection with the defense thereof, except
that if Parent elects not to assume such defense or counsel for the
Indemnified Parties reasonably advises that there are issues which raise
conflicts of interest between Parent and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them
after consultation with Parent, and Parent shall pay the reasonable fees
and expenses of such counsel for the Indemnified Parties, (2) Parent shall
in all cases be obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties, (3) Parent shall not be liable
for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld), and (4) Parent shall have no
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim Indemnification
under this Section 7.9, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof, provided
that the failure to so notify shall not affect the obligations of Parent
under this Section 7.9 except to the extent such failure to notify
materially prejudices Parent. Parent's obligations under this Section 7.9
shall continue in full force and effect without time limit from and after
the Effective Time.
(b) Parent shall cause the persons serving as officers and
directors of the Company immediately prior to the Effective Time to be
covered for a period of three years from the Effective Time by the
directors' and officers' liability insurance policy maintained by the
Company (provided that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are not
less advantageous than such policy) with respect to acts or omissions
occurring prior to the Effective Time which were committed by such officers
and directors in their capacity as such; provided, however, that in no
event shall Parent be required to expend on an annual basis more than 200%
of the current amount expended by the Company (the "Insurance Amount") to
maintain or procure insurance coverage, and further provided that if Parent
is unable to maintain or obtain the insurance called for by this Section
7.9(b), Parent shall use all reasonable best efforts to obtain as much
comparable insurance as is available for the Insurance Amount.
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Parent assume the obligations set forth in this Section 7.9.
(d) The provisions of this Section 7.9 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives.
7.10 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of any of the parties to the Merger, the proper officers and
directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by
Parent.
7.11 Employee Stock Purchase Plan. Parent shall assume and
honor the ESPP and shall not take any action that would terminate, or
adversely affect the participants in, the ESPP until the completion of the
annual offering (the "Offering") commenced under the ESPP on January 1,
2002, which Offering shall terminate on December 31, 2002 (the "Offering
Termination Date"). The options granted to participants in the ESPP shall
have the terms described in Section 7.11 of the Company Disclosure
Schedule.
7.12 Appointment of Directors. Effective as of the Effective
Time, Parent shall cause its Board of Directors to be expanded by one
member, to a total of 18 members, and shall appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the
"Company Director") to fill the vacancy on Parent's Board of Directors
created by such increase. Subject to the foregoing, as of the Effective
Time the class of directors with a term expiring at Parent's 2005 annual
meeting of stockholders shall include the Company Director. If the Company
Director does not become a director of Parent because of death, disability
or otherwise, or if the Company Director shall cease to be a director of
Parent at any time before the third anniversary of the Effective Time,
Parent agrees, after consultation with the Bank Directors (as defined in
Section 7.13), to cause a person who is a member of the Board of Directors
of the Company as of the date hereof to be elected or appointed to the
Board of Directors of Parent as the new Company Director. In connection
with the annual meeting of Parent next following the Effective Time (the
"Next Annual Meeting"), Parent shall nominate the Company Director for
election as a director by the stockholders of the Company, to continue
serving as a director of the class of directors whose term expires at
Parent's 2005 annual meeting of stockholders, and Parent shall solicit
proxies for his election at the Next Annual Meeting.
7.13 Execution and Authorization of Bank Merger Agreement.
(a) As soon as reasonably practicable after the date of this
Agreement, (a) Parent shall (i) cause the Board of Directors of Parent Bank
to approve the Bank Merger Agreement, (ii) cause Parent Bank to execute and
deliver the Bank Merger Agreement, and (iii) approve the Bank Merger
Agreement as the sole stockholder of Parent Bank, and (b) the Company shall
(i) cause the Board of Directors of the Company Bank to approve the Bank
Merger Agreement, (ii) cause the Company Bank to execute and deliver the
Bank Merger Agreement, and (iii) approve the Bank Merger Agreement as the
sole stockholder of the Company Bank.
(b) The Bank Merger Agreement shall provide that (i) the
surviving entity in the Bank Merger (the "Surviving Bank") shall continue
under the name "Mercantile Bank", or another name to be mutually agreed by
Parent and the Company, (ii) immediately following the effective time of
the Bank Merger, the directors of the Surviving Bank shall consist of all
the directors of the Parent Bank serving immediately prior to the effective
time of the Bank Merger and the Bank Directors (as defined below), each to
hold office in accordance with the Articles of Incorporation and Bylaws of
the Surviving Bank until their respective successors are duly elected or
appointed and qualified, and (iii) the Bank Directors shall hold office for
a period of no less than two years from the effective time of the Bank
Merger. The Bank Merger Agreement shall contain other terms that are normal
and customary in light of the transactions contemplated hereby and such
additional terms as are necessary to carry out the purposes of this
Agreement. The term "Bank Directors" shall mean, collectively, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and four additional persons who are currently serving in the board
of directors of either the Company or Company Bank, each of who shall be
reasonably acceptable to Parent.
(c) If any of the Bank Directors does not become a director of
the Surviving Bank because of death, disability or otherwise, or if any of
the Bank Directors shall cease to be a director of the Surviving Bank at
any time before the second anniversary of the effective time of the Bank
Merger, Parent agrees, after consultation with the remaining Bank
Directors, to cause a person who is a member of the Board of Directors of
the Company as of the date hereof to be elected or appointed to the Board
of Directors of the Surviving Bank as the new Bank Director.
7.14 Advisory Board. Parent shall, effective as of the
Effective Time, cause each individual who is currently serving as a
director of the Company or the Company Bank (other than the Company
Director and the Bank Directors), if such persons are willing to so serve,
to be elected or appointed as members of an advisory board ("Advisory
Board") established by Parent, the function of which shall be to advise
Parent with respect to deposit and lending activities in the Company's
former market area and to maintain and develop customer relationships. The
members of the Advisory Board who are willing to so serve initially shall
be elected or appointed for a term of one year. Parent agrees annually to
re-elect or re-appoint each of the initial members of the Advisory Board to
two successive one-year terms following the initial one-year term;
provided, however, that Parent shall have no obligation to re-elect or
re-appoint any member if Parent reasonably determines that such member has
a conflict of interest that compromises such member's ability to serve
effectively as a member of the advisory board or any cause exists that
otherwise would allow for removal of such person as a director of Parent
if such person were a member of Parent's Board of Directors. Each member of
the Advisory Board shall receive a fee for such service consistent with
Parent's other advisory boards, as described in Section 7.14 of Parent's
Disclosure Schedule. Service on the Board of Directors of the Surviving
Bank or the Advisory Board shall constitute continued service for purposes
of the Company Option Plan.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of the
outstanding shares of Company Common Stock under applicable law.
(b) Listing of Shares. The shares of Parent Common Stock which
shall be issued to the stockholders of the Company upon consummation of the
Merger shall have been authorized for listing on the NASDAQ/NMS.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby (including the Merger)
shall have been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired (all such
approvals and the expiration of all such waiting periods being referred to
herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the S-4
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
8.2 Conditions to Obligations of Parent. The obligation of
Parent to effect the Merger is also subject to the satisfaction or waiver
by Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2,
the representations and warranties of the Company set forth in this
Agreement (other than those set forth in Section 4.2) shall be true and
correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; and (ii) the
representations and warranties of the Company set forth in Section 4.2 of
this Agreement shall be true and correct in all material respects (without
giving effect to Section 3.2 of this Agreement) as of the date of this
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date. Parent shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer or the Chief Financial
Officer of the Company to the foregoing 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 Closing Date,
and Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer or the Chief Financial Officer of
the Company to such effect.
(c) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.
(d) Federal Tax Opinion. Parent shall have received an opinion
from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P., counsel to Parent
("Parent's Counsel"), in form and substance reasonably satisfactory to
Parent, dated the Effective Time, substantially to the effect that on the
basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective
Time, the Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, Parent's Counsel may
require and rely upon representations and covenants, including those
contained in certificates of officers of Parent, the Company and others,
reasonably satisfactory in form and substance to such counsel.
8.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2,
the representations and warranties of Parent set forth in this Agreement
(other than those set forth in Section 5.2) shall be true and correct as of
the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date; and (ii) the representations and
warranties of Parent set forth in Section 5.2 of this Agreement shall be
true and correct in all material respects (without giving effect to Section
3.2 of this Agreement) as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date. The
Company shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer or the Chief Financial Officer of Parent to the
foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent by the Chief
Executive Officer or the Chief Financial Officer of Parent to such effect.
(c) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.
(d) Federal Tax Opinion. The Company shall have received an
opinion from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP (the "Company's
Counsel"), in form and substance reasonably satisfactory to the Company,
dated the Effective Time, substantially to the effect that on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code. In rendering such opinion, the Company's Counsel may
require and rely upon representations and covenants, including those
contained in certificates of officers of Parent, the Company and others,
reasonably satisfactory in form and substance to such counsel.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual consent of the Company and Parent in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Parent or the Company upon written notice to the
other party (i) 30 days after the date on which any request or application
for a Requisite Regulatory Approval shall have been denied or withdrawn at
the request or recommendation of the Governmental Entity which must grant
such Requisite Regulatory Approval, unless within the 30-day period
following such denial or withdrawal a petition for rehearing or an amended
application has been filed with the applicable Governmental Entity,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 9.1(b)(i) if such denial or request or
recommendation for withdrawal shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein or (ii) if any Governmental
Entity of competent jurisdiction shall have issued a final nonappealable
order enjoining or otherwise prohibiting the Merger;
(c) by either Parent or the Company if the Merger shall not
have been consummated on or before the later of (i) October 31, 2002, or
(ii) if the S-4 is given a full review by the SEC, December 31, 2002,
unless the failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth herein;
(d) by either Parent or the Company if the approval of the
stockholders of the Company required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of such stockholders or at any
adjournment or postponement thereof;
(e) by either Parent or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the representations or warranties set
forth in this Agreement on the part of the other party, which breach is not
cured within thirty days following written notice to the party committing
such breach, or which breach, by its nature, cannot be cured prior to the
Closing; provided, however, that neither party shall have the right to
terminate this Agreement pursuant to this Section 9.1(e) unless the breach
of representation or warranty, together with all other such breaches, would
entitle the party receiving such representation not to consummate the
transactions contemplated hereby under Section 8.2(a) (in the case of a
breach of representation or warranty by the Company) or Section 8.3(a) (in
the case of a breach of representation or warranty by Parent);
(f) by either Parent or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the covenants or agreements set forth in
this Agreement on the part of the other party, which breach shall not have
been cured within thirty days following receipt by the breaching party of
written notice of such breach from the other party hereto, or which breach,
by its nature, cannot be cured prior to the Closing; or
(g) by the Company, in the event that the Board of Directors of
the Company determines in good faith, after consultation with outside
counsel, that in light of a Superior Proposal it is necessary to terminate
this Agreement in order to comply with its fiduciary duties to the Company
and to the Company's shareholders under applicable law; provided, however,
that the Board of Directors of the Company may terminate this Agreement
pursuant to this Section 9.1(g) solely in order to concurrently enter into
a letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquisition Agreement") related to a Superior
Proposal; provided further, however, that this Agreement may be terminated
pursuant to this Section 9.1(g) only after the fifth day following Parent's
receipt of written notice advising Parent that the Board of Directors of
the Company is prepared to accept a Superior Proposal, and only if, during
such five-day period, if Parent so elects, the Company and its advisors
shall have negotiated in good faith with Parent to make such adjustments in
the terms and conditions of this Agreement as would enable Parent to
proceed with the transactions contemplated herein on such adjusted terms;
or
(h) by the Company at any time during the three-day period
following the Determination Date (as defined in Section 1.4 hereof), if
both of the following conditions are satisfied:
(1) the Average Closing Price (as defined below) shall
be less than the product of 0.85 and the Starting Price; and
(2) (i) the number obtained by dividing the Average
Closing Price by the Starting Price (such number being referred to
herein as the "Parent Ratio") shall be less than (ii) the number
obtained by dividing the Index Price on the Determination Date by
the Index Price on the Starting Date and subtracting 0.10 from
such quotient (such number being referred to herein as the "Index
Ratio");
subject to the following. If the Company elects to exercise its termination
right pursuant to the immediately preceding sentence, it shall give prompt
written notice to Parent; provided that such notice of election to
terminate may be withdrawn at any time within the aforementioned three-day
period. During the three-day period commencing with its receipt of such
notice, Parent shall have the option of increasing the Total Stock Amount
and/or the Total Cash Amount in a manner such that the conditions set forth
in either clauses (1) or (2) above shall be deemed not to exist; provided,
however, that the Total Cash Amount shall not be increased in a manner that
would cause the failure of the conditions set forth in Sections 8.2(d) or
8.3(d) hereof. For purposes hereof, the condition set forth in (1) above
shall be deemed not to exist if the Total Stock Amount and/or the Total
Cash Amount is increased so that the Per Share Consideration after such
increase is not less than the Per Share Consideration that would have been
in effect if the condition set forth in (1) above did not exist. For
purposes hereof, the condition set forth in clause (2) above shall be
deemed not to exist if the Total Stock Amount and/or the Total Cash Amount
is increased so that the Per Share Consideration after such increase is not
less than the Per Share Consideration that would have been in effect if the
condition set forth in (2) above did not exist. If Parent makes this
election, within such three-day period, it shall give prompt written notice
to Company of such election and the revised Total Stock Amount and/or Total
Cash Amount, whereupon no termination shall have occurred pursuant to this
Section 9.1(h) and this Agreement shall remain in effect in accordance with
its terms (except as the Total Stock Consideration and/or Total Cash Amount
shall have been so modified), and any references in this Agreement to
"Total Stock Consideration," "Total Stock Amount," "Per Share Stock
Consideration" and "Per Share Cash Consideration" shall thereafter be
deemed to refer to the Total Stock Consideration, Total Stock Amount, Per
Share Stock Consideration and Per Share Cash Consideration after giving
effect to any adjustment made pursuant to this Section 9.1(h). For purposes
of this Section 9.1(h), the following terms shall have the meanings
indicated:
"Average Closing Price" means the average of the last reported
sale prices per share of Parent Common Stock as reported on the NASDAQ/NMS
(as reported in The Wall Street Journal or, if not reported therein, in
another mutually agreed upon authoritative source) for the 10 consecutive
trading days immediately preceding the Determination Date (as defined in
Section 1.4(a) hereof).
"Index Price" on a given date means the closing price of the
NASDAQ Bank Index.
"Starting Price" shall mean $19.568.
If Parent declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction between the Starting Date and the Determination Date, the
prices for the common stock of Parent shall be appropriately adjusted for
the purposes of applying this Section 9.1(h).
9.2 Effect of Termination.
(a) In the event of termination of this Agreement by either
Parent or the Company as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect except (i) Sections 7.2(b), 9.2
and 10.3 shall survive any termination of this Agreement and (ii) that,
notwithstanding anything to the contrary contained in this Agreement, no
party shall be relieved or released from any liabilities or damages arising
out of its willful breach of any provision of this Agreement.
(b) If the Company terminates this Agreement pursuant to
Section 9.1(g), the Company shall pay to Parent a termination fee equal to
$5 million (the "Termination Fee Amount") by wire transfer of same day
funds on the date of termination.
(c) In the event that an Acquisition Proposal with respect to
the Company or any of its Subsidiaries shall have been made known to the
Company or any of its Subsidiaries and shall have been publicly announced
or otherwise become public, or shall have been made to the shareholders of
the Company, and thereafter (x) this Agreement is terminated by either
Parent or the Company pursuant to either (i) Section 9.1(c) hereof and
prior to such termination the stockholders of the Company shall not have
previously approved the Merger, or (ii) Section 9.1(d) hereof as a result
of the failure of the stockholders of the Company to approve the Merger,
and (y) within twelve months of such termination (A) the Company or the
Company Bank enters into any Acquisition Agreement providing for any
transaction described in clause (i)(a) or clause (i)(b) of Section
7.3(d)(ii), other than any such transaction involving a merger,
consolidation or similar transaction as to which the common stockholders of
the Company immediately prior thereto own in the aggregate at least 60% of
the common stock of the surviving or transferee corporation or its
publicly-held parent corporation immediately following consummation
thereof, or (B) any person shall acquire beneficial ownership of or the
right to acquire 25% or more of the outstanding shares of Company Common
Stock, then upon the first occurrence of either of the events contemplated
by clause (y) the Company shall pay Parent a termination fee equal to the
Termination Fee Amount by wire transfer of same day funds.
(d) The Company agrees that the agreements contained in Section
9.2(b) and 9.2(c) above are integral parts of the transactions contemplated
by this Agreement and constitute liquidated damages and not a penalty.
(e) Provided that the Company shall not be in material breach
of this Agreement, in the event that this Agreement is terminated by Parent
or the Company pursuant to (i) Section 9.1(c), and at the time of such
termination any of the Non-Florida Approvals (as defined below) shall not
have been obtained, or (ii) Section 9.1(b) as a result of the failure of
Parent to obtain any of the Non-Florida Approvals, Parent shall pay to the
Company a termination fee of $3.5 million by wire transfer of same day
funds on the date of termination. The term "Non-Florida Approvals" shall
mean the Requisite Regulatory Approvals other than any regulatory approval
required under Florida law.
9.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or
after approval of the matters presented in connection with the Merger by
the stockholders of either the Company or Parent; provided, however, that
after any approval of the transactions contemplated by this Agreement by
the Company's stockholders, there may not be, without further approval of
such stockholders, any amendment of this Agreement which reduces the amount
or changes the form of the consideration to be delivered to the Company
stockholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time,
each of the parties hereto, by action taken or authorized by its Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or conditions of
the other party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party, but such extension or
waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at
10:00 a.m. on the first day which is (a) the last business day of a month
and (b) at least one business days after the satisfaction or waiver
(subject to applicable law) of the latest to occur of the conditions set
forth in Article VIII hereof (other than those conditions which relate to
actions to be taken at the Closing) (the "Closing Date"), at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P., unless another time, date or
place is agreed to in writing by the parties hereto.
10.2 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
10.3 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such costs and expenses.
10.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent, to:
The South Financial Group
▇▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Hummers III
Executive Vice President
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P.
First Union Plaza, Suite 1400
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and
(b) if to the Company, to:
Gulf West Banks, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
10.5 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 shall not affect in any way the meaning or
interpretation 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". The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to March 21, 2002. No
provision of this Agreement shall be construed to require the Company,
Parent or any of their respective Subsidiaries or affiliates to take any
action that would violate any applicable law (including common law), rule
or regulation.
10.6 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
10.7 Entire Agreement. This Agreement (including the documents
and the instruments referred to herein) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof, other
than the Confidentiality Agreement between Parent and the Company.
10.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Florida, without
regard to any applicable conflicts of law.
10.9 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained
in 7.2(b) of this Agreement were not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent
breaches of Section 7.2(b) of this Agreement and to enforce specifically
the terms and provisions thereof in any court of the United States or any
state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.10 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
10.11 Publicity. Except as expressly permitted by this
Agreement or otherwise required by law or the rules of the NASDAQ/NMS, so
long as this Agreement is in effect, neither Parent nor the Company shall,
or shall permit any of its Subsidiaries to, issue or cause the publication
of any press release or other public announcement with respect to, or
otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party,
which consent shall not be unreasonably withheld.
10.12 Assignment; No Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
THE SOUTH FINANCIAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Hummers III
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Name: ▇▇▇▇▇▇▇ ▇. Hummers III
Title: Vice President
GULF WEST BANKS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman of the Board
and President