As Filed with the Securities and Exchange Commission on December 31, 2001
Registration No. 333-76104
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COLONY BANKCORP, INC.
(Exact name of registrant as specified in its charter)
Georgia 6022 58-1492391
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification Number)
Incorporation or Classification Code
Organization) Number)
115 South Grant Street
Fitzgerald, Georgia 31750
(229) 426-6000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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James D. Minix
President and Chief Executive Officer
115 South Grant Street
Fitzgerald, Georgia 31750
(229) 426-6000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
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Copies to:
EDWARD J. HARRELL, ESQ. GREGORY J. RUBIS
Martin, Snow, Grant & Napier, LLP Manatt, Phelps & Phillips, LLP
240 Third Street 1001 Page Mill Road, Bldg. 2
Macon, Georgia 31202-1606 Palo Alto, CA 94304
(478) 749-1727 (650) 812-1300
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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EXPLANATORY NOTE
Amendment No. 1 to the Form S-4 is filing to serve as a remedy to an incomplete
transmission involving the December 28th Initial filing. The December 28th
filing did not include the entire Plan of Merger, or Annex A section. Included
with this filing are only the Registration Cover, the Signature Pages, or Part
II section, and the entire Annex A section.
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The articles of incorporation of Colony Bankcorp, Inc., as amended, provide
that Colony may indemnify or obligate itself to indemnify its officers and
directors for their actions to the fullest extent permitted under the Georgia
Business Corporation Code. Article Nine of Colony's bylaws provides that Colony
may indemnify or reimburse any person for reasonable expenses actually incurred
in connection with any action, suit, or proceeding, whether civil or criminal,
to which such person is made a party by reason of his or her position as a
director, trustee, officer, employee, or agent of Colony, or by reason of such
person serving, at the request of Colony, as a director, trustee, officer,
employee, or agent of another firm, corporation, trust, or other organization
or enterprise. However, Colony will not indemnify any such person in relation
to any matter as to which he or she is adjudged guilty or liable of gross
negligence, willful misconduct or criminal acts in the performance of his or
her duties to Colony, or to any firm, corporation, trust, or other organization
or enterprise with which such person was engaged at the request of Colony. In
addition, Colony will not indemnify any such person with respect to any matter
that has been the subject of a compromise settlement, unless indemnification is
approved by: (a) a court of competent jurisdiction; (b) the holders of a
majority of the outstanding shares of capital stock of Colony; or (c) a
majority of disinterested directors then in office.
Article Nine of Colony's bylaws further authorizes Colony, upon approval by
Colony's Board of Directors, to pay expenses in advance of final disposition of
any action, suit or proceeding involving a director, trustee, officer,
employee, or agent if such person submits an undertaking to Colony that he or
she will repay such amount unless it is ultimately determined that he or she
was entitled to such amount under Article Nine.
As provided under Georgia law, the liability of a director may not be
eliminated or limited (a) for any appropriation, in violation of his duties, of
any business opportunity of Colony, (b) for acts or omissions which involve
intentional misconduct or a knowing violation of law, (c) for unlawful
corporate distributions or (d) for any transaction from which the director
received an improper benefit.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Colony's directors and officers are insured against losses arising from any
claim against them as such for wrongful acts or omissions, subject to certain
limitations.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
Exhibit Description of Exhibit
- ------- --------------------------------------------------------------------------------------------------
2.1 Agreement and Plan of Merger by and between Colony Bankcorp, Inc. and Quitman Bankcorp, Inc.
dated as of October 22, 2001, included as Appendix A to the proxy statement/prospectus set forth
in Part I of the registration statement.
3.1 Articles of Incorporation of Colony (incorporated by reference to Exhibit 3 (a) to Colony's
registration statement on Form 10 (File No. 0-86486), filed with the Commission on April 25,
1990).
II-1
Exhibit Description of Exhibit
- ------- -------------------------------------------------------------------------------------------------------
*3.2 Amendment to Articles of Incorporation dated February 16, 1999.
*3.3 Amendment to Articles of Incorporation dated May 18, 1999.
3.4 Bylaws of Colony Bankcorp, Inc., as amended (incorporated by reference to Exhibit 3 (b) to Colony's
Registration Statement on Form 10 (File No. 0-18486) filed with the Commission on April 25,
1990).
4.1 See Exhibits 3.1, 3.2, 3.3, and 3.4 for provisions of Articles of Incorporation and Bylaws, as amended,
which define the rights of its shareholders.
4.2 Form of Certificate for Colony Bankcorp, Inc. (incorporated herein by reference to Colony's
Registration Statement on Form 10 (File No. 0-18486) filed with the Commission on April 25,
1990).
*5.1 Opinion of Martin, Snow, Grant & Napier, LLP regarding legality of securities being registered
(including its consent).
*8.1 Opinion of Martin, Snow, Grant & Napier, LLP regarding certain tax matters (including its consent).
10.1 Colony Bankcorp, Inc 1999 Restricted Stock Grant Plan (incorporated by reference to Exhibit 10 (c)
of Colony's annual report on Form 10-K (File No. 000-12436), filed with the Commission on
March 30, 2001).
10.2 Profit Sharing Plan dated January 1, 1979 (filed as Exhibit 10(b) to Colony Bankcorp, Inc.'s
registration statement on Form 10 (File No. 0-18486) filed with the Commission on April 25,
1990).
*10.3 Proposed Employment Agreement between Quitman Federal Savings Bank and Melvin E. Plair to be
entered into upon consummation of the merger.
*10.4 Proposed Employment Agreement between Quitman Federal Savings Bank and Peggy L. Forgione to
be entered into upon consummation of the merger.
13.1 Annual Report of Colony Bankcorp, Inc. on Form 10-K for the year ended December 31, 2000
(attached as Appendix E to the prospectus/proxy statement).
*21.1 Schedule of subsidiaries of Colony Bankcorp, Inc.
*23.1 Consents of Martin, Snow, Grant & Napier, LLP (included as parts of Exhibits 5.1 and 8.1 hereto).
*23.2 Consent of McNair, McLemore, Middlebrooks & Co., LLP.
*23.3 Consent of Stewart, Fowler & Stalvey, P.C.
*23.4 Consent of Trident Securities.
24 Power of Attorney (included on the Signature Page to the Registration Statement).
99.1 Opinion of Trident Securities (attached as Appendix C to proxy statement/prospectus).
*99.2 Form of Letter of Transmittal.
*99.3 Form of Proxy Card for the special meeting of shareholders of Quitman Bancorp, Inc.
- --------
* Previously filed
II-2
(b) Financial Statement Schedules.
No financial statements schedules are required to be filed as part of this
Registration Statement.
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(b) The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (a) immediately preceding, or (ii) that
purports to meet the requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, as amended, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(f) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(A) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(B) to reflect in the prospectus any facts or event arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum, offering
range may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 42(b), if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
II-3
(C) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities it that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(g) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Colony Bankcorp,
Inc. has filed this Amendment to the Registration Statement to be signed on its
behalf by the undersigned duly authorized in the City of Fitzgerald, State of
Georgia, on December 20, 2001.
COLONY BANKCORP, INC.
By: /s/ James D. Minix
_____________________________________
JAMES D. MINIX, President
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and
appoints James D. Minix and Terry L. Hester as true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments to this registration statement (including pre- and post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto such attorney-in-fact full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that such attorney-in-fact, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on December 20, 2001.
Signature Title
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/s/ James D. Minix President Chief Executive Officer and Director
- ------------------------- (Principal Executive Officer)
JAMES D. MINIX
/s/ Terry L. Hester Executive Vice-President, and
- ------------------------- Director and Chief Financial Officer)
TERRY L. HESTER (Principal Financial and Accounting Officer)
- ------------------------- Director
TERRY COLEMAN
/s/ Morris Downing Director
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MORRIS DOWNING
- ------------------------- Director
MILTON N. HOPKINS, JR.
/s/ Harold E. Kimball Director
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HAROLD E. KIMBALL
/s/ Marion H. Massee, III Director
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MARION H. MASSEE, III
- ------------------------- Director
BEN B. MILLS, JR.
II-5
Signature Title
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/s/ Walter P. Patten Director
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WALTER P. PATTEN
- ---------------------- Director
RALPH D. ROBERTS
/s/ W. B. Roberts, Jr. Director
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W.B. ROBERTS, JR.
/s/ Sidney Ross Director
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SIDNEY ROSS
/s/ Joe K. Shiver Director
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JOE. K. SHIVER
II-6
EXHIBIT INDEX
Document
Number Description of Exhibit
2.1 Agreement and Plan of Merger by and between Colony Bankcorp, Inc. and Quitman Bancorp, Inc.
dated as of October 22, 2001, included as Appendix A to the proxy statement/prospectus set forth
in Part I of the registration statement.
3.1 Articles of Incorporation of Colony (incorporated by reference to Exhibit 3(a) to Colony's
registration statement on Form 10 (File No. 0-8486), filed with the Commission on April 25, 1990).
*3.2 Amendment to Articles of Incorporation dated February 16, 1999.
*3.3 Amendment to Articles of Incorporation dated May 18, 1999.
3.4 Bylaws of Colony Bankcorp, Inc., as amended (incorporated by reference to Exhibit 3(b) to
Colony's Registration Statement on Form 10 (File No. 0-18486) filed with the Commission on
April 25, 1990).
4.1 See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of Articles of Incorporation and Bylaws, as
amended, which define the rights of its shareholders.
4.2 Form of Certificate for Colony Bankcorp, Inc. (incorporated herein by reference to Colony's
Registration Statement on Form 10 (File No. 0-18486) filed with the Commission on April 25,
1990).
*5.1 Opinion of Martin, Snow, Grant & Napier, LLP regarding legality of securities being registered
(including its consent).
*8.1 Opinion of Martin, Snow, Grant & Napier, LLP regarding certain tax matters (including its
consent).
10.1 Colony Bankcorp, Inc. 1999 Restricted Stock Grant Plan (incorporated by reference to
Exhibit 10(c) of Colony's annual report on Form 10-K (File No. 000-12436), filed with the
Commission on March 30, 2001).
10.2 Profit Sharing Plan dated January 1, 1979 (filed as Exhibit 10(b) to Colony Bankcorp, Inc.'s
registration statement on Form 10 (File No. 0-18486) filed with the Commission on April 25,
1990).
*10.3 Proposed Employment Agreement between Quitman Federal Savings Bank and Melvin E. Plair to
be entered into upon consummation of the merger.
*10.4 Proposed Employment Agreement between Quitman Federal Savings Bank and Peggy L. Forgione
to be entered into upon consummation of the merger.
13.1 Annual Report of Colony Bankcorp, Inc. on Form 10-K for the year ended December 31, 2000
(attached as Appendix E to the prospectus/proxy statement).
*21.1 Schedule of subsidiaries of Colony Bankcorp, Inc.
*23.1 Consent of Martin, Snow, Grant & Napier, LLP (included as parts of Exhibits 5.1 and 8.1 hereto)
*23.2 Consent of McNair, McLemore, Middlebrooks & Co., LLP.
*23.3 Consent of Stewart, Fowler & Stalvey, P.C.
*23.4 Consent of Trident Securities.
24 Power of Attorney (included on the Signature Page to the Registration Statement).
99.1 Opinion of Trident Securities (attached as Appendix C to proxy statement/prospectus).
*99.2 Letter of Transmittal.
*99.3 Form of Proxy Card for the special meeting of shareholders of Quitman Bancorp, Inc.
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* Previously filed
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
COLONY BANKCORP, INC.
AND
QUITMAN BANCORP, INC.
Dated as of October 22, 2001
TABLE OF CONTENTS
Page
----
PARTIES................................................................ A-1
PREAMBLE............................................................... A-1
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER
1.1 Merger.................................................. A-1
1.2 Time and Place of Closing............................... A-1
1.3 Effective Time.......................................... A-1
ARTICLE 2 TERMS OF MERGER
2.1 Charter................................................. A-2
2.2 Bylaws.................................................. A-2
2.3 Directors and Officers.................................. A-2
ARTICLE 3 MANNER OF CONVERTING SHARES
3.1 Conversion of Shares.................................... A-2
3.2 Conversion of Options................................... A-3
3.3 Quitman Restricted Stock Plan........................... A-3
3.4 Quitman Employee Stock Ownership Plan................... A-3
3.5 Quitman 401(k) Profit Sharing Plan...................... A-3
3.6 Quitman Federal Savings and Loan Association
Executive and Director Indexed Salary Continuation Plans A-3
ARTICLE 4 EXCHANGE OF SHARES
4.1 Exchange Procedures..................................... A-4
4.2 Rights of Former Quitman Shareholders................... A-4
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF QUITMAN
5.1 Organization, Standing, and Power....................... A-5
5.2 Authority of Quitman; No Breach By Agreement............ A-5
5.3 Capital Stock........................................... A-6
5.4 Quitman Subsidiaries.................................... A-6
5.5 SEC Filings; Financial Statements....................... A-7
5.6 Absence of Undisclosed Liabilities...................... A-7
5.7 Absence of Certain Changes or Events.................... A-7
5.8 Tax Matters............................................. A-7
5.9 Allowance for Possible Loan Losses...................... A-8
5.10 Assets.................................................. A-9
5.11 Intellectual Property................................... A-9
5.12 Environmental Matters................................... A-9
5.13 Compliance with Laws.................................... A-10
5.14 Labor Relations......................................... A-11
5.15 Employee Benefit Plans.................................. A-11
5.16 Material Contracts...................................... A-12
5.17 Legal Proceedings....................................... A-13
5.18 Reports................................................. A-13
5.19 Statements True and Correct............................. A-13
5.20 Accounting, Tax and Regulatory Matters.................. A-14
5.21 State Takeover Laws..................................... A-14
5.22 Charter Provisions...................................... A-14
5.23 Directors' Agreements................................... A-14
5.24 Board Recommendation.................................... A-14
i
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF COLONY
6.1 Organization, Standing, and Power............................ A-14
6.2 Authority; No Breach By Agreement............................ A-14
6.3 Capital Stock................................................ A-15
6.4 Colony Subsidiaries.......................................... A-15
6.5 SEC Filings; Financial Statements............................ A-16
6.6 Absence of Undisclosed Liabilities........................... A-16
6.7 Absence of Certain Changes or Events......................... A-17
6.8 Tax Matters.................................................. A-17
6.9 Allowance for Possible Loan Losses........................... A-18
6.10 Assets....................................................... A-18
6.11 Intellectual Property........................................ A-18
6.12 Environmental Matters........................................ A-19
6.13 Compliance With Laws......................................... A-19
6.14 Labor Relations.............................................. A-20
6.15 Employee Benefit Plans....................................... A-20
6.16 Legal Proceedings............................................ A-21
6.17 Reports...................................................... A-22
6.18 Statements True and Correct.................................. A-22
6.19 Accounting, Tax and Regulatory Matters....................... A-22
6.20 State Takeover Laws.......................................... A-22
6.21 Charter Provisions........................................... A-22
6.22 Board Action................................................. A-23
6.23 Quitman Federal Board Membership............................. A-23
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Each Party.......................... A-23
7.2 Negative Covenants of Quitman................................ A-23
7.3 Negative Covenants of Colony................................. A-24
7.4 Adverse Changes in Condition................................. A-25
7.5 Reports...................................................... A-25
ARTICLE 8 ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval A-25
8.2 Exchange Listing............................................. A-26
8.3 Applications................................................. A-26
8.4 Filings with State Offices................................... A-26
8.5 Agreement as to Efforts to Consummate........................ A-26
8.6 Investigation and Confidentiality............................ A-26
8.7 Press Releases............................................... A-27
8.8 Certain Actions.............................................. A-27
8.9 No Solicitation.............................................. A-27
8.10 Tax Treatment................................................ A-28
8.11 State Takeover Laws.......................................... A-29
8.12 Charter Provisions........................................... A-29
8.13 Agreement of Affiliates...................................... A-29
8.14 Employee Benefits and Contracts.............................. A-29
8.15 Indemnification.............................................. A-29
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party...................... A-30
9.2 Conditions to Obligations of Colony.......................... A-31
9.3 Conditions to Obligations of Quitman......................... A-32
ii-
ARTICLE 10 TERMINATION
10.1 Termination.................................. A-32
10.2 Effect of Termination........................ A-33
10.3 Non-Survival of Representations and Covenants A-33
ARTICLE 11 MISCELLANEOUS
11.1 Definitions.................................. A-34
11.2 Expenses..................................... A-40
11.3 Brokers and Finders.......................... A-41
11.4 Entire Agreement............................. A-41
11.5 Amendments................................... A-41
11.6 Waivers...................................... A-41
11.7 Assignment................................... A-42
11.8 Notices...................................... A-42
11.9 Governing Law................................ A-42
11.l0 Counterparts................................ A-42
11.11 Captions; Articles and Sections.............. A-42
11.12 Interpretations.............................. A-42
11.13 Severability................................. A-43
SIGNATURES.................................................... A-43
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of October 22, 2001, by and between COLONY BANKCORP, INC. ("Colony"), a
Georgia corporation, and QUITMAN BANCORP, INC. ("Quitman"), a Georgia
corporation.
Preamble
The respective Boards of Directors of Quitman and Colony are of the opinion
that the transactions described herein are in the best interests of the parties
to this Agreement and their respective shareholders. This Agreement provides
for the merger of Quitman with and into Colony. At the effective time of such
merger, the outstanding shares of the capital stock of Quitman shall be
converted into the right to receive shares of the common stock of Colony and
cash (except as provided herein). As a result, shareholders of Quitman shall
become shareholders of Colony and Colony shall continue to conduct the business
and operations of Quitman. The transactions described in this Agreement are
subject to the approvals of the shareholders of Quitman, the Board of Governors
of the Federal Reserve System, Department of Banking and Finance of the State
of Georgia, the Office of Thrift Supervision, and the satisfaction of certain
other conditions described in this Agreement. It is the intention of the
parties to this Agreement that the Merger for federal income tax purposes shall
qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code and to the extent of the Stock Consideration no gain or
loss will be recognized by the Quitman shareholders, and for accounting
purposes shall be treated as a purchase.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, Quitman shall be merged with and into Colony in accordance with
the provisions of Section 14-2-1101 of the GBCC and with the effect provided in
Section 14-2-1106 of the GBCC (the "Merger"). Colony shall be the Surviving
Corporation resulting from the Merger and shall continue to be governed by the
Laws of the State of Georgia. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the respective
Boards of Directors of Quitman and Colony.
1.2 Time and Place of Closing. The closing of the transactions contemplated
hereby (the "Closing") will take place at 9:00 A.M. on the date that the
Effective Time occurs (or the immediately preceding day if the Effective Time
is earlier than 9:00 A.M.), or at such other time as the Parties, acting
through their authorized officers, may mutually agree. The Closing shall be
held at such location as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Georgia (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on or before the fifth business
day following the last to occur of (i) the effective date (including expiration
of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the shareholders of Quitman approve this
Agreement to the extent required by applicable Law.
A-1
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Articles of Incorporation of Colony in effect immediately
prior to the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation until duly amended or repealed.
2.2 Bylaws. The Bylaws of Colony in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until duly
amended or repealed.
2.3 Directors and Officers. The directors of Colony in office immediately
prior to the Effective Time shall serve as the initial directors of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation. The officers of Colony in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of Colony, Quitman, or the shareholders of either of the foregoing, the shares
of the constituent corporations shall be converted as follows:
(a) Each share of capital stock of Colony issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of Quitman Common Stock (including any shares
currently subject to options which are exercised with cash or Option
Shares pursuant to Section 3.2 and any Quitman shares issued that
increases the number of outstanding shares of Quitman common stock under
Quitman's Restricted Stock Plan prior to the Effective Time) outstanding
immediately prior to the Effective Time, other than shares with respect
to which the holders thereof, prior to the Effective Time, met the
requirements of, and perfected their dissenters' rights under Article 13
of the GBCC with respect to shareholders dissenting from the Merger (the
"Dissenting Shares"), and shares held by Quitman or by Colony or any of
the Colony Subsidiaries, in each case other than in a fiduciary capacity
or as a result of debts previously contracted, shall automatically be
converted at the Effective Time into the right to receive its Pro-Rata
Share of the Cash Consideration and the Stock Consideration (plus cash
in lieu of fractional shares pursuant to subsection (c) below, if
applicable), respectively. It is anticipated Quitman will have issued
and outstanding at the Effective Time 507,262 common shares and
30,307.6431 option equivalent shares which when divided into the Cash
Consideration and stock consideration each Quitman shareholder should
receive $4.41 cash and .683 shares of Colony Common Stock for each share
of Quitman Common Stock. The actual amount of cash and Colony Common
Stock each Quitman Shareholder will receive for each share of Quitman
Common Stock the amount of cash and fraction of Colony Common Stock
determined by the formula in the first sentence of this Section 3.1(b).
(c) Notwithstanding any other provision of this Agreement, each
holder of outstanding Quitman Shares exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a share
of Colony Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of
Colony Common Stock multiplied by $12.00. No such holder will be
entitled to dividends, voting rights, or any other rights as a
shareholder in respect of any fractional shares.
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(d) Each share of the Quitman Common Stock that is not an outstanding
Quitman Share as of the Effective Time shall be canceled without
consideration therefor.
(e) No Dissenting Shares shall be converted in the Merger. All such
shares shall be canceled and the holders thereof shall thereafter have
only such rights as are granted to dissenting shareholders under Article
13 of the GBCC; provided, however, that if any such shareholder fails to
perfect his or her rights as a dissenting shareholder with respect to
his or her Dissenting Shares in accordance with Article 13 of the GBCC,
such shares held by such shareholder shall, upon the happening of that
event, be treated the same as all other holders of Quitman Common Stock
who at the Effective Time held outstanding Quitman Shares.
3.2 Conversion of Options. Each option, if any, to purchase shares of
Quitman Common Stock issued by Quitman that is outstanding and unexercised
immediately prior to the Effective Time ("Quitman Options") shall be canceled
upon consummation of the Merger, and all rights in respect thereof will cease
to exist. As consideration for the cancellation of all of the Quitman Options,
as of the Effective Time, each holder of Quitman Options (each, a "Holder")
shall be entitled to receive a portion of the Aggregate Merger Consideration
(plus cash in lieu of fractional shares pursuant to subparagraph 3.1(c) above,
if applicable) equal to the aggregate number of Option Shares to which such
Option Holder is entitled hereunder multiplied by a Pro-Rata Share of the Cash
Consideration and the Stock Consideration, respectively. The name of each
Holder and the number of equivalent Quitman Shares the Option Holders shall be
entitled to receive in consideration of the Quitman Options (the "Option
Shares") applicable to such Holder is set forth on Exhibit "A" hereto and
Quitman shall use its best efforts to have each Option Holder execute the
letter agreement in the form of Exhibit "D" hereto.
3.3 Quitman's Restricted Stock Plan. After the date of execution of this
Agreement and public announcement of the transaction, Quitman will, to the
extent possible, purchase in the open market a sufficient number of its common
shares to satisfy the distribution requirements of the Quitman Restricted Stock
Plan required as the result of the change in control of the company. As of the
Effective Time all of the stock in the Stock Plan will be distributed to
participants pursuant to the terms of the Plan and the Plan will be terminated.
Quitman agrees that to the extent it is unable to repurchase a sufficient
number of its common shares prior to the Effective Time to satisfy the
distribution requirements of the Plan, it will pay pro rata to the participants
cash in the amount of $12.61 for each share of Quitman common stock that
Quitman was unable to purchase in the open market and is distributable at the
Effective Time. Quitman shall use its best efforts to cause each participant to
sign the letter agreement in the form of Exhibit "D" to this Agreement agreeing
to accept $12.61 per share in cash in lieu of the shares of Quitman Common
Stock distributable at the Effective Time to the extent of such participants'
pro rata share of the Quitman common shares that Quitman is unable to purchase
in the open market to satisfy the distribution requirements prior to the
Effective Time.
3.4 Quitman Employee Stock Ownership Plan. Immediately following the
Effective Time the Quitman Employee Stock Ownership Plan will be terminated
pursuant to the terms of the Plan. From the cash part of the consideration paid
for the Quitman shares, the Quitman Employee Stock Ownership Plan will repay
all or a portion of the outstanding indebtedness to Quitman. Additionally any
balance of the loan will be due and payable as of the Effective Time and the
trustees of the Employee Stock Ownership Plan will sell a sufficient number of
the Colony shares received as proceeds of the Merger to satisfy all liabilities
of the Plan. The Plan assets will then be held and distributed to participants
pursuant to the terms of the Plan.
3.5 Quitman 401(k) Profit Sharing Plan. Quitman will terminate its 401(k)
Profit Sharing Plan and the benefits will be held and distributed to
participants pursuant to the terms of the Plan.
3.6 Quitman Federal Savings and Loan Association Executive and Director
Indexed Salary Continuation Plans. The Quitman Federal Savings and Loan
Association Executive and Director Indexed Salary Continuation Plans, the
Agreements thereunder, and the related Life Insurance Endorsement Method Split
Dollar Plan Agreements will be continued by Colony after the Effective Time
pursuant to the terms of such Plans and
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Agreements as in effect until all benefits thereunder have been fully paid,
however, no new participants shall be added to the Plans after the date of
execution of this Agreement without the specific written consent of Colony.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Prior to the Effective Time, Colony shall select a
bank or trust company reasonably acceptable to Quitman to act as exchange agent
(the "Exchange Agent") to effectuate the delivery of the Merger Consolidation
to holders of Quitman Common Stock. Promptly following the Effective Time, the
Exchange Agent shall send to each holder of Outstanding Quitman Shares
immediately prior to the Effective Time a form of letter of transmittal (the
"Letter of Transmittal") for use in exchanging certificates previously
evidencing shares of Quitman Common Stock ("Old Certificates"). The Letter of
Transmittal will contain instructions with respect to the surrender of Old
Certificates and the distribution of any cash and certificates representing
Colony Common Stock, which certificates shall be deposited with the Exchange
Agent by Colony as of the Effective Time. If any certificates for shares of
Colony Common Stock are to be issued in a name other than that for which an Old
Certificate surrendered or exchanged is issued, the Old Certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer and the person requesting such exchange shall affix any requisite
stock transfer tax stamps to the Old Certificate surrendered or provide funds
for their purchase or establish to the satisfaction of the Exchange Agent that
such taxes are not payable. Unless and until Old Certificates or evidence that
such certificates have been lost, stolen, or destroyed accompanied by such
security or indemnity as shall be requested by Quitman) are presented to the
Exchange Agent, the holder thereof shall not be entitled to the consideration
to be paid in exchange therefor pursuant to the Merger, to any dividends
payable on any Colony Common Stock to which he or she is entitled, or to
exercise any rights as a shareholder of Colony Common Stock. Subject to
applicable law and to the extent that the same has not yet been paid to a
public official pursuant to applicable abandoned property laws, upon surrender
of his or her Old Certificates, the holder thereof shall be paid the
consideration to which he or she is entitled. All such property, if held by the
Exchange Agent for payment or delivery to the holders of unsurrendered Old
Certificates and unclaimed at the end of one (1) year from the Effective Time,
shall at such time be paid or redelivered by the Exchange Agent to Colony, and
after such time any holder of an Old Certificate who has not surrendered such
certificate shall, subject to applicable laws and to the extent that the same
has not yet been paid to a public official pursuant to applicable abandoned
property laws, look as a general creditor only to Colony for payment or
delivery of such property. In no event will any holder of Quitman Common Stock
exchanged in the Merger be entitled to receive any interest on any amounts held
by the Exchange Agent or Colony of the Merger Consideration.
4.2 Rights of Former Quitman Shareholders. At the Effective Time, the stock
transfer books of Quitman shall be closed as to holders of Quitman Common Stock
immediately prior to the Effective Time and no transfer of Quitman Common Stock
by any such holder shall thereafter be made or recognized. Until surrendered
for exchange in accordance with the provisions of Section 4.1, each Certificate
theretofore representing shares of Quitman Common Stock (other than shares to
be canceled pursuant to Sections 3.2 and 3.3) shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Section 3.1 in exchange therefor, subject, however,
to the Surviving Corporation's obligation to pay any dividends or make any
other distributions with a record date prior to the Effective Time which have
been declared or made by Quitman in respect of such shares of Quitman Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. To the extent permitted by Law, former shareholders of
record of Quitman shall be entitled to vote after the Effective Time at any
meeting of Colony shareholders the number of whole shares of Colony Common
Stock into which their respective shares of Quitman Common Stock are converted,
regardless of whether such holders have exchanged their Certificates for
certificates representing Colony Common Stock in accordance with the provisions
of this Agreement.
Whenever a dividend or other distribution is declared by Colony on the
Colony Common Stock, the record date for which is at or after the Effective
Time, the declaration shall include dividends or other distributions on all
shares of Colony Common Stock issuable pursuant to this Agreement, but no
dividend or other distribution
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payable to the holders of record of Colony Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
Certificate until such holder surrenders such Certificate for exchange as
provided in Section 4.1. However, upon surrender of such Certificate, both the
Colony Common Stock certificate and any undelivered dividends and cash payments
payable hereunder (without interest) shall be delivered and paid with respect
to each share represented by such Certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF QUITMAN
Quitman hereby represents and warrants to Colony as follows:
5.1 Organization, Standing, and Power. Quitman is a corporation duly
organized, validly existing, and in good standing under the Laws of the State
of Georgia, and has the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its material Assets. Quitman is
duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Quitman Material Adverse Effect. The
minute book and other organizational documents for Quitman have been made
available to Colony for its review and, except as disclosed in Section 5.1 of
the Quitman Disclosure Memorandum, are true and complete in all material
respects as in effect as of the date of this Agreement and accurately reflect
in all material respects all amendments thereto and all proceedings of the
Board of Directors and shareholders thereof.
5.2 Authority of Quitman; No Breach By Agreement.
(a) Quitman has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and
to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly
and validly authorized by all necessary corporate action in respect
thereof on the part of Quitman, subject to the approval of this
Agreement by the holders of two-thirds of the outstanding shares of
Quitman Common Stock, which is the only shareholder vote required for
approval of this Agreement and consummation of the Merger by Quitman.
Subject to such requisite shareholder approval, this Agreement
represents a legal, valid, and binding obligation of Quitman,
enforceable against Quitman in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium,
or similar Laws affecting the enforcement of creditors' rights generally
and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the
court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Quitman,
nor the consummation by Quitman of the transactions contemplated hereby,
nor compliance by Quitman with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Quitman's
Articles of Incorporation or Bylaws or the charter, certificate or
articles of incorporation or bylaws of any Quitman Subsidiary or any
resolution adopted by the board of directors or the shareholders of any
Quitman Entity, or (ii) except as disclosed in Section 5.2 of the
Quitman Disclosure Memorandum, constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any
Lien on any Asset of any Quitman Entity under, any Contract or Permit of
any Quitman Entity, where such Default or Lien, or any failure to obtain
such Consent, is reasonably likely to have, individually or in the
aggregate, a Quitman Material Adverse Effect, or, (iii) subject to
receipt of the requisite Consents referred to in Section 9.1(b),
constitute or result in a Default under, or require any Consent pursuant
to, any Law or Order applicable to any Quitman Entity or any of their
respective material Assets (including any Colony Entity or any Quitman
Entity becoming subject to or liable for the payment of any Tax or any
of the Assets owned by any Colony Entity or any Quitman Entity being
reassessed or revalued by any Taxing authority).
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(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and
other than Consents required from Regulatory Authorities, and other than
notices to or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings, or notifications which, if not
obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Quitman Material Adverse Effect, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by Quitman of the Merger and the other transactions
contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Quitman consists of (a) 4,000,000
shares of $.10 par value per share Quitman Common Stock, of which
661,250 shares are issued, 507,262 shares are outstanding and 153,988
shares are held in treasury as of the date of this Agreement and (b)
1,000,000 shares of no par value per share preferred stock of which none
are issued or outstanding. All of the issued and outstanding shares of
capital stock of Quitman are duly and validly issued and outstanding and
are fully paid and nonassessable under the GBCC. None of the outstanding
shares of capital stock of Quitman has been issued in violation of any
preemptive rights of the current or past shareholders of Quitman.
(b) Except as set forth in Section 5.3(a), or as provided in the
Quitman Stock Option Agreement, or as disclosed in Section 5.3(b) of the
Quitman Disclosure Memorandum, there are no shares of capital stock,
preferred stock or other equity securities of Quitman outstanding and no
outstanding Equity Rights relating to the capital stock of Quitman.
5.4 Quitman Subsidiaries. Quitman has disclosed in Section 5.4 of the
Quitman Disclosure Memorandum all of the Quitman Subsidiaries that are
corporations (identifying its jurisdiction of incorporation, each jurisdiction
in which in which the character of its Assets or the nature or conduct of its
business requires it to be qualified and/or licensed to transact business, and
the number of shares owned and percentage ownership interest represented by
such share ownership) and all of the Quitman Subsidiaries that are general or
limited partnerships, limited liability companies, or other non-corporate
entities (identifying the Law under which such entity is organized, each
jurisdiction in which the character of its Assets or the nature or conduct of
its business requires it to be qualified and/or licensed to transact business,
and the amount and nature of the ownership interest therein). Except as
disclosed in Section 5.4 of the Quitman Disclosure Memorandum, Quitman or one
of its wholly owned Subsidiaries owns all of the issued and outstanding shares
of capital stock (or other equity interests) of each Quitman Subsidiary
including but not limited to Quitman Federal Savings Bank ("Quitman Federal").
No capital stock (or other equity interest) of any Quitman Subsidiary is or may
become required to be issued (other than to another Quitman Entity) by reason
of any Equity Rights, and there are no Contracts by which any Quitman
Subsidiary is bound to issue (other than to another Quitman Entity) additional
shares of its capital stock (or other equity interests) or Equity Rights or by
which any Quitman Entity is or may be bound to transfer any shares of the
capital stock (or other equity interests) of any Quitman Subsidiary (other than
to another Quitman Entity). There are no Contracts relating to the rights of
any Quitman Entity to vote or to dispose of any shares of the capital stock (or
other equity interests) of any Quitman Subsidiary. All of the shares of capital
stock (or other equity interests) of each Quitman Subsidiary held by a Quitman
Entity are fully paid and nonassessable and are owned by the Quitman Entity
free and clear of any Lien. Except as disclosed in Section 5.4 of the Quitman
Disclosure Memorandum, each Quitman Subsidiary is either a depository
institution or a corporation, and each such Subsidiary is duly organized,
validly existing, and (as to corporations) in good standing under the Laws of
the jurisdiction in which it is incorporated or organized, and has the
corporate power and authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. Each Quitman Subsidiary
is duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Quitman Material Adverse Effect. Each
Quitman Subsidiary that is a depository institution is an "insured institution"
as defined in the Federal Deposit Insurance Act and applicable regulations
thereunder.
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5.5 SEC Filings; Financial Statements.
(a) Quitman has timely filed and made available to Colony all SEC
Documents required to be filed by Quitman since December 31, 1998 (the
"Quitman SEC Reports"). The Quitman SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of
the Securities Laws and other applicable Laws and (ii) did not, at the
time they were filed (or, if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact
required to be stated in such Quitman SEC Reports or necessary in order
to make the statements in such Quitman SEC Reports, in light of the
circumstances under which they were made, not misleading. No Quitman
Subsidiary is required to file any SEC Documents.
(b) Each of the Quitman Financial Statements (including, in each
case, any related notes) contained in the Quitman SEC Reports, including
any Quitman SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect
thereto, was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the
notes to such financial statements or, in the case of unaudited interim
statements, as permitted by Form 10-Q of the SEC), and fairly presented
in all material respects the consolidated financial position of Quitman
and its Subsidiaries as at the respective dates and the consolidated
results of operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
5.6 Absence of Undisclosed Liabilities. No Quitman Entity has any
Liabilities of a nature required to be reflected on a balance sheet prepared in
accordance with GAAP that are reasonably likely to have, individually or in the
aggregate, a Quitman Material Adverse Effect, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Quitman as of
June 30, 2001, included in the Quitman Financial Statements delivered prior to
the date of this Agreement or reflected in the notes thereto. No Quitman Entity
has incurred or paid any Liability since June 30, 2001, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Quitman Material Adverse Effect or (ii) in
connection with the transactions contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since June 30, 2001, except as
disclosed in the Quitman Financial Statements delivered prior to the date of
this Agreement or as disclosed in Section 5.7 of the Quitman Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Quitman Material Adverse Effect, and (ii) the Quitman Entities have not taken
any action, or failed to take any action, prior to the date of this Agreement,
which action or failure, if taken after the date of this Agreement, would
represent or result in a material breach or violation of any of the covenants
and agreements of Quitman provided in Article 7.
5.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of
the Quitman Entities have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended
on or before December 31, 1997, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, except
to the extent that all such failures to file, taken together, are not
reasonably likely to have a Quitman Material Adverse Effect, and all Tax
Returns filed are complete and accurate in all material respects. All
Taxes shown on filed Tax Returns have been paid. There is no audit
examination, deficiency, or refund Litigation with respect to any Taxes
that is reasonably likely to result in a determination that would have,
individually or in the aggregate, a Quitman Material Adverse Effect,
except as reserved against in the Quitman Financial Statements
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delivered prior to the date of this Agreement or as disclosed in Section
5.8 of the Quitman Disclosure Memorandum. Quitman's federal income Tax
Returns have not been audited by the IRS. All Taxes and other
Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid. There are no Liens with respect to
Taxes upon any of the Assets of the Quitman Entities, except for any
such Liens which are not reasonably likely to have a Quitman Material
Adverse Effect.
(b) None of the Quitman Entities has executed an extension or waiver
of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due for any of the
Quitman Entities for the period or periods through and including the
date of the respective Quitman Financial Statements that has been made
and is reflected on such Quitman Financial Statements is sufficient to
cover all such Taxes.
(d) Deferred Taxes of the Quitman Entities have been provided for in
accordance with GAAP.
(e) Except for a Tax Allocation Agreement between Quitman FSB and
Quitman, none of the Quitman Entities is a party to any Tax allocation
or sharing agreement and none of the Quitman Entities has been a member
of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Quitman) or has any
Liability for Taxes of any Person (other than Quitman and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law) as a transferee or successor
or by Contract or otherwise.
(f) Each of the Quitman Entities is in compliance with, and its
records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements under federal,
state, and local Tax Laws, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the
Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in
the aggregate, a Quitman Material Adverse Effect.
(g) Except as disclosed in Section 5.8 of the Quitman Disclosure
Memorandum, none of the Quitman Entities has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction
under Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Quitman Entities that occurred
during or after any Taxable Period in which the Quitman Entities
incurred a net operating loss that carries over to any Taxable Period
ending after December 31, 2000.
5.9 Allowance for Possible Loan Losses. The allowance for possible loan or
credit losses (the "Allowance") shown on the consolidated balance sheets of
Quitman included in the most recent Quitman Financial Statements dated prior to
the date of this Agreement was, and the Allowance shown on the consolidated
balance sheets of Quitman included in the Quitman Financial Statements as of
dates subsequent to the execution of this Agreement will be, as of the dates
thereof, adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for all known or reasonably anticipated
losses relating to or inherent in the loan and lease portfolios (including
accrued interest receivables) of the Quitman Entities and other extensions of
credit (including letters of credit and commitments to make loans or extend
credit) by the Quitman Entities as of the dates thereof, except where the
failure of such Allowance to be so adequate is not reasonably likely to have a
Quitman Material Adverse Effect.
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5.10 Assets.
(a) Except as disclosed in Section 5.10 of the Quitman Disclosure
Memorandum or as disclosed or reserved against in the Quitman Financial
Statements delivered prior to the date of this Agreement, the Quitman
Entities have good and marketable title, free and clear of all Liens, to
all of their respective Assets, except for any such Liens or other
defects of title which are not reasonably likely to have a Quitman
Material Adverse Effect. All tangible properties used in the businesses
of the Quitman Entities are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent
with Quitman's past practices.
(b) All Assets which are material to Quitman's business on a
consolidated basis, held under leases or subleases by any of the Quitman
Entities, are held under valid Contracts enforceable in accordance with
their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other
Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceedings may be brought), and each such Contract is in full force
and effect.
(c) The Quitman Entities have paid all amounts due and payable under
any insurance policies and guarantees applicable to Quitman Entitles and
their assets and operations; all such insurance policies and guarantees
are in full force and effect, and all Quitman's material properties are
insured against fire, casualty, theft, loss, and such other events
against which it is customary to insure, all such insurance policies
being in amounts that are adequate and are consistent with past practice
and experience. None of the Quitman Entities has received notice from
any insurance carrier that (i) any policy of insurance will be canceled
or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be
substantially increased. There are presently no claims for amounts
exceeding in any individual case $10,000 pending under such policies of
insurance and no notices of claims in excess of such amounts have been
given by any Quitman Entity under such policies.
(d) The Assets of the Quitman Entities include all Assets required to
operate the business of the Quitman Entities as presently conducted.
5.11 Intellectual Property. Each Quitman Entity owns or has a license to use
all of the Intellectual Property used by such Quitman Entity in the course of
its business. Each Quitman Entity is the owner of or has a license to any
Intellectual Property sold or licensed to a third party by such Quitman Entity
in connection with such Quitman Entity's business operations, and such Quitman
Entity has the right to convey by sale or license any Intellectual Property so
conveyed. No Quitman Entity is in Default under any of its Intellectual
Property licenses. No proceedings have been instituted, or are pending or to
the Knowledge of Quitman threatened, which challenge the rights of any Quitman
Entity with respect to Intellectual Property used, sold or licensed by such
Quitman Entity in the course of its business, nor has any person claimed or
alleged any rights to such Intellectual Property. The conduct of the business
of the Quitman Entities does not infringe any Intellectual Property of any
other person. Except as disclosed in Section 5.11 of the Quitman Disclosure
Memorandum, no Quitman Entity is obligated to pay any recurring royalties to
any Person with respect to any such Intellectual Property. Except as disclosed
in Section 5.11 of the Quitman Disclosure Memorandum, no officer, director or
employee of any Quitman Entity is party to any Contract which restricts or
prohibits such officer, director or employee from engaging in activities
competitive with any Person, including any Quitman Entity.
5.12 Environmental Matters.
(a) To the Knowledge of Quitman, each Quitman Entity, its
Participation Facilities, and its Operating Properties are, and have
been, in compliance with all Environmental Laws, except for violations
which are not reasonably likely to have, individually or in the
aggregate, a Quitman Material Adverse Effect.
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(b) To the Knowledge of Quitman, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other
forum in which any Quitman Entity or any of its Operating Properties or
Participation Facilities (or Quitman in respect of such Operating
Property or Participation Facility) has been or, with respect to
threatened Litigation, may be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release, discharge, spillage, or disposal into
the environment of any Hazardous Material, whether or not occurring at,
on, under, adjacent to, or affecting (or potentially affecting) a site
owned, leased, or operated by any Quitman Entity or any of its Operating
Properties or Participation Facilities, except for such Litigation
pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Quitman Material Adverse Effect, nor
is there any reasonable basis for any Litigation of a type described in
this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a Quitman Material Adverse Effect.
(c) During the period of (i) any Quitman Entity's ownership or
operation of any of their respective current properties, (ii) any
Quitman Entity's participation in the management of any Participation
Facility, or (iii) any Quitman Entity's holding of a security interest
in a Operating Property, there have been no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, adjacent
to, or affecting (or potentially affecting) such properties, except such
as are not reasonably likely to have, individually or in the aggregate,
a Quitman Material Adverse Effect. Prior to the period of (i) any
Quitman Entity's ownership or operation of any of their respective
current properties, (ii) any Quitman Entity's participation in the
management of any Participation Facility, or (iii) any Quitman Entity's
holding of a security interest in a Operating Property, to the Knowledge
of Quitman, there were no releases, discharges, spillages, or disposals
of Hazardous Material in, on, under, or affecting any such property,
Participation Facility or Operating Property, except such as are not
reasonably likely to have, individually or in the aggregate, a Quitman
Material Adverse Effect.
5.13 Compliance with Laws. Quitman is duly registered as a savings and loan
holding company under the supervision of the Office of Thrift Supervision. Each
Quitman Entity has in effect all Permits necessary for it to own, lease, or
operate its material Assets and to carry on its business as now conducted,
except for those Permits the absence of which are not reasonably likely to
have, individually or in the aggregate, a Quitman Material Adverse Effect, and
there has occurred no Default under any such Permit, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Quitman
Material Adverse Effect. Except as disclosed in Section 5.13 of the Quitman
Disclosure Memorandum, none of the Quitman Entities:
(a) is in Default under any of the provisions of its Articles of
Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits applicable to
its business or employees conducting its business, except for Defaults
which are not reasonably likely to have, individually or in the
aggregate, a Quitman Material Adverse Effect; or
(c) since January 1, 1998, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i)
asserting that any Quitman Entity is not in compliance with any of the
Laws or Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Quitman Material Adverse Effect,
(ii) threatening to revoke any Permits, the revocation of which is
reasonably likely to have, individually or in the aggregate, a Quitman
Material Adverse Effect, or (iii) requiring any Quitman Entity to enter
into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business or in any manner relates to its
capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.
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Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to Colony.
5.14 Labor Relations. No Quitman Entity is the subject of any Litigation
asserting that it or any other Quitman Entity has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other Quitman Entity to bargain with
any labor organization as to wages or conditions of employment, nor is any
Quitman Entity party to any collective bargaining agreement, nor is there any
strike or other labor dispute involving any Quitman Entity, pending or
threatened, or to the Knowledge of Quitman, is there any activity involving any
Quitman Entity's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.15 Employee Benefit Plans.
(a) Quitman has disclosed in Section 5.15 of the Quitman Disclosure
Memorandum, and has delivered or made available to Colony prior to the
execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, employee stock ownership, deferred
compensation, stock option, employee stock ownership, severance pay,
vacation, cash or stock bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical,
vision, dental, or other health plans, all life insurance plans, and all
other employee benefit plans or fringe benefit plans, including
"employee benefit plans" as that term is defined in Section 3(3) of
ERISA, currently adopted, maintained by, sponsored in whole or in part
by, or contributed to by any Quitman Entity or ERISA Affiliate thereof
for the benefit of employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate
(collectively, the "Quitman Benefit Plans"). Any of the Quitman Benefit
Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "Quitman
ERISA Plan." Each Quitman ERISA Plan which is also a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue Code) is
referred to herein as a "Quitman Pension Plan." No Quitman Pension Plan
is or has been a multi-employer plan within the meaning of Section 3(37)
of ERISA.
(b) All Quitman Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws
the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Quitman Material Adverse Effect.
Each Quitman ERISA Plan which is intended to be qualified under Section
40 1(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and Quitman is
not aware of any circumstances likely to result in revocation of any
such favorable determination letter. No Quitman Entity has engaged in a
transaction with respect to any Quitman Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject any Quitman Entity to a Tax imposed by either Section 4975 of
the Internal Revenue Code or Section 502(i) of ERISA in amounts which
are reasonably likely to have, individually or in the aggregate, a
Quitman Material Adverse Effect.
(c) No Quitman Pension Plan has any "unfunded current liability," as
that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial
valuation. Since the date of the most recent actuarial valuation, there
has been (i) no material change in the financial position of any Quitman
Pension Plan, (ii) no change in the actuarial assumptions with respect
to any Quitman Pension Plan, and (iii) no increase in benefits under any
Quitman Pension Plan as a result of plan amendments or changes in
applicable Law which is reasonably likely to have, individually or in
the aggregate, a Quitman Material Adverse Effect or materially adversely
affect the funding status of any such plan. Neither any Quitman Pension
Plan nor any "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any Quitman
Entity, or the single-employer plan of any entity which is
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considered one employer with Quitman under Section 4001 of ERISA or
Section 414 of the Internal Revenue Code or Section 302 of ERISA
(whether or not waived) (an "ERISA Affiliate") has an "accumulated
funding deficiency" within the meaning of Section 412 of the Internal
Revenue Code or Section 302 of ERISA, which is reasonably likely to have
a Quitman Material Adverse Effect. No Quitman Entity has provided, or is
required to provide, security to a Quitman Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by any Quitman Entity with respect to any
ongoing, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate, which Liability is
reasonably likely to have a Quitman Material Adverse Effect. No Quitman
Entity has incurred any withdrawal Liability with respect to a
multi-employer plan under Subtitle B of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate), which Liability
is reasonably likely to have a Quitman Material Adverse Effect. No
notice of a "reportable event," within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived,
has been required to be filed for any Quitman Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.15 of the Quitman Disclosure
Memorandum, no Quitman Entity has any Liability for retiree health and
life benefits under any of the Quitman Benefit Plans and there are no
restrictions on the rights of such Quitman Entity to amend or terminate
any such retiree health or benefit Plan without incurring any Liability
thereunder, which Liability is reasonably likely to have a Quitman
Material Adverse Effect.
(f) Except as disclosed in Section 5.15 of the Quitman Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation, golden
parachute, or otherwise) becoming due to any director or any employee of
any Quitman Entity from any Quitman Entity under any Quitman Benefit
Plan or otherwise, (ii) increase any benefits otherwise payable under
any Quitman Benefit Plan, or (iii) result in any acceleration of the
time of payment or vesting of any such benefit, where such payment,
increase, or acceleration is reasonably likely to have, individually or
in the aggregate, a Quitman Material Adverse Effect.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and
former employees of any Quitman Entity and their respective
beneficiaries, other than entitlements accrued pursuant to funded
retirement plans subject to the provisions of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, have been fully reflected
on the Quitman Financial Statements to the extent required by and in
accordance with GAAP.
5.16 Material Contracts. Except as disclosed in Section 5.16 of the Quitman
Disclosure Memorandum or otherwise reflected in the Quitman Financial
Statements, none of the Quitman Entities, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination,
consulting, or retirement Contract, (ii) any Contract relating to the borrowing
of money by any Quitman Entity or the guarantee by any Quitman Entity of any
such obligation (other than Contracts evidencing deposit liabilities, purchases
of federal funds, fully-secured repurchase agreements, and Federal Home Loan
Bank advances of depository institution Subsidiaries, trade payables and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), (iii) any Contract which prohibits or restricts any Quitman Entity
from engaging in any business activities in any geographic area, line of
business or otherwise in competition with any other Person, (iv) any Contract
between or among Quitman Entities, (v) any Contract involving Intellectual
Property (other than Contracts entered into in the ordinary course with
customers and "shrink-wrap" software licenses), (vi) any Contract relating to
the provision of data processing, network communication, or other technical
services to or by any Quitman Entity, (vii) any Contract relating to the
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purchase or sale of any goods or services (other than Contracts entered into in
the ordinary course of business and involving payments under any individual
Contract not in excess of $25,000), (viii) any exchange-traded or
over-the-counter swap, forward, future, option, cap, floor, or collar financial
Contract, or any other interest rate or foreign currency protection Contract
not included on its balance sheet which is a financial derivative Contract, and
(ix) any other Contract or amendment thereto that would be required to be filed
as an exhibit to a Form 10-KSB filed by Quitman with the SEC as of the date of
this Agreement that has not been filed as an exhibit to Quitman's Form 10-KSB
filed for the fiscal year ended September 30, 2000, or in an SEC Document and
identified to Colony (the "Quitman Contracts"). With respect to each Quitman
Contract and except as disclosed in Section 5.16 of the Quitman Disclosure
Memorandum: (i) the Contract is in full force and effect; (ii) no Quitman
Entity is in Default thereunder, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Quitman Material Adverse
Effect; (iii) no Quitman Entity has repudiated or waived any material provision
of any such Contract; and (iv) no other party to any such Contract is, to the
Knowledge of Quitman, in Default in any respect, other than Defaults which are
not reasonably likely to have, individually or in the aggregate, a Quitman
Material Adverse Effect, or has repudiated or waived any material provision
thereunder. All of the indebtedness of any Quitman Entity for money borrowed is
prepayable at any time by such Quitman Entity without penalty or premium.
5.17 Legal Proceedings. There is no Litigation instituted or pending, or, to
the Knowledge of Quitman, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any Quitman Entity, or against any director,
employee or employee benefit plan of any Quitman Entity, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Quitman Material Adverse Effect, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Quitman Entity, that are reasonably
likely to have, individually or in the aggregate, a Quitman Material Adverse
Effect. Section 5.17 of the Quitman Disclosure Memorandum contains a summary of
all Litigation as of the date of this Agreement to which any Quitman Entity is
a party and which names a Quitman Entity as a defendant or cross-defendant or
for which any Quitman Entity has any potential Liability.
5.18 Reports. Since January 1, 1998, or the date of organization if later,
each Quitman Entity has timely filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required
to file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Quitman Material Adverse Effect). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5.19 Statements True and Correct. None of the information supplied or to be
supplied by any Quitman Entity or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Colony with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Quitman Entity or any Affiliate thereof for inclusion in the
Joint Proxy Statement to be mailed to each Party's shareholders in connection
with the Shareholders' Meetings, and any other documents to be filed by a
Quitman Entity or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Joint Proxy
Statement, when first mailed to the shareholders of Quitman and Colony, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of
the Joint Proxy Statement or any amendment thereof or supplement thereto, at
the time of the Shareholders' Meetings, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
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any proxy for the Shareholders' Meetings. All documents that any Quitman Entity
or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable Law.
5.20 Accounting, Tax and Regulatory Matters. No Quitman Entity or any
Affiliate thereof has taken or agreed to take any action or has any Knowledge
of any fact or circumstance that is reasonably likely to (i) prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) or result in
the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
5.21 State Takeover Laws. Each Quitman Entity has taken or will take all
necessary action to exempt the transactions contemplated by this Agreement
from, or if necessary to challenge the validity or applicability of, any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover Laws (collectively, "Takeover Laws"), including Sections
14-2-1111 and 14-2-1132 of the GBCC.
5.22 Charter Provisions. Each Quitman Entity has taken, or will take, all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby and thereby do not and
will not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any Quitman Entity or
restrict or impair the ability of Colony or any of its Subsidiaries to vote, or
otherwise to exercise therights of a shareholder with respect to, shares of any
Quitman Entity that or indirectly acquired or controlled by them.
5.23 Directors' Agreements. Each of the directors and executive officers of
Quitman has executed and delivered to Colony an agreement in substantially the
form of Exhibit C (the "Quitman Directors' Agreements).
5.24 Board Recommendation. The Board of Directors of Quitman, at a meeting
duly called and held, has by unanimous vote of the directors present (who
constituted all of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, and
the Quitman Directors' Agreements and the transactions contemplated thereby,
taken together, are fair to and in the best interests of the shareholders and
(ii) resolved to recommend that the holders of the shares of Quitman Common
Stock approve this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF COLONY
Colony hereby represents and warrants to Quitman as follows:
6.1 Organization, Standing and Power. Colony is a corporation duly
organized, validly existing, and in good standing under the Laws of the State
of Georgia, and has the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its material Assets. Colony is
duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Colony Material Adverse Effect. The
minute book and other organizational documents for Colony have been made
available to Quitman for its review and are true and complete in all material
respects as in effect as of the date of this Agreement and accurately reflect
in all material respects all amendments thereto and all proceedings of the
Board of Directors and shareholders thereof.
6.2 Authority; No Breach By Agreement.
(a) Colony has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the
transactions
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contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the
part of Colony. This Agreement represents a legal, valid, and binding
obligation of Colony, enforceable against Colony in accordance with its
terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be
brought).
(b) Neither the execution and delivery of this Agreement by Colony,
nor the consummation by Colony of the transactions contemplated hereby,
nor compliance by Colony with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Colony's
Articles of Incorporation or Bylaws or the certificate or articles of
incorporation or bylaws of any Colony Subsidiary or any resolution
adopted by the board of directors or the shareholders of any Colony
Entity, or (ii) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset
of any Colony Entity under, any Contract or Permit of any Colony Entity,
where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Colony
Material Adverse Effect, or, (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b), constitute or result in a
Default under, or require any Consent pursuant to, any Law or Order
applicable to any Colony Entity or any of their respective material
Assets (including any Colony Entity or any Quitman Entity becoming
subject to or liable for the payment of any Tax or any of the Assets
owned by any Colony Entity or any Quitman Entity being reassessed or
revalued by any Taxing authority).
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and
rules of the Nasdaq National Market, and other than Consents required
from Regulatory Authorities, and other than notices to or filings with
the Internal Revenue Service or the Pension Benefit Guaranty Corporation
with respect to any employee benefit plans, and other than Consents,
filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Colony
Material Adverse Effect, no notice to, filing with, or Consent of any
public body or authority is necessary for the consummation by Colony of
the Merger and the other transactions contemplated in this Agreement.
6.3 Capital Stock.
(a) The authorized capital stock of Colony consists of 20,000,000
shares of Colony Common Stock, of which 4,445,526 shares are issued,
4,445,526 shares are outstanding and no shares are held in treasury as
of the date of this Agreement. All of the issued and outstanding shares
of Colony Common Stock are, and all of the shares of Colony Common Stock
to be issued in exchange for shares of Quitman Common Stock upon
consummation of the Merger, when issued in accordance with the terms of
this Agreement, will be, duly and validly issued and outstanding and
fully paid and nonassessable under the GBCC. None of the outstanding
shares of Colony Common Stock has been, and none of the shares of Colony
Common Stock to be issued in exchange for shares of Quitman Common Stock
upon consummation of the Merger will be, issued in violation of any
preemptive rights of the current or past shareholders of Colony.
(b) Except as previously disclosed there are no shares of capital
stock, preferred stock or other equity securities of Colony outstanding
and no outstanding Equity Rights relating to the capital stock of Colony.
6.4 Colony Subsidiaries. Except as previously disclosed all of the Colony
Subsidiaries as of the date of this Agreement that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which the
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the number of shares
owned and percentage ownership interest represented by such share ownership)
and all of the Colony Subsidiaries that are general or limited partnerships,
limited liability
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companies, or other non-corporate entities (identifying the Law under which
such entity is organized, each jurisdiction in which the character of its
Assets or the nature or conduct of its business requires it to be qualified
and/or licensed to transact business, and the amount and nature of the
ownership interest therein). Colony or one of its wholly owned Subsidiaries
owns all of the issued and outstanding shares of capital stock (or other equity
interests) of each Colony Subsidiary. No capital stock (or other equity
interest) of any Colony Subsidiary are or may become required to be issued
(other than to another Colony Entity) by reason of any Equity Rights, and there
are no Contracts by which any Colony Subsidiary is bound to issue (other than
to another Colony Entity) additional shares of its capital stock (or other
equity interests) or Equity Rights or by which any Colony Entity is or may be
bound to transfer any shares of the capital stock (or other equity interests)
of any Colony Subsidiary (other than to another Colony Entity). There are no
Contracts relating to the rights of any Colony Entity to vote or to dispose of
any shares of the capital stock (or other equity interests) of any Colony
Subsidiary. All of the shares of capital stock (or other equity interests) of
each Colony Subsidiary held by a Colony Entity are fully paid and (except
pursuant to 12 U.S.C. Section 55 in the case of national banks and comparable,
applicable state Law, if any, in the case of state depository institutions)
nonassessable and are owned by the Colony Entity free and clear of any Lien.
Each Colony Subsidiary is either a bank or a corporation, and each such
Subsidiary is duly organized, validly existing, and (as to corporations) in
good standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease and operate its Assets and to carry on its business as now conducted.
Each Colony Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Colony Material
Adverse Effect. Each Colony Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder.
6.5 SEC Filings; Financial Statements.
(a) Colony has timely filed and made available to Quitman all SEC
Documents required to be filed by Colony since December 31, 1998 (the
"Colony SEC Reports"). The Colony SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of
the Securities Laws and other applicable Laws and (ii) did not, at the
time they were filed (or, if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact
required to be stated in such Colony SEC Reports or necessary in order
to make the statements in such Colony SEC Reports, in light of the
circumstances under which they were made, not misleading. No Colony
Subsidiary is required to file any SEC Documents.
(b) Each of the Colony Financial Statements (including, in each case,
any related notes) contained in the Colony SEC Reports, including any
Colony SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect
thereto, was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the
notes to such financial statements or, in the case of unaudited interim
statements, as permitted by Form 10-Q of the SEC), and fairly presented
in all material respects the consolidated financial position of Colony
and its Subsidiaries as at the respective dates and the consolidated
results of operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
6.6 Absence of Undisclosed Liabilities. No Colony Entity has any Liabilities
of a nature required to be reflected on a balance sheet prepared in accordance
with GAAP that are reasonably likely to have, individually or in the aggregate,
a Colony Material Adverse Effect, except Liabilities which are accrued or
reserved against in the consolidated balance sheets of Colony as of June 30,
2001, included in the Colony Financial Statements
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delivered prior to the date of this Agreement or reflected in the notes
thereto. No Colony Entity has incurred or paid any Liability since June 30,
2001, except for such Liabilities incurred or paid (i) in the ordinary course
of business consistent with past business practice and which are not reasonably
likely to have, individually or in the aggregate, a Colony Material Adverse
Effect or (ii) in connection with the transactions contemplated by this
Agreement.
6.7 Absence of Certain Changes or Events. Since June 30, 2001, except as
disclosed previously, (i) there have been no events, changes or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Colony Material Adverse Effect, and (ii) the Colony Entities have
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of Colony provided in Article 7.
6.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of
the Colony Entities have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended
on or before December 31, 1997, and on or before the date of the most
recent fiscal year-end immediately preceding the Effective Time, except
to the extent that all such failures to file, taken together, are not
reasonably likely to have a Colony Material Adverse Effect, and all Tax
Returns filed are complete and accurate in all material respects. All
Taxes shown on filed Tax Returns have been paid. There is no audit
examination, deficiency, or refund Litigation with respect to any Taxes
that is reasonably likely to result in a determination that would have,
individually or in the aggregate, a Colony Material Adverse Effect,
except as reserved against in the Colony Financial Statements delivered
prior to the date of this Agreement. Colony's federal income Tax Returns
have not been audited by the IRS. All Taxes and other Liabilities due
with respect to completed and settled examinations or concluded
Litigation have been paid. There are no Liens with respect to Taxes upon
any of the Assets of the Colony Entities, except for any such Liens
which are not reasonably likely to have a Colony Material Adverse Effect.
(b) None of the Colony Entities has executed an extension or waiver
of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due for any of the
Colony Entities for the period or periods through and including the date
of the respective Colony Financial Statements that has been made and is
reflected on such Colony Financial Statements is sufficient to cover all
such Taxes.
(d) Deferred Taxes of the Colony Entities have been provided for in
accordance with GAAP.
(e) None of the Colony Entities is a party to any Tax allocation or
sharing agreement and none of the Colony Entities has been a member of
an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Colony) or has any
Liability for Taxes of any Person (other than Colony and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law) as a transferee or successor
or by Contract or otherwise.
(f) Each of the Colony Entities is in compliance with, and its
records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements under federal,
state, and local Tax Laws, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the
Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in
the aggregate, a Colony Material Adverse Effect.
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(g) Except as disclosed in Section 6.8 of the Colony Disclosure
Memorandum, none of the Colony Entities has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction
under Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Colony Entities that occurred during
or after any Taxable Period in which the Colony Entities incurred a net
operating loss that carries over to any Taxable Period ending after
December 31, 1996.
6.9 Allowance for Possible Loan Losses. The Allowance shown on the
consolidated balance sheets of Colony included in the most recent Colony
Financial Statements dated prior to the date of this Agreement was, and the
Allowance shown on the consolidated balance sheets of Colony included in the
Colony Financial Statements as of dates subsequent to the execution of this
Agreement will be, as of the dates thereof, adequate (within the meaning of
GAAP and applicable regulatory requirements or guidelines) to provide for all
known or reasonably anticipated losses relating to or inherent in the loan and
lease portfolios (including accrued interest receivables) of the Colony
Entities and other extensions of credit (including letters of credit and
commitments to make loans or extend credit) by the Colony Entities as of the
dates thereof, except where the failure of such Allowance to be so adequate is
not reasonably likely to have a Colony Material Adverse Effect.
6.10 Assets.
(a) Except as previously disclosed or as disclosed or reserved
against in the Colony Financial Statements delivered prior to the date
of this Agreement, the Colony Entities have good and marketable title,
free and clear of all Liens, to all of their respective Assets, except
for any such Liens or other defects of title which are not reasonably
likely to have a Colony Material Adverse Effect. All tangible properties
used in the businesses of the Colony Entities are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course
of business consistent with Colony's past practices.
(b) All Assets which are material to Colony's business on a
consolidated basis, held under leases or subleases by any of the Colony
Entities, are held under valid Contracts enforceable in accordance with
their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other
Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceedings may be brought), and each such Contract is in full force
and effect.
(c) The Colony Entities currently maintain insurance similar in
amounts, scope and coverage to that maintained by other peer banking
organizations. None of the Colony Entities has received notice from any
insurance carrier that (i) any policy of insurance will be canceled or
that coverage thereunder will be reduced or eliminated, or (ii) premium
costs with respect to such policies of insurance will be substantially
increased. There are presently no claims pending under such policies of
insurance for amounts exceeding in any individual case $20,000 pending
under such policies of insurance and no notices of claims in excess of
such amounts have been given by any Colony Entity under such policies.
(d) The Assets of the Colony Entities include all assets required to
operate the business of the Colony Entities as presently conducted.
6.11 Intellectual Property. Each Colony Entity owns or has a license to use
all of the Intellectual Property used by such Colony Entity in the course of
its business. Each Colony Entity is the owner of or has a license to any
Intellectual Property sold or licensed to a third party by such Colony Entity
in connection with such Colony Entity's business operations, and such Colony
Entity has the right to convey by sale or license any Intellectual Property so
conveyed. No Colony Entity is in Default under any of its Intellectual Property
licenses. No proceedings have been instituted, or are pending or to the
Knowledge of Colony threatened, which challenge the rights of any Colony Entity
with respect to Intellectual Property used, sold or licensed by such Colony
Entity
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in the course of its business, nor has any person claimed or alleged any rights
to such Intellectual Property. The conduct of the business of the Colony
Entities does not infringe any Intellectual Property of any other person. No
Colony Entity is obligated to pay any recurring royalties to any Person with
respect to any such Intellectual Property. No officer, director or employee of
any Colony Entity is party to any Contract which restricts or prohibits such
officer, director or employee from engaging in activities competitive with any
Person, including any Colony Entity.
6.12 Environmental Matters.
(a) To the Knowledge of Colony, each Colony Entity, its Participation
Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are
not reasonably likely to have, individually or in the aggregate, a
Colony Material Adverse Effect.
(b) To the Knowledge of Colony, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other
forum in which any Colony Entity or any of its Operating Properties or
Participation Facilities (or Colony in respect of such Operating
Property or Participation Facility) has been or, with respect to
threatened Litigation, may be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release, discharge, spillage, or disposal into
the environment of any Hazardous Material, whether or not occurring at,
on, under, adjacent to, or affecting (or potentially affecting) a site
owned, leased, or operated by any Colony Entity or any of its Operating
Properties or Participation Facilities, except for such Litigation
pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Colony Material Adverse Effect, nor
is there any reasonable basis for any Litigation of a type described in
this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a Colony Material Adverse Effect.
(c) During the period of (i) any Colony Entity's ownership or
operation of any of their respective current properties, (ii) any Colony
Entity's participation in the management of any Participation Facility,
or (iii) any Colony Entity's holding of a security interest in a
Operating Property, there have been no releases, discharges, spillages,
or disposals of Hazardous Material in, on, under, adjacent to, or
affecting (or potentially affecting) such properties, except such as are
not reasonably likely to have, individually or in the aggregate, a
Colony Material Adverse Effect. Prior to the period of (i) any Colony
Entity's ownership or operation of any of their respective current
properties, (ii) any Colony Entity's participation in the management of
any Participation Facility, or (iii) any Colony Entity's holding of a
security interest in a Operating Property, to the Knowledge of Colony,
there were no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, or affecting any such property, Participation
Facility or Operating Property, except such as are not reasonably likely
to have, individually or in the aggregate, a Colony Material Adverse
Effect.
6.13 Compliance with Laws. Colony is duly registered as a bank holding
company under the BHC Act. Each Colony Entity has in effect all Permits
necessary for it to own, lease or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which
are not reasonably likely to have, individually or in the aggregate, a Colony
Material Adverse Effect, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Colony Material Adverse Effect. None of the
Colony Entities:
(a) is in Default under any of the provisions of its Articles of
Incorporation or Bylaws (or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for Defaults which
are not reasonably likely to have, individually or in the aggregate, a
Colony Material Adverse Effect; or
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(c) since December 31, 1998 has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i)
asserting that any Colony Entity is not in compliance with any of the
Laws or Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Colony Material Adverse Effect, (ii)
threatening to revoke any Permits, the revocation of which is reasonably
likely to have, individually or in the aggregate, a Colony Material
Adverse Effect, or (iii) requiring any Colony Entity to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the
conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment
of dividends.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to
Quitman.
6.14 Labor Relations. No Colony Entity is the subject of any Litigation
asserting that it or any other Colony Entity has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other Colony Entity to bargain with
any labor organization as to wages or conditions of employment, nor is any
Colony Entity party to any collective bargaining agreement, nor is there any
strike or other labor dispute involving any Colony Entity, pending or
threatened, or to the Knowledge of Colony, is there any activity involving any
Colony Entity's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
6.15 Employee Benefit Plans.
(a) Colony has previously disclosed and has delivered or made
available to Quitman prior to the execution of this Agreement copies in
each case of all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay,
vacation, bonus, or other incentive plan, all other written employee
programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit
plans" as that term is defined in Section 3(3) of ERISA, currently
adopted, maintained by, sponsored in whole or in part by, or contributed
to by any Colony Entity or ERISA Affiliate thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "Colony
Benefit Plans"). Any of the Colony Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA,
is referred to herein as a "Colony ERISA Plan." Each Colony ERISA Plan
which is also a "defined benefit plan" (as defined in Section 414(j) of
the Internal Revenue Code) is referred to herein as a "Colony Pension
Plan." No Colony Pension Plan is or has been a multi-employer plan
within the meaning of Section 3(3 7) of ERISA.
(b) All Colony Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws
the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Colony Material Adverse Effect. Each
Colony ERISA Plan which is intended to be qualified under Section 401(a)
of the Internal Revenue Code has received a favorable determination
letter from the Internal Revenue Service, and Colony is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. No Colony Entity has engaged in a transaction with
respect to any Colony Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would subject any Colony
Entity to a Tax imposed by either Section 4975 of the Internal Revenue
Code or Section 502(i) of ERISA in amounts which are reasonably likely
to have, individually or in the aggregate, a Colony Material Adverse
Effect.
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(c) No Colony Pension Plan has any "unfunded current liability," as
that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial
valuation. Since the date of the most recent actuarial valuation, there
has been (i) no material change in the financial position of a Colony
Pension Plan, (ii) no change in the actuarial assumptions with respect
to any Colony Pension Plan, and (iii) no increase in benefits under any
Colony Pension Plan as a result of plan amendments or changes in
applicable Law which is reasonably likely to have, individually or in
the aggregate, a Colony Material Adverse Effect or materially adversely
affect the funding status of any such plan. Neither any Colony Pension
Plan nor any "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any Colony
Entity, or the single-employer plan of any ERISA Affiliate has an
"accumulated funding deficiency" within the meaning of Section 412 of
the Internal Revenue Code or Section 302 of ERISA, which is reasonably
likely to have a Colony Material Adverse Effect. No Colony Entity has
provided, or is required to provide, security to a Colony Pension Plan
or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by any Colony Entity with respect to any
ongoing, frozen or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate, which Liability is
reasonably likely to have a Colony Material Adverse Effect. No Colony
Entity has incurred any withdrawal Liability with respect to a
multi-employer plan under Subtitle B of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate), which Liability
is reasonably likely to have a Colony Material Adverse Effect. No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Colony Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(e) Except as previously disclosed, no Colony Entity has any
Liability for retiree health and life benefits under any of the Colony
Benefit Plans and there are no restrictions on the rights of such Colony
Entity to amend or terminate any such retiree health or benefit Plan
without incurring any Liability thereunder, which Liability is
reasonably likely to have a Colony Material Adverse Effect.
(f) Except as previously disclosed, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including severance,
unemployment compensation, golden parachute, or otherwise) becoming due
to any director or any employee of any Colony Entity from any Colony
Entity under any Colony Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Colony Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably
likely to have, individually or in the aggregate, a Colony Material
Adverse Effect.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and
former employees of any Colony Entity and their respective
beneficiaries, other than entitlements accrued pursuant to funded
retirement plans subject to the provisions of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, have been fully reflected
on the Colony Financial Statements to the extent required by and in
accordance with GAAP.
6.16 Legal Proceedings. There is no Litigation instituted or pending, or, to
the Knowledge of Colony, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any Colony Entity, or against any director,
employee or employee benefit plan of any Colony Entity, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Colony Material Adverse Effect, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any
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Colony Entity, that are reasonably likely to have, individually or in the
aggregate, a Colony Material Adverse Effect.
6.17 Reports. Since December 31, 1998, or the date of organization if later,
each Colony Entity has timely filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required
to file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Colony Material Adverse Effect). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
6.18 Statements True and Correct. None of the information supplied or to be
supplied by any Colony Entity or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Colony with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Colony Entity or any Affiliate thereof for inclusion in the
Joint Proxy Statement to be mailed to each Party's shareholders in connection
with the Shareholders' Meetings, and any other documents to be filed by any
Colony Entity or any Affiliate thereof with the SEC or any other, Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Joint Proxy
Statement, when first mailed to the shareholders of Quitman and Colony, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of
the Joint Proxy Statement or any amendment thereof or supplement thereto, at
the time of the Shareholders' Meetings, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meetings. All documents that any Colony Entity or
any Affiliate thereof is responsible for filing with any Regulatory Authority
in connection with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable Law.
6.19 Accounting, Tax and Regulatory Matters. No Colony Entity or any
Affiliate thereof has taken or agreed to take any action or has any Knowledge
of any fact or circumstance that is reasonably likely to (i) prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) or result in
the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
6.20 State Takeover Laws. Each Colony Entity has taken all necessary action
to exempt the transactions contemplated by this Agreement from, or if necessary
to challenge the validity or applicability of, any applicable "moratorium,"
"fair price," "business combination," "control share," or other anti-takeover
Laws (collectively, "Takeover Laws"), including Sections 14-2-1111 and
14-2-1132 of the GBCC.
6.21 Charter Provisions. Each Colony Entity has taken all action so that the
entering into of this Agreement and the Colony Stock Option Agreement and the
consummation of the Merger and the other transactions contemplated hereby and
thereby, including the acquisition of shares pursuant to, or other exercise of
rights under, the Colony Stock Option Agreement, do not and will not result in
the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any Colony Entity or restrict or
impair the ability of Quitman or any Quitman shareholder to vote, or otherwise
to exercise the rights of a shareholder with respect to, shares of Colony
Common Stock that may be directly or indirectly acquired or controlled by them.
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6.22 Board Action. The Board of Directors of Colony, at a meeting duly
called and held, has by unanimous vote of the directors present (who
constituted all of the directors then in office) determined that this Agreement
and the transactions contemplated hereby, including the Merger, and the
transactions contemplated thereby, taken together, are fair to and in the best
interests of the shareholders.
6.23 Quitman Federal Board Membership. It is the intention of Colony to
maintain for a period of at least three (3) years the current board of
directors of Quitman Federal and pay substantially similar board fees to such
Quitman Federal Directors in return for their continued service to Quitman
Federal or Colony.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Each Party. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of the other Party shall have been obtained,
and except as otherwise expressly contemplated herein, each Party shall and
shall cause each of its Subsidiaries to (a) operate its business only in the
usual, regular, and ordinary course, (b) preserve intact its business
organization and Assets and maintain its rights and franchises, and (c) take no
action which would (i) materially adversely affect the ability of either Party
to obtain any Consents required for the transactions contemplated hereby
without imposition of a condition or restriction of the type referred to in the
last sentences of Section 9.1(b) or 9.1(c), or (ii) materially adversely affect
the ability of either Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of Quitman. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, unless the
prior written consent of Colony shall have been obtained, which consent shall
not be unreasonably withheld, and except as otherwise expressly contemplated
herein, Quitman covenants and agrees that it will not do or agree or commit to
do, or permit any of its Subsidiaries to do or agree or commit to do, any of
the following:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any Quitman Entity; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Quitman Entity to another
Quitman Entity) in excess of an aggregate of $50,000 (for the Quitman
Entities on a consolidated basis) except in the ordinary course of the
business of Quitman Subsidiaries consistent with past practices (which
shall include, for Quitman Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal
funds, advances from the Federal Reserve Bank or Federal Home Loan Bank,
and entry into repurchase agreements fully secured by U.S. government or
agency securities), or impose, or suffer the imposition, on any Asset of
any Quitman Entity of any Lien or permit any such Lien to exist (other
than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the
ordinary course of business, the satisfaction of legal requirements in
the exercise of trust powers, and Liens in effect as of the date hereof
that are disclosed in the Quitman Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly
or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any Quitman Entity (except for purchases
in the open market of shares to fund the Quitman Federal Savings Bank
Restricted Stock Plan), or declare or pay any dividend or make any other
distribution in respect of Quitman's capital stock.
(d) issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any
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additional shares of Quitman Common Stock or any other capital stock of
any Quitman Entity, or any stock appreciation rights, or any option,
warrant, or other Equity Right; or
(e) adjust, split, combine or reclassify any shares of Quitman Common
Stock or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Quitman Common Stock, or
sell, lease, mortgage or otherwise dispose of or otherwise encumber (x)
any shares of capital stock of any Quitman Subsidiary (unless any such
shares of stock are sold or otherwise transferred to another Quitman
Entity) or (y) any Asset having a book value in excess of $25,000 other
than in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities, U.S. Government
agency securities or obligations of the State of Georgia, or any
subdivisions thereof which have maturities of seven years or less,
purchase any securities or make any material investment, either by
purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned Quitman Subsidiary, or otherwise acquire direct or indirect
control over any Person, other than in connection with (i) internal
reorganizations or consolidations involving existing Subsidiaries, (ii)
foreclosures in the ordinary course of business, (iii) acquisitions of
control by a depository institution Subsidiary in its fiduciary
capacity, or (iv) the creation of new wholly owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or
(g) grant any increase in compensation or benefits to the employees
or officers of any Quitman Entity, pay any severance or termination pay
or any bonus other than pursuant to written policies or written
Contracts in effect on the date of this Agreement and disclosed in
Section 7.2(g) of the Quitman Disclosure Memorandum; and enter into or
amend any severance agreements with officers of any Quitman Entity; or
grant any material increase in fees or other increases in compensation
or other benefits to directors of any Quitman Entity; or
(h) enter into or amend any employment Contract between any Quitman
Entity and any Person (unless such amendment is required by Law) that
the Quitman Entity does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered),
at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any Quitman Entity or
terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any Quitman Entity other than any
such change that is required by Law or that, in the opinion of counsel,
is necessary or advisable to maintain the tax qualified status of any
such plan, or make any distributions from such employee benefit plans,
except as required by Law or contemplated by this Agreement, the terms
of such plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice, or settle any Litigation involving any Liability of any
Quitman Entity for material money damages or restrictions upon the
operations of any Quitman Entity; or
(l) except in the ordinary course of business, enter into, modify,
amend or terminate any material Contract (including any loan Contract
with an unpaid balance exceeding $25,000) or waive, release, compromise
or assign any material rights or claims.
7.3 Negative Covenants of Colony. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, unless the
prior written consent of Quitman shall have been obtained, which consent shall
not be unreasonably withheld, and except as otherwise expressly contemplated
herein,
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Colony covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Articles of Incorporation or Bylaws of Colony, in each
case, in any manner adverse to the holders of Quitman Common Stock, or
(b) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly
or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any Colony Entity, or declare or pay any
dividend or make any other distribution in respect of Colony's capital
stock, provided that Colony may (to the extent legally and contractually
permitted to do so), but shall not be obligated to, declare and pay
regular quarterly cash dividends on the shares of Colony Common Stock in
accordance with past practice; or
(c) adjust, split, combine or reclassify any shares of Colony Common
Stock or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Colony Common Stock; or
(d) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in applicable Tax Laws or regulatory accounting
requirements or GAAP; or
(e) commence any Litigation other than in accordance with past
practice, or settle any Litigation involving any Liability of any Colony
Entity for material money damages or restrictions upon the operations of
any Colony Entity.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Quitman Material Adverse Effect or a Colony Material Adverse
Effect, as applicable, or (ii) would cause or constitute a material breach of
any of its representations, warranties, or covenants contained herein, and to
use its reasonable efforts to prevent or promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports required
to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements
will fairly present the consolidated financial position of the entity filing
such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods
then ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval. As soon
as reasonably practicable after execution of this Agreement, Colony shall
prepare and file the Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to become effective
under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of Colony Common Stock upon consummation of the Merger. Quitman
shall cooperate in
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the preparation and filing of the Registration Statement and shall furnish all
information concerning it and the holders of its capital stock as Colony may
reasonably request in connection with such action. Quitman shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Shareholders' Meetings, (i) Quitman
and Colony shall prepare and file with the SEC a Proxy Statement and prospectus
and mail such Proxy Statement and prospectus to Quitman shareholders, (ii) the
Parties shall furnish to each other all information concerning them that they
may reasonably request in connection with such Proxy Statement and prospectus,
(iii) subject to Section 8.9 of this Agreement, the Board of Directors of
Quitman shall recommend to their shareholders the approval of the matters
submitted for approval, and (iv) subject to Section 8.9 of this Agreement, the
Board of Directors and officers of Colony shall use their reasonable efforts to
obtain such shareholders' approval. Colony shall make all necessary filings
with respect to the Merger under the Securities Laws.
8.2 Exchange Listing. Colony shall use its reasonable efforts to list, prior
to the Effective Time, on the Nasdaq National Market the shares of Colony
Common Stock to be issued to the holders of Quitman Common Stock pursuant to
the Merger, and Colony shall give all notices and make all filings with the
Nasdaq National Market required in connection with the transactions
contemplated herein.
8.3 Applications. Colony shall prepare and file, and Quitman shall cooperate
in the preparation and, where appropriate, filing of, applications with all
Regulatory Authorities having jurisdiction over the transactions contemplated
by this Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement. The Parties shall deliver to each
other copies of all filings, correspondence and orders to and from all
Regulatory Authorities in connection with the transactions contemplated hereby.
8.4 Filings with State Offices. Upon the terms and subject to the conditions
of this Agreement, Colony shall execute and file the Certificate of Merger with
the Secretary of State of the State of Georgia in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use,
and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the other
Party advised of all material developments relevant to its business and
to consummation of the Merger and shall permit the other Party to make
or cause to be made such investigation of the business and properties of
it and its Subsidiaries and of their respective financial and legal
conditions as the other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions
contemplated hereby and shall not interfere unnecessarily with normal
operations. No investigation by a Party shall affect the representations
and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its
advisers and agents to, maintain the confidentiality of all confidential
information furnished to it by the other Party concerning its and its
Subsidiaries' businesses, operations, and financial positions
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and shall not use such information for any purpose except in furtherance
of the transactions contemplated by this Agreement. If this Agreement is
terminated prior to the Effective Time, each Party shall promptly return
or certify the destruction of all documents and copies thereof and all
work papers containing confidential information received from the other
Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course
of its investigation and which represents, or is reasonably likely to
represent, either a material breach of any representation, warranty,
covenant or agreement of the other Party or which has had or is
reasonably likely to have a Quitman Material Adverse Effect or a Colony
Material Adverse Effect, as applicable.
8.7 Press Releases. Prior to the Effective Time, Quitman and Colony shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement and the
transactions contemplated hereby, neither Party nor any Affiliate thereof nor
any Representatives thereof retained by either Party shall directly or
indirectly solicit any Acquisition Proposal by any Person. Neither Party nor
any Affiliate or Representative thereof shall furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, or enter into any Contract with respect to, any Acquisition Proposal, but a
Party may communicate information about such an Acquisition Proposal to its
shareholders if and to the extent that it is required to do so in order to
comply with obligations under Section 14 of the 1934 Act and in accordance with
Section 8.9 of this Agreement. Each Party shall promptly advise the other Party
following the receipt of any Acquisition Proposal and the details thereof and
advise the other Party of any developments with respect to such Acquisition
Proposal promptly upon the occurrence thereof.
8.9 No Solicitation.
(a) Quitman shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any officer, director of employee
of, or any investment banker, attorney or other advisor or
representative of, Quitman or any of its Subsidiaries to (i) solicit or
initiate, or encourage the submission of, any Takeover Proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes,
or may reasonably be expected to lead to, any Takeover Proposal;
provided, however, that, subject to compliance with subsection (c) below
and after consultation with its legal counsel, the Quitman Board of
Directors determines that the failure to do so could constitute a breach
by the Quitman Board of Directors of its fiduciary duties to Quitman
shareholders under applicable law, Quitman may, in response to an
unsolicited Takeover Proposal that (i) was not received in violation of
this Section 8.9 and (ii) the Quitman Board of Directors determines in
good faith, after receipt of a written opinion of a financial advisor of
nationally recognized reputation to such effect, might result in a
transaction more favorable to Quitman shareholders than the Merger, (A)
furnish information with respect to Quitman to any Person pursuant to a
confidentiality agreement and (B) participate in negotiations regarding
such Takeover Proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the immediately
preceding sentence by any executive officer of Quitman or any of its
Subsidiaries or any investment banker, attorney or other advisor or
representative of Quitman or any of its Subsidiaries, whether or not
such person is purporting to act on behalf of Quitman or any of its
Subsidiaries or otherwise, shall be deemed to be a breach of this
Section 8.9 by Quitman. For purposes of this Agreement, "Takeover
Proposal" means an inquiry, proposal or acquisition or purchase of a
substantial amount of assets of
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Quitman or any of its Subsidiaries (other than investors in the ordinary
course of business) or of over 15% of any class of equity securities of
Quitman or any of its Subsidiaries or any tender offer or exchange offer
that if consummated would result in any Person beneficially owing 15% or
more of any class of equity securities of Quitman or any of its
Subsidiaries, or any merger, consolidation, business combination, sale
of substantially all assets, recapitalization, liquidation, dissolution
or similar transaction involving Quitman or any of its Subsidiaries
other than the transactions contemplated by this Agreement, or any other
transaction the consummation of which would reasonably be executed to
impede, interfere with, prevent or materially delay the Merger or which
would reasonably be expected to dilute materially the benefits to Colony
of the transactions contemplated hereby.
(b) Except as set forth herein, neither the Board of Directors of
Quitman nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Colony the
approval or recommendation of such Board of Directors or any such
committee of this Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal or (iii) enter
into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, after consultation with its legal
counsel, the Quitman Board of Directors determines that failure to do so
might constitute a breach of its fiduciary duties to Quitman
shareholders under applicable law, then, prior to the Shareholders'
Meeting, the Quitman Board of Directors may (subject to the terms of
this and the following sentences) approve or recommend (and, in
connection therewith, withdraw or modify its approval or recommendation
of this Agreement or the Merger) a Superior Proposal, or enter into an
agreement with respect to a Superior Proposal, in each case at any time
after the second Business Day following Colony's receipt of written
notice (a "Notice of Superior Proposal") advising Colony that the
Quitman Board of Directors has received a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and
identifying the Person making such Superior Proposal; provided that
Quitman shall not enter into an agreement with respect to a Superior
Proposal unless Quitman shall have furnished Colony with written notice
no later than 12:00 noon one (1) day in advance of any date that it
intends to enter into such agreement. For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more
than 50% of the shares of Quitman Common Stock or Quitman Bank then
outstanding or all or substantially all of the assets of Quitman or
Quitman Bank and otherwise on terms that the Quitman Board of Directors
determines in its good faith judgment (after receipt of a written
opinion of a financial advisor of nationally recognized reputation to
such effect) to be more favorable to Quitman shareholders than the
Merger.
(c) In addition to the obligations of Quitman set forth in subsection
(b) above, Quitman shall immediately advise Colony orally and in writing
of any request for information or of any Takeover Proposal, or any
inquiry with respect to or which could lead to any Takeover Proposal,
the material terms and conditions of such request, Takeover Proposal or
inquiry, and the identity of the person making any Takeover Proposal or
inquiry, Quitman shall keep Colony full informed of the status and
details (including amendments or proposed amendments) of any such
request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 8.9 shall prohibit Quitman from
making any disclosure to Quitman's shareholders if the Quitman Board of
Directors determines in good faith, after receipt of the advice of
outside counsel to such effect, that it is required to do so in order to
discharge properly its fiduciary duties to shareholders under applicable
law; provided that Quitman does not, except as permitted by subsection
(b) above, withdraw or modify, or propose to withdraw or modify, its
position with respect to the Merger or approve or recommend, or propose
to approve or recommend, a Takeover Proposal.
8.10 Tax Treatment. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify as a tax-free "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
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8.11 State Takeover Laws. Each Quitman Entity shall take all necessary steps
to exempt the transactions contemplated by this Agreement from, or if necessary
to challenge the validity or applicability of, any applicable Takeover Law,
including Sections 14-2-1111 and 14-2-1132 of the GBCC.
8.12 Charter Provisions. Each Quitman Entity shall take all necessary action
to ensure that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby do not and will not
result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any Quitman Entity or
restrict or impair the ability of Colony or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of
any Quitman Entity that may be directly or indirectly acquired or controlled by
them.
8.13 Agreement of Affiliates. Quitman has disclosed in Section 8.13 of the
Quitman Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of Quitman for purposes of Rule 145 under the 1933 Act that shall
include all participants in the Quitman Restricted Stock Plan. Quitman shall
use its reasonable efforts to cause each such Person to deliver to Colony not
later than 30 days after the date of this Agreement, a written agreement,
substantially in the form of Exhibit B.
8.14 Employee Benefits and Contracts.
(a) All employees of Quitman shall be evaluated by Colony for
retention or termination prior to Closing. Colony agrees that for a
period of twelve (12) months following the Closing, any employee of
Quitman whose employment is involuntarily terminated by Colony for a
reason other than just cause on or after the Closing shall be entitled
to receive payment for both accrued vacation time and continued payment
of salary in effect as of the Closing through the remainder of the one
(1) year period after Closing.
(b) All employees of Quitman who continue as employees of Colony
after the Merger shall (i) continue their employment and regular salary
in effect on the Closing Date until the earlier to occur of their
voluntary termination of employment and the date twelve (12) months
after the Closing; (ii) receive service credit for employment at Quitman
prior to the Closing for purposes of meeting all the eligibility
requirements and all vesting requirements for all Colony benefit
programs with such employees shall become eligible to participate in on
or after the Closing including, but not limited to, health, retirement,
vacation and disability plans; (iii) receive service credit for
employment at Quitman prior to the Closing for purposes of benefit
accrual under all Colony benefit programs, other than Colony retirement
plans, including, but not limited to, accrual of vacation pay and sick
leave; and (iv) be subject to Colony's employment policies. No such
employees or dependents of such employees shall be subject to any
uninsured waiting periods or pre-existing condition exclusions under any
plan of Colony or its subsidiaries.
(c) Colony also shall, and shall cause its Subsidiaries to, honor in
accordance with their terms all employment, severance, consulting and
other compensation Contracts disclosed in Section 8.14 of the Quitman
Disclosure Memorandum between any Quitman Entity and any current or
former director, officer, or employee thereof, and all provisions for
vested benefits or other vested amounts earned or accrued through the
Effective Time under the Quitman Benefit Plans.
8.15 Indemnification.
(a) For a period of six years after the Effective Time, Colony agrees
that all rights to indemnification and all limitations of liability
existing in favor of the directors, officers, employees and agents of
the Quitman Entities (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions arising out of the
Indemnified Party's service or services as directors, officers,
employees or agents of Quitman or, at Quitman's request, of another
corporation, partnership, joint venture, trust or other enterprise
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted under
Georgia Law and as provided in their respective Quitman's Articles of
Incorporation and Bylaws as in effect on the date hereof shall
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survive the Merger and shall continue in full force and effect,
including provisions relating to advances of expenses incurred in the
defense of any Litigation and whether or not any Colony Entity is
insured against any such matter. Without limiting the foregoing, in any
case in which approval by the Surviving Corporation is required to
effectuate any indemnification, the Surviving Corporation shall direct,
at the election of the Indemnified Party, that the determination of any
such approval shall be made by independent counsel mutually agreed upon
between Colony and the Indemnified Party.
(b) Colony shall use its reasonable efforts (and Quitman shall
cooperate prior to the Effective Time in these efforts) to maintain in
effect for a period of three years after the Effective Time Quitman's
existing directors' and officers' liability insurance policy (provided
that Colony may substitute therefor (i) policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous or (ii) with the consent of Quitman given prior to the
Effective Time, any other policy) with respect to claims arising from
facts or events which occurred prior to the Effective Time and covering
persons who are currently covered by such insurance; provided, that the
Surviving Corporation shall not be obligated to make aggregate premium
payments for such three-year period in respect of such policy (or
coverage replacing such policy) which exceed, for the portion related to
Quitman's directors and officers, 150% of the annual premium payments on
Quitman's current policy in effect as of the date of this Agreement (the
"Maximum Amount"). If the amount of the premiums necessary to maintain
or procure such insurance coverage exceeds the Maximum Amount, Colony
shall use its reasonable efforts to maintain the most advantageous
policies of directors' and officers' liability insurance obtainable for
a premium equal to the Maximum Amount.
(c) If the Surviving Corporation or any successors or assigns shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and
in each case, proper provision shall be made so that the successors and
assigns of the Surviving Corporation shall assume the obligations set
forth in this Agreement.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6:
(a) Shareholder Approval. The shareholders of Quitman shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required
by Law and, by the provisions of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be
in full force and effect and all waiting periods required by Law shall
have expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating
to the raising of additional capital or the disposition of Assets) which
in the reasonable judgment of the Board of Directors of either Party
would so materially adversely impact the economic or business benefits
of the transactions contemplated by this Agreement that, had such
condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b)) or for the preventing of any Default
under any Contract or Permit of such Party which, if not obtained or
made, is reasonably
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likely to have, individually or in the aggregate, a Quitman Material
Adverse Effect or a Colony Material Adverse Effect, as applicable. No
Consent so obtained which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner which
in the reasonable judgment of the Board of Directors of either Party
would so materially adversely impact the economic or business benefits
of the transactions contemplated by this Agreement that, had such
condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of Colony
Common Stock issuable pursuant to the Merger shall have been received.
(f) NASDAQ Listing. The shares of Colony Common Stock issuable
pursuant to the Merger shall have been approved for listing on the
Nasdaq National Market.
(g) Tax Matters. Each Party shall have received a written opinion of
counsel from Martin, Snow, Grant & Napier, LLP, in form reasonably
satisfactory to such Parties (the "Tax Opinion"), to the effect that (i)
the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, (ii) the exchange in the
Merger of Quitman Common Stock for Colony Common Stock will not give
rise to gain or loss to the shareholders of Quitman with respect to such
exchange (except to the extent of any cash received).
9.2 Conditions to Obligations of Colony. The obligations of Colony to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by Colony pursuant to Section 11.6(a):
(a) Representations and Warranties. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of Quitman
set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date), except for representations and warranties of Quitman in this
Agreement set forth in Section 5.3, which shall be true in all respects,
the inaccuracies of which relate to matters not reasonably likely to
have, a Quitman Material Adverse Effect.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Quitman to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. Quitman shall have delivered to Colony (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as relates to
Quitman and in Section 9.2(a) and 9.2(b) have been satisfied, and (ii)
certified copies of resolutions duly adopted by Quitman's Board of
Directors and shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as Colony and its counsel shall request.
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(d) Opinion of Counsel. Quitman shall have delivered to Colony
opinions of Manatt, Phelps & Phillips, LLP and local counsel, dated as
of the Closing Date, covering those matters set forth in Exhibit F
hereto, which opinions may be rendered in accordance with the
Interpretive Standards on Legal Opinions to Third Parties in Corporate
Transactions promulgated by the Corporate and Banking Law Section of the
State Bar of Georgia (January 1, 1992) or the American Bar Association
(the "Interpretive Standards").
(e) Affiliate Agreements. Colony shall have received from each
affiliate of Quitman the affiliates letter referred to in Section 8.13
and from each Option Holder the letter agreements referred to in Section
3.2.
9.3 Conditions to Obligations of Quitman. The obligations of Quitman to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by Quitman pursuant to Section 11.6(b):
(a) Representations and Warranties. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of Colony set
forth in this Agreement shall be true and correct as of the date of this
Agreement and as of the Effective Time with the same effect as though
all such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date), except
for representations and warranties of Colony in this Agreement set forth
in Section 6.3 which shall be true in all respects the inaccuracies of
which relate to matters not reasonably likely to have, a Colony Material
Adverse Effect.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Colony to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Opinions of Financial Advisor. Quitman shall have received a
written opinion from its financial advisor dated the date the Proxy
Statement is mailed to shareholders of Quitman, to the effect that the
terms of the Merger, including the Cash Consideration and Stock
Consideration, are fair, from a financial point of view, to the
shareholders of Quitman.
(d) Certificates. Colony shall have delivered to Quitman (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as relates to Colony
and in Section 9.3(a) and 9.3(b) have been satisfied, and (ii) certified
copies of resolutions duly adopted by Colony's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby, all in such
reasonable detail as Quitman and its counsel shall request.
(e) Opinion of Counsel. Colony shall have delivered to Quitman an
opinion of Martin, Snow, Grant & Napier, LLP, counsel to Colony, dated
as of the Closing Date, covering those matters set forth in Exhibit E
hereto, which opinion may be rendered in accordance with the
Interpretive Standards.
(f) Employment Contracts. Colony shall have executed employment
agreements with those individuals included in Section 9.3 of the Quitman
Disclosure Memorandum.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement, and
notwithstanding the approval of this Agreement by the shareholders of Quitman,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
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(a) By mutual consent of the Boards of Directors Colony and Quitman;
or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in
the event of a material breach by the other Party of any representation
or warranty contained in this Agreement which cannot be or has not been
cured within 30 days after the giving of written notice to the breaching
Party of such breach and which breach is reasonably likely, in the
opinion of the non-breaching Party, to have, individually or in the
aggregate, a Quitman Material Adverse Effect or a Colony Material
Adverse Effect, as applicable, on the breaching Party; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in
the event of a material breach by the other Party of any covenant or
agreement contained in this Agreement which cannot be or has not been
cured within 30 days after the giving of written notice to the breaching
Party of such breach; or
(d) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in
the event (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated
hereby shall have been denied by final nonappealable action of such
authority or if any action taken by such authority is not appealed
within the time limit for appeal, or (ii) the shareholders of Quitman
fail to vote their approval of the matters relating to this Agreement
and the transactions contemplated hereby at the Shareholders' Meetings
where such matters were presented to such shareholders for approval and
voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by May 31, 2002, if the failure
to consummate the transactions contemplated hereby on or before such
date is not caused by any breach of this Agreement by the Party electing
to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of Quitman if the Final Market Price
shall be equal or less than $9.60.
(g) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in
the event that any of the conditions precedent to the obligations of
such Party to consummate the Merger cannot be satisfied or fulfilled by
the date specified in Section 10.1(e); or
(h) By of the Board of Directors of Quitman in connection with
entering into a definitive agreement in accordance with Section 8.9(b)
provided that it has complied with all provisions thereof, including the
notice provisions therein, and that it makes simultaneous payment of the
Termination Fee.
10.2 Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 10.1, this Agreement shall become void
and have no effect, except that (i) the provisions of this Section 10.2 and
Article 11 and Section 8.6(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b) or 10.1(c)
shall entitle the non-breaching Party to the sum of $100,000.00 to be paid by
the breach Party, as and for liquidated damages, which shall be the sole remedy
of either Party against the other under this Agreement pursuant to O.C.G.A. (S)
13-6-7. The Parties agree that the amount specified as liquidated damages
hereunder represents a good faith and reasonable estimate of the Parties of the
amount of damages that the non-breaching Party would expect to incur in the
event of a default under this Agreement and is not intended as a penalty.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Article 10 and
Articles 1, 2, 3, 4 and 11 and Sections 8.12, 8.14 and 8.15.
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ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of or other business
combination involving the acquisition of such Party or any of its
Subsidiaries or the acquisition of a substantial equity interest in,
or a substantial portion of the assets of, such Party or any of its
Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of
such Person; or (iii) any other Person for which a Person described
in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated
herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or
utilized in such Person's business, directly or indirectly, in whole
or in part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956,
as amended.
"Cash Consideration" shall mean TWO MILLION THREE HUNDRED
SEVENTY-TWO THOUSAND EIGHT HUNDRED EIGHTY-FOUR AND NO/100 DOLLARS
($2,372,884.00), subject to adjustment pursuant to Section 11.2 of
this Agreement.
"Certificate of Merger" shall mean the Certificate of Merger to be
executed by Colony and filed with the Secretary of State of the State
of Georgia relating to the Merger as contemplated by Section 1.1.
"Closing Date" shall mean the date on which the Closing occurs.
"Colony Common Stock" shall mean the $1.00 par value common stock
of Colony.
"Colony Entities" shall mean, collectively, Colony and all Colony
Subsidiaries.
"Colony Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Colony as of December 31, 1999 and 2000, and the related statements
of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for each of the three fiscal
years ended December 31, 1998, 1999 and 2000, as filed by Colony in
SEC Documents, (ii) the consolidated balance sheets (including
related notes and schedules, if any) of Colony as of December 31,
1999 and 2000, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if
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any) for each of the three fiscal years ended December 31, 1998, 1999
and 2000, as delivered by Colony to Quitman prior to execution of
this Agreement, and (iii) the consolidated balance sheets of Colony
(including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC
Documents (including financial statements covering the periods in
clause (ii) above) filed with respect to periods ended subsequent to
December 31, 2000.
"Colony Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event,
change or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of Colony and
its Subsidiaries, taken as a whole, or (ii) the ability of Colony to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement,
provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of
general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting principles generally
applicable to banks and their holding companies, (c) actions and
omissions of Colony (or any of its Subsidiaries) taken with the prior
informed written Consent of Quitman in contemplation of the
transactions contemplated hereby, and (d) the direct effects of
compliance with this Agreement on the operating performance of
Colony, including expenses incurred by Colony in consummating the
transactions contemplated by this Agreement.
"Colony Subsidiaries" shall mean the Subsidiaries of Colony and
any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Colony in the future and held as a
Subsidiary by Colony at the Effective Time.
"Confidentiality Agreement" shall mean that certain
Confidentiality Agree-ment, dated May 10, 2001, between Quitman and
Colony.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital
stock, Assets or business.
"Default" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order,
or Permit, (ii) any occurrence of any event that with the passage of
time or the giving of notice or both would constitute a breach or
violation of, default under, contravention of, or conflict with, any
Contract, Law, Order, or Permit, or (iii) any occurrence of any event
that with or without the passage of time or the giving of notice
would give rise to a right of any Person to exercise any remedy or
obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to
accelerate the maturity or performance of, or to increase or impose
any Liability under, any Contract, Law, Order, or Permit.
"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and
which are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution
or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other
Laws relating to emissions, discharges, releases, or threatened
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releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of any Hazardous Material.
"Equity Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, script, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is
or may be bound to issue additional shares of its capital stock or
other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exhibits" A through F, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof,
and may be referred to in this Agreement and any other related
instrument or document without being attached thereto.
"Final Market Price" shall mean, the average closing price per
share of the "last" real time trades (i.e., closing price) of the
Colony Common Stock as reported on the NASDAQ National Market for
each of the thirty (30) NASDAQ National Market general market trading
days preceding one week prior to the Closing on which the NASDAQ
Nation Market was open for business (the "Pricing Period"), provided,
however, if there are less than ten (10) business days during such
period when Colony Common Stock trades on which there is a closing
price, then the Pricing Period shall be extended backwards for such
period as is necessary until there are ten (10) days on which Colony
Common Stock trades and on which there is a closing price if such
extension backwards will result in a lower calculated Final Market
Price. In the event the Colony Common Stock does not trade on one or
more of the trading days during the Pricing Period (a "No Trade
Date"), any such No Trade Date shall be disregarded in computing the
average closing price per share of Colony Common Stock and the
average shall be based upon the "last" real time trades and number of
days on which the Colony Common Stock actually traded during the
Pricing Period.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications
therefor, technology rights and licenses, computer software
(including any source or object codes therefor or documentation
relating thereto), trade secrets, franchises, know-how, inventions,
and other intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated
thereunder.
"Knowledge" as used with respect to a Person (including references
to such Person being aware of a particular matter) shall mean the
personal knowledge after due inquiry of the chairman, president,
chief financial officer, chief accounting officer, chief operating
officer, chief credit officer, executive or other vice president of
such Person and the knowledge of any such persons obtained or which
would have been obtained from a reasonable investigation.
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"Law" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any
Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or
expense (including costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any
type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reserva-tion, restriction,
security interest, title retention or other security arrangement, or
any ad-verse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due
and payable, (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary
course of the banking business, and (iii) Liens which do not
materially impair the use of or title to the Assets subject to such
Lien.
"Litigation" shall mean any action, arbitration, cause of action,
claim, com-plaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other
proceeding relating to or affecting a Party, its business, its Assets
(including Contracts related to it), or the transactions contemplated
by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"Material" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
"NASDAQ National Market" shall mean the National Market System of
The NASDAQ Stock Market, Inc.
"Operating Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds a security interest or other
interest (including an interest in a fiduciary capacity), and, where
required by the context, includes the owner or operator of such
property, but only with respect to such property.
"Option Shares" shall mean, with respect to each Holder, the
number of shares of Quitman Common Stock determined by dividing (a)
the total number of shares of Quitman Common Stock that such Holder
would be entitled to receive upon the exercise of all of such
Holder's outstanding Quitman Options (whether or not such options are
then exercisable) multiplied by the difference between $12.61 and the
Weighted Average Strike Price for such Holder's Quitman Options, by
(b) $12.61.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other
court, arbitrator, mediator, tribunal, administrative agency, or
Regulatory Authority.
"Participation Facility" shall mean any facility or property in
which the Party in question or any of its Subsidiaries participates
in the management and, where required by the context, said term means
the owner or operator of such facility or property, but only with
respect to such facility or property.
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"Party" shall mean either Quitman or Colony, and "Parties" shall
mean both Quitman and Colony.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of
any Person or its securities, Assets, or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by Quitman
and Colony to solicit the approval of its respective shareholders of
the transactions contemplated by this Agreement, which shall include
the prospectus of Colony relating to the issuance of the Colony
Common Stock to holders of Quitman Common Stock.
"Quitman Common Stock" shall mean the $.10 par value common stock
of Quitman.
"Quitman Disclosure Memorandum" shall mean the written information
entitled "Quitman Bancorp, Inc. Disclosure Memorandum" delivered
prior to the date of this Agreement to Colony describing in
reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section
of this Agreement under which such disclosure is being made.
Information disclosed with respect to one Section shall not be deemed
to be disclosed for purposes of any other Section not specifically
referenced with respect thereto.
"Quitman Entities" shall mean, collectively, Quitman and all
Quitman Subsidiaries.
"Quitman Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Quitman as of December 31, 2000 and 1999, and the related statements
of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for each of the two fiscal years
ended September 30, 2000 and 1999, as filed by Quitman in SEC
Documents, (ii) the consolidated balance sheets (including related
notes and schedules, if any) of Quitman as of September 30, 2000 and
1999, and the related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if
any) for each of the two fiscal years ended September 30, 2000 and
1999, as delivered by Quitman to Colony prior to execution of this
Agreement, and (iii) the consolidated balance sheets of Quitman
(including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC
Documents (including financial statements covering the periods in
clause (ii) above) filed with respect to periods ended subsequent to
June 30, 2001.
"Quitman Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event,
change or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of Quitman and
its Subsidiaries, taken as a whole, or (ii) the ability of Quitman to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement,
provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of
general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting principles generally
applicable to banks and their holding companies, (c) actions and
omissions of Quitman (or any of its Subsidiaries) taken with the
prior informed written Consent of Colony in contemplation of the
transactions contemplated hereby, and (d) the direct effects of
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compliance with this Agreement on the operating performance of
Quitman, including expenses incurred by Quitman in consummating the
transactions contemplated by this Agreement.
"Quitman Subsidiaries" shall mean the Subsidiaries of Quitman,
which shall include the Quitman Federal Savings Bank and any
corporation, bank, savings association, or other organization
acquired as a Subsidiary of Quitman in the future and held as a
Subsidiary by Quitman at the Effective Time.
"Registration Statement" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC
by Colony under the 1933 Act with respect to the shares of Colony
Common Stock to be issued to the shareholders of Quitman in
connection with the transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the SEC, the
NASDAQ National Market the Federal Trade Commission, the United
States Department of Justice, the Board of the Governors of the
Federal Reserve System, the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the Department
of Banking and Finance of the State of Georgia, the Office of Thrift
Supervision and all other federal, state, county, local or other
governmental or regulatory agencies, authorities (including
self-regulatory authorities), instrumentalities, commissions, boards
or bodies having jurisdiction over the Parties and their respective
Subsidiaries.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative
engaged by a Person.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents
filed, or required to be filed, by a Party or any of its Subsidiaries
with any Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"Shareholders' Meetings" shall mean the respective meetings of the
shareholders of Quitman to be held pursuant to this Agreement,
including any adjournment or adjournments thereof
"Stock Consideration" shall mean 367,156 shares of Colony Common
Stock.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i)
owns or controls 50% or more of the outstanding equity securities
either directly or through an unbroken chain of entities as to each
of which 50% or more of the outstanding equity securities is owned
directly or indirectly by its parent (provided, there shall not be
included any such entity the equity securities of which are owned or
controlled in a fiduciary capacity), (ii) in the case of
partnerships, serves as a general partner, (iii) in the case of a
limited liability company, serves as a managing member, or (iv)
otherwise has the ability to elect a majority of the directors,
trustees or managing members thereof.
"Surviving Corporation" shall mean Colony as the surviving
corporation resulting from the Merger.
"Tax Return" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or
combined or unitary group that includes a Party or its Subsidiaries.
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"Tax" or "Taxes" shall mean any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital,
profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposes or required to be withheld by the United States or any state,
county, local or foreign government or subdivision or agency thereof,
including any interest, penalties, and additions imposed thereon or
with respect thereto.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Allowance........................... Section 5.9
Quitman Benefit Plans............... Section 5.15
Quitman Contracts................... Section 5.16
Quitman ERISA Plan.................. Section 5.15
Quitman Options..................... Section 3.2
Quitman Pension Plan................ Section 5.15
Quitman SEC Reports................. Section 5.5(a)
Quitman Stock Option Agreement...... Section 5.3
Closing............................. Section 1.2
Directors' Agreements............... Section 5.23
Effective Time...................... Section 1.3
ERISA Affiliate..................... Section 5.15(a)
Exchange Agent...................... Section 4.1
Exchange Ratio...................... Section 3.1(c)
Maximum Amount...................... Section 8.15(b)
Merger.............................. Section 1.1
Option Shares....................... Section 3.2
Colony Benefit Plans................ Section 6.15
Colony ERISA Plan................... Section 6.15
Colony Pension Plan................. Section 6.15
Colony SEC Reports.................. Section 6.5(a)
Colony Stock Option Agreement....... Section 6.21
Takeover Laws....................... Section 5.21
Tax Opinion......................... Section 9.1(g)
(c) Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they
shall be deemed followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees, printing
fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel; provided, however, that
(i) the Cash Consideration shall be reduced by an amount equal to all of
the cost and fees of Quitman's accountants, attorneys, and Trident
Securities, Quitman's financial adviser, in excess of the amounts
disclosed in the Quitman Disclosure Memorandum; and (ii) each of the
Parties shall bear and pay one-half of the filing fees payable in
connection with the Registration
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Statement and the Proxy Statement and the printing costs incurred in
connection with the printing of the Registration Statement and the Proxy
Statement.
(b) Quitman shall pay, or cause to be paid, in same day funds to
Colony, cash in the amount of $200,000.00 (the "Termination Fee") upon
demand if (A) Quitman terminates this Agreement pursuant to Section
10.1(g), or (B) prior to the termination of this Agreement (other than
by Quitman pursuant to Section 10.1(c)), a Takeover Proposal described
in Section 8.9 shall have been made and within one hundred eighty (180)
days of such termination, Quitman enters into an agreement with respect
to, or approves or recommends or takes any action to facilitate, such
Takeover Proposal.
11.3 Brokers and Finders. Except for Trident Securities as to Quitman, each
of the Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by Quitman or by Colony, each of
Quitman and Colony, as the case may be, agrees to indemnify and hold the other
Party harmless of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except for the
Confidentiality Agreement).
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after shareholder approval of this
Agreement has been obtained; provided, that after any such approval by the
holders of Quitman Common Stock, there shall be made no amendment that pursuant
to Section 14-2-1106 of the GBCC requires further approval by such shareholders
without the further approval of such shareholders; and further provided, that
after any such approval by the holders of Colony Common Stock, the provisions
of this Agreement relating to the manner or basis in which shares of Quitman
Common Stock will be exchanged for shares of Colony Common Stock shall not be
amended after the Colony Shareholders' Meeting in a manner adverse to the
holders of Colony Common Stock without any requisite approval of the holders of
the issued and outstanding shares of Colony Common Stock entitled to vote
thereon.
11.6 Waivers.
(a) Prior to or at the Effective Time, Colony, acting through its
Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term
of this Agreement by Quitman, to waive or extend the time for the
compliance or fulfillment by Quitman of any and all of its obligations
under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Colony under this Agreement, except any
condition which, if not satisfied, would result in the violation of any
Law. No such waiver shall be effective unless in writing signed by a
duly authorized officer of Colony.
(b) Prior to or at the Effective Time, Quitman, acting through its
Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term
of this Agreement by Colony, to waive or extend the time for the
compliance or fulfillment by Colony of any and all of its obligations
under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Quitman under this Agreement, except any
condition which, if not satisfied, would result in the violation of any
Law. No such waiver shall be effective unless in writing signed by a
duly authorized officer of Quitman.
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(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision
of this Agreement. No waiver of any condition or of the breach of any
term contained in this Agreement in one or more instances shall be
deemed to be or construed as a further or continuing waiver of such
condition or breach or a waiver of any other condition or of the breach
of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or
by courier or overnight carrier, to the persons at the addresses set forth
below (or at such other address as may be provided hereunder), and shall be
deemed to have been delivered as of the date so delivered:
Quitman: QUITMAN BANCORP, INC.
P. O. Box 592
Quitman, Georgia 31643
Attention: Melvin E. Plair
With a copy to: Gregory J. Rubis, Esq.
Manatt, Phelps & Phillips, LLP
1001 Page Mill Road, Bldg. 2
Palo Alto, California 94304
Colony: COLONY BANKCORP, INC.
P. O. Box 989
115 South Grant Street
Fitzgerald, Georgia 31750
Attention: Dan Minix, President and
Chief Executive Officer
With a copy to: Edward J. Harrell, Esq.
Martin, Snow, Grant & Napier, LLP
P. O . Box 1606
Macon, Georgia 31202-1606
11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions; Articles and Sections. The captions contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
11.12 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall
be considered the draftsman. The parties acknowledge and agree that this
Agreement has been reviewed,
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negotiated, and accepted by all parties and their attorneys and shall be
construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all parties hereto.
11.13 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.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
COLONY BANKCORP, INC.
By: /s/ James D. Minix
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President
QUITMAN BANCORP, INC.
By: /s/ Melvin E. Plair
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President
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