EX 10.11
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ABC BANCORP
AND
CENTRAL BANKSHARES, INC.
AS OF DECEMBER 29, 1995
TABLE OF CONTENTS
Page
PREAMBLE ........................................................................................... 1
ARTICLE 1 TERMS OF MERGER................................................................. 1
1.1 Merger.......................................................................... 1
1.2 Time and Place of Closing....................................................... 1
1.3 Effective Time.................................................................. 2
ARTICLE 2 ARTICLES, BYLAWS, MANAGEMENT.................................................... 2
2.1 Articles of Incorporation....................................................... 2
2.2 Bylaws.......................................................................... 2
2.3 Directors and Officers.......................................................... 2
ARTICLE 3 MANNER OF CONVERTING AND EXCHANGING SHARES...................................... 2
3.1 Conversion of Shares............................................................ 2
3.2 Exchange of Shares.............................................................. 3
3.3 Anti-Dilution Provisions........................................................ 4
3.4 Shares Held by TARGET or PURCHASER.............................................. 4
3.5 TARGET Bank..................................................................... 4
3.6 Rights of Former TARGET Shareholders............................................ 5
3.7 Options......................................................................... 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF TARGET........................................ 5
4.1 Organization, Standing and Power................................................ 5
4.2 Authority; No Breach............................................................ 6
4.3 Capital Stock................................................................... 6
4.4 TARGET Subsidiaries............................................................. 7
4.5 Financial Statements............................................................ 7
4.6 Absence of Undisclosed Liabilities.............................................. 8
4.7 Absence of Certain Changes or Events............................................ 8
4.8 Tax Matters..................................................................... 8
4.9 TARGET Allowance for Possible Loan Losses....................................... 9
4.10 Assets.......................................................................... 9
4.11 Environmental Matters........................................................... 10
4.12 Compliance with Laws............................................................ 11
4.13 Labor Relations................................................................. 12
4.14 Employee Benefit Plans.......................................................... 12
4.15 Material Contracts.............................................................. 14
i
4.16 Legal Proceedings ............................................................. 14
4.17 Reports........................................................................ 14
4.18 Statements True and Correct.................................................... 14
4.19 Accounting, Tax and Regulatory Matters......................................... 15
4.20 Charter Provisions............................................................. 15
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................... 16
5.1 Organization, Standing and Power............................................... 16
5.2 Authority; No Breach........................................................... 16
5.3 Capital Stock.................................................................. 17
5.4 PURCHASER Subsidiaries......................................................... 17
5.5 Financial Statements........................................................... 18
5.6 Absence of Undisclosed Liabilities............................................. 18
5.7 Absence of Certain Changes or Events........................................... 18
5.8 Tax Matters.................................................................... 19
5.9 PURCHASER Allowance for Possible Loan Losses................................... 19
5.10 Assets......................................................................... 20
5.11 Environmental Matters.......................................................... 20
5.12 Compliance with Laws........................................................... 21
5.13 Labor Relations................................................................ 22
5.14 Employee Benefit Plans......................................................... 22
5.15 Legal Proceedings.............................................................. 24
5.16 Reports........................................................................ 24
5.17 Statements True and Correct.................................................... 24
5.18 Accounting, Tax and Regulatory Matters......................................... 25
5.19 Charter Provisions............................................................. 25
ARTICLE 6 CONDUCT OF BUSINESS PENDING CONSUMMATION....................................... 26
6.1 Affirmative Covenants of TARGET................................................ 26
6.2 Negative Covenants of TARGET................................................... 26
6.3 Covenants of PURCHASER......................................................... 28
6.4 Adverse Changes in Condition................................................... 28
6.5 Reports........................................................................ 28
ARTICLE 7 ADDITIONAL AGREEMENTS.......................................................... 28
7.1 Registration Statement; Proxy Statement; Shareholder Approval.................. 28
7.2 Listing........................................................................ 29
7.3 Applications................................................................... 29
7.4 Filings with State Offices..................................................... 29
7.5 Agreement as to Efforts to Consummate.......................................... 29
7.6 Investigation and Confidentiality.............................................. 29
ii
7.7 Press Releases ................................................................. 30
7.8 No Solicitation................................................................. 30
7.9 Tax Treatment................................................................... 32
7.10 Agreement of Affiliates......................................................... 32
7.11 Employee Benefits and Contracts................................................. 33
7.12 Large Deposits.................................................................. 33
7.13 Indemnification................................................................. 33
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE...................................................................... 33
8.1 Conditions to Obligations of Each Party......................................... 33
8.2 Conditions to Obligations of PURCHASER.......................................... 35
8.3 Conditions to Obligations of TARGET............................................. 36
ARTICLE 9 TERMINATION..................................................................... 36
9.1 Termination..................................................................... 37
9.2 Effect of Termination........................................................... 38
ARTICLE 10 MISCELLANEOUS................................................................... 38
10.1 Definitions..................................................................... 38
10.2 Expenses........................................................................ 45
10.3 Brokers and Finders............................................................. 45
10.4 Entire Agreement................................................................ 45
10.5 Amendments...................................................................... 45
10.6 Waivers......................................................................... 46
10.7 Assignment...................................................................... 46
10.8 Notices......................................................................... 46
10.9 Governing Law................................................................... 47
10.10 Counterparts.................................................................... 47
10.11 Captions........................................................................ 47
10.12 Enforcement of Agreement........................................................ 47
10.13 Severability.................................................................... 48
iii
LIST OF EXHIBITS
----------------
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
1. Form of agreement of affiliates of Central Bankshares,
Inc. ((S) 7.10).
2. Matters as to which Powell, Goldstein, Frazer & Murphy
will opine ((S) 8.2(d)).
3. Matters as to which Rogers & Hardin will opine ((S)
8.3(d)).
4. Employment Agreement between PURCHASER and Robert L. Evans
((S) 8.2(f)).
5. Employment Agreement between PURCHASER and Roxie W.
Bagwell ((S) 8.2(f)).
iv
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of December 29, 1995, by and between CENTRAL BANKSHARES, INC.
("TARGET"), a corporation organized and existing under the laws of the State of
Georgia, with its principal office located in Cordele, Georgia, and ABC BANCORP
("PURCHASER"), a corporation organized and existing under the laws of the State
of Georgia, with its principal office located in Moultrie, Georgia.
PREAMBLE
--------
Certain terms used in this Agreement are defined in Section 10.1 hereof.
The Boards of Directors of TARGET and PURCHASER are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the combination of TARGET
with PURCHASER pursuant to the merger of TARGET with and into PURCHASER, as a
result of which the outstanding shares of the capital stock of TARGET shall be
converted into the right to receive shares of common stock of PURCHASER (except
as provided herein), and the shareholders of TARGET shall become shareholders of
PURCHASER (except as provided herein). The transactions described in this
Agreement are subject to the approvals of the shareholders of TARGET, the Board
of Governors of the Federal Reserve System, the Georgia Department of Banking
and Finance and the satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this Agreement that the Merger
for federal income tax purposes shall qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code.
Following the Closing of the Merger, Central Bank & Trust, a wholly-owned
Georgia state bank subsidiary of TARGET, will be operated as a separate
subsidiary of PURCHASER.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the parties agree as
follows:
ARTICLE 1
TERMS OF MERGER
---------------
1.1 MERGER. Subject to the terms and conditions of this Agreement, at
------
the Effective Time, TARGET shall be merged with and into PURCHASER in accordance
with the provisions of Section 14-2-1101 of the GBCC and with the effect
provided in Section 14-2-1106 of the GBCC (the "Merger"). PURCHASER shall be
the Surviving Corporation resulting from the Merger. The Merger shall be
consummated pursuant to the terms of this Agreement, which has been approved and
adopted by the respective Boards of Directors of TARGET and PURCHASER.
1.2 TIME AND PLACE OF CLOSING. The Closing shall take place at 10:00
-------------------------
a.m. on the date that the Effective Time occurs or at such other time as the
Parties, acting through their chief executive officers or chief financial
officers, may mutually agree (the "Closing Date"). The place of Closing shall
be at the offices of Rogers & Hardin, Atlanta, Georgia, or such other place as
may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by
--------------
this Agreement shall become effective on the date and at the time the Georgia
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia (the "Effective Time"). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the chief executive officers of each Party, the Parties shall use
their reasonable efforts to cause the Effective Time to occur on (a) the last
business day of the month in which occurs the last to occur of (i) the effective
date (including expiration of any applicable waiting period) of the last
required Consent of any Regulatory Authority having authority over and approving
or exempting the Merger and (ii) the date on which the shareholders of TARGET
approve this Agreement to the extent such approval is required by applicable
Law; or (b) such later date as may be mutually agreed upon in writing by the
chief executive officers or chief financial officers of each Party.
ARTICLE 2
ARTICLES, BYLAWS, MANAGEMENT
----------------------------
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
-------------------------
PURCHASER in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed.
2.2 BYLAWS. The Bylaws of PURCHASER in effect immediately prior to the
------
Effective Time shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of PURCHASER in office
----------------------
immediately prior to the Effective Time shall serve as the directors of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation. The officers of PURCHASER in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of PURCHASER from and
after the Effective Time in accordance with the Bylaws of PURCHASER. The
directors and officers of TARGET Bank immediately prior to the Effective Time
shall serve as the initial directors and officers of TARGET Bank from and after
the Effective Time in accordance with the Bylaws of TARGET Bank.
ARTICLE 3
MANNER OF CONVERTING AND EXCHANGING SHARES
------------------------------------------
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3,
--------------------
at the Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, the shares of PURCHASER and TARGET shall be
converted as follows:
(a) Each share of PURCHASER Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
2
(b) Each share of TARGET Common Stock outstanding immediately prior
to the Effective Time, other than shares with respect to which statutory
dissenters' rights have been perfected (the "Dissenting Shares") and shares held
in TARGET'S treasury which shall be cancelled without consideration at the
Effective Time (the "Outstanding TARGET Shares"), shall automatically be
converted at the Effective Time into the right to receive whole shares of
PURCHASER Common Stock, plus cash in lieu of fractional shares pursuant to
subparagraph (c) below, if applicable, in an amount equal to (i) (A) 2.0 times
the lesser of (1) 0.08 times the total assets of TARGET or (2) the Total Equity
of TARGET plus, (B) 1.0 times the amount, if any, by which the Total Equity of
----
TARGET exceeds 0.08 times the total assets of TARGET, based on the average of
the total assets of TARGET as of the close of business for each of the sixty
(60) calendar days immediately preceding the Closing Date, (ii) divided by the
aggregate number of Outstanding TARGET Shares (the "Merger Consideration"). In
accordance with the provisions of this Section 3.1, each TARGET shareholder who
does not dissent shall receive the number of shares, or such fractions of a
share (subject to paragraph (b) below), of PURCHASER Common Stock which shall be
equal to the (i) Merger Consideration divided by the Base Period Trading Price
(the "Exchange Ratio"), (ii) multiplied by the aggregate number of Outstanding
TARGET Shares such shareholder holds as of the Effective Time.
(c) Notwithstanding any other provision of this Agreement, each
holder of shares of TARGET Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of PURCHASER
Common Stock (after taking into account all certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of PURCHASER Common Stock multiplied by
the Base Period Trading Price. No such holder will be entitled to dividends,
voting rights, or any other rights as a shareholder in respect of any fractional
shares.
(d) Each share of the TARGET Common Stock that is not an
Outstanding TARGET Share as of the Effective Time shall be cancelled without
consideration therefor.
(e) Outstanding TARGET Shares held by TARGET shareholders who,
prior to the Effective Time, have met the requirements of Article 13 of the GBCC
with respect to shareholders dissenting from the Merger ("Dissenting TARGET
Shareholders") shall not be converted in the Merger, but all such shares shall
be cancelled and the holders thereof shall thereafter have only such rights as
are granted to dissenting shareholders under Article 13 of the GBCC; provided,
however, that if any such shareholder fails to perfect his or her rights as a
dissenting shareholder with respect to his or her Outstanding TARGET Shares in
accordance with Article 13 of the GBCC, such shares held by such shareholder
shall, upon the happening of that event, be treated the same as all other
holders of TARGET Common Stock who have not dissented as to the Merger.
3.2 EXCHANGE OF SHARES. Prior to the Effective Time, PURCHASER shall
------------------
select a bank or trust company reasonably acceptable to TARGET to act as
exchange agent (the "Exchange Agent") to effectuate the delivery of the Merger
Consideration to holders of TARGET Common Stock. Promptly following the
Effective Time, the Exchange Agent shall send to each holder of
3
Outstanding TARGET Shares immediately prior to the Effective Time a form of
letter of transmittal (the "Letter of Transmittal") for use in exchanging
certificates previously evidencing shares of TARGET Common Stock ("Old
Certificates"). The Letter of Transmittal will contain instructions with
respect to the surrender of Old Certificates and the distribution of cash and
certificates representing PURCHASER Common Stock, which certificates shall be
deposited with the Exchange Agent by PURCHASER as of the Effective time. If any
certificates for shares of PURCHASER Common Stock are to be issued in a name
other than that for which an Old Certificate surrendered or exchanged is issued,
the Old Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and the person requesting such exchange shall affix any
requisite stock transfer tax stamps to the Old Certificate surrendered or
provide funds for their purchase or establish to the satisfaction of 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
TARGET) are presented to the Exchange Agent, the holder thereof shall not be
entitled to the consideration to be paid in exchange therefor pursuant to the
Merger, to any dividends payable on any PURCHASER Common Stock to which he or
she is entitled, or to exercise any rights as a shareholder of PURCHASER Common
Stock. Subject to applicable law and to the extent that the same has not yet
been paid to a public official pursuant to applicable abandoned property laws,
upon surrender of his or her Old Certificates, the holder thereof shall be paid
the consideration to which he or she is entitled. All such property, if held by
the Exchange Agent for payment or delivery to the holders of unsurrendered Old
Certificates and unclaimed at the end of one (1) year from the Effective Time,
shall at such time be paid or redelivered by the Exchange Agent to PURCHASER and
after such time any holder of an Old Certificate who has not surrendered such
certificate shall, subject to applicable laws and to the extent that the same
has not yet been paid to a public official pursuant to applicable abandoned
property laws, look as a general creditor only to PURCHASER for payment or
delivery of such property. In no event will any holder of TARGET Common Stock
exchanged in the Merger be entitled to receive any interest on any amounts held
by the Exchange Agent or PURCHASER.
3.3 ANTI-DILUTION PROVISIONS. In the event TARGET or PURCHASER changes
------------------------
the number of shares of TARGET Common Stock or PURCHASER Common Stock,
respectively, issued and outstanding prior to the Effective Time as a result of
a stock split, stock dividend or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or the
effective date therefor (in the case of a stock split or similar
recapitalization) shall be prior to the Effective Time, the Exchange Ratio shall
be proportionately adjusted.
3.4 SHARES HELD BY TARGET OR PURCHASER. Each of the shares of TARGET
----------------------------------
Common Stock held by any TARGET Company or by any PURCHASER Company, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.5 TARGET BANK. After consummation of the Merger, TARGET Bank shall be
-----------
a separate subsidiary of PURCHASER.
4
3.6 RIGHTS OF FORMER TARGET SHAREHOLDERS. At the Effective Time, the
------------------------------------
stock transfer books of TARGET shall be closed as to holders of TARGET Common
Stock immediately prior to the Effective Time and no transfer of TARGET Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 3.2 of
this Agreement, each Old Certificate (other than shares to be canceled pursuant
to Section 3.1(d) of this Agreement) shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Section 3.1 of this Agreement in exchange therefor. To the extent permitted
by Law, former shareholders of record of TARGET shall be entitled to vote after
the Effective Time at any meeting of shareholders of PURCHASER the number of
whole shares of PURCHASER Common Stock into which their respective shares of
TARGET Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing TARGET Common Stock for certificates
representing PURCHASER Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by PURCHASER
on the PURCHASER Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement, but no dividend or other
distribution payable to the holders of record of PURCHASER Common Stock as of
any time subsequent to the Effective Time shall be delivered to the holder of
any certificate representing shares of TARGET Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 3.2 of this Agreement. However, upon
surrender of such TARGET Common Stock certificate, both the PURCHASER Common
Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate.
3.7 OPTIONS. Each warrant, stock option or other right, if any, to
-------
purchase shares of TARGET Common Stock issued and outstanding immediately prior
to the Effective Time shall be cancelled (whether or not such warrant, option or
other right is then exercisable), and all rights in respect thereof shall cease
to exist, without any conversion thereof or payment of any consideration
therefor.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TARGET
----------------------------------------
TARGET hereby represents and warrants to PURCHASER as follows:
4.1 ORGANIZATION, STANDING AND POWER. TARGET is a corporation duly
--------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and is duly registered as a bank holding company under the BHC Act.
TARGET has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. TARGET is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in
5
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on TARGET.
4.2 AUTHORITY; NO BREACH
--------------------
(a) TARGET has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of TARGET,
subject to the approval of this Agreement by the holders of a majority of the
outstanding TARGET Common Stock. Subject to such requisite shareholder approval,
this Agreement represents a legal, valid and binding obligation of TARGET,
enforceable against TARGET in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by TARGET,
nor the consummation by TARGET of the transactions contemplated hereby, nor
compliance by TARGET with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of TARGET's Articles of Incorporation or
Bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any TARGET
Company under, any Contract or Permit of any TARGET Company, where such Default
or Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, or, (iii)
subject to receipt of the requisite approvals referred to in Section 8.1(b) of
this Agreement, violate any Law or Order applicable to any TARGET Company or any
of their respective Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate 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 Material Adverse Effect on
TARGET, no notice to, filing with, or Consent of any public body or authority is
necessary for the consummation by TARGET of the Merger and the other
transactions contemplated in this Agreement.
4.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of TARGET consists of 10,000,000
shares of TARGET Common Stock, of which 218,130 shares are issued and
outstanding as of the date of this Agreement. All of the issued and outstanding
shares of capital stock of TARGET are duly and validly issued and outstanding
and are fully paid and nonassessable under the GBCC. None of the
6
outstanding shares of capital stock of TARGET has been issued in violation of
any preemptive rights of the current or past shareholders of TARGET. TARGET has
reserved 17,100 shares of TARGET Common Stock for issuance under the TARGET
Stock Plans, pursuant to which options to purchase not more than 17,100 shares
of TARGET Common Stock are outstanding as of the date of this Agreement and at
the Effective Time.
(b) Except as set forth in Section 4.3(a) of this Agreement or as
Previously Disclosed, there are no shares of capital stock or other equity
securities of TARGET outstanding and no outstanding options, warrants, scrip,
rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of TARGET or contracts, commitments, understandings,
or arrangements by which TARGET is or may be bound to issue additional shares of
its capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock.
4.4 TARGET SUBSIDIARIES. TARGET has Previously Disclosed all of the
-------------------
TARGET Subsidiaries as of the date of this Agreement. TARGET owns all of the
issued and outstanding shares of capital stock of TARGET Bank, and TARGET Bank
owns all of the issued and outstanding stock of each other TARGET Subsidiary.
No equity securities of any TARGET Subsidiary are or may become required to be
issued (other than to a TARGET Company) by reason of any options, warrants,
scrip, rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of any such Subsidiary, and there are no Contracts
by which any TARGET Subsidiary is bound to issue (other than to a TARGET
Company) additional shares of its capital stock or options, warrants, or rights
to purchase or acquire any additional shares of its capital stock or by which
any TARGET Company is or may be bound to transfer any shares of the capital
stock of any TARGET Subsidiary (other than to a TARGET Company). There are no
Contracts relating to the rights of any TARGET Company to vote or to dispose of
any shares of the capital stock of any TARGET Subsidiary. All of the shares of
capital stock of each TARGET Subsidiary held by a TARGET Company are fully paid
and nonassessable under the applicable corporation Law of the jurisdiction in
which such Subsidiary is incorporated or organized and are owned by the TARGET
Company free and clear of any Lien. Each TARGET Subsidiary is either a bank or
a corporation, and is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which it is incorporated
or organized, and has the corporate power and authority necessary for it to own,
lease and operate its Assets and to carry on its business as now conducted.
Each TARGET Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET. Each TARGET Subsidiary that is a depository institution is an
insured institution as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder.
4.5 FINANCIAL STATEMENTS. TARGET has Previously Disclosed, and
--------------------
delivered to PURCHASER prior to the execution of this Agreement, copies of all
TARGET Financial Statements
7
for periods ended prior to the date hereof and will deliver to PURCHASER copies
of all TARGET Financial Statements prepared subsequent to the date hereof. The
TARGET Financial Statements (as of the dates thereof and for the periods covered
thereby) (a) are or, if dated after the date of this Agreement, will be in
accordance with the books and records of the TARGET Companies, which are or will
be, as the case may be, complete and correct and which have been or will have
been, as the case may be, maintained in accordance with good business practices,
and (b) present or will present, as the case may be, fairly the consolidated
financial position of the TARGET Companies as of the dates indicated and the
consolidated results of operations, changes in shareholders' equity, and cash
flows of the TARGET Companies for the periods indicated, in accordance with GAAP
(subject to any exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments that are not material).
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously Disclosed,
----------------------------------
no TARGET Company has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of TARGET as of December 31, 1994 and September 30, 1995 included in the
TARGET Financial Statements or reflected in the notes thereto. Except as
Previously Disclosed, no TARGET Company has incurred or paid any Liability since
September 30, 1995, except for such Liabilities incurred or paid in the ordinary
course of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1995, (a)
------------------------------------
there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET, and (b) the TARGET Companies have not taken any action, or
failed to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and agreements of TARGET
provided in Article 7 of this Agreement.
4.8 TAX MATTERS.
-----------
(a) All Tax returns required to be filed by or on behalf of any of the
TARGET Companies have been duly filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1994, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on TARGET, and all returns filed are complete and accurate to the
Knowledge of TARGET. All Taxes shown on filed returns have been paid. As of
the date of this Agreement, there is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on TARGET, except as reserved against in the TARGET Financial
Statements delivered prior to
8
the date of this Agreement. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
(b) None of the TARGET Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect, and no unpaid tax deficiency has been asserted
in writing against or with respect to any TARGET Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET.
(c) Adequate provision for any Taxes due or to become due for any
of the TARGET Companies for the period or periods through and including the date
of the respective TARGET Financial Statements has been made and is reflected on
such TARGET Financial Statements.
(d) Deferred Taxes of the TARGET Companies have been provided for
in accordance with GAAP.
(e) Each of the TARGET Companies is in compliance with, and its
records contain all information and documents (including, without limitation,
properly completed IRS Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements under federal, state and
local Tax Laws, and such records identify with specificity all accounts subject
to backup withholding under Section 3406 of the Internal Revenue Code, except
for such instances of noncompliance and such omissions as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
TARGET.
(f) Effective January 1, 1993, TARGET adopted Financial Accounting
Standards Board Statement 109, "Accounting for Income Taxes."
4.9 TARGET ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for
-----------------------------------------
possible loan or credit losses (the "TARGET Allowance") shown on the
consolidated balance sheets of TARGET included in the most recent TARGET
Financial Statements dated prior to the date of this Agreement was, and the
TARGET Allowance shown on the consolidated balance sheets of TARGET included in
the TARGET Financial Statements as of dates subsequent to the execution of this
Agreement will be, maintained in accordance with, and are in the amounts
required by GAAP and applicable regulatory requirements or guidelines as of the
dates thereof except where the failure of such TARGET Allowance to be so
maintained is not reasonably likely to have a Material Adverse Effect on TARGET.
4.10 ASSETS. Except as Previously Disclosed or as disclosed or reserved
------
against in the TARGET Financial Statements, or where the failure to own good and
marketable title is not reasonably likely to have a Material Adverse Effect on
TARGET, the TARGET Companies have good and marketable title, free and clear of
all Liens, to all of their respective Assets. All material tangible properties
used in the businesses of the TARGET Companies are in good condition, reasonable
wear and tear excepted, and are usable in the ordinary course of business
consistent with
9
TARGET's past practices. All Assets which are material to TARGET's business on
a consolidated basis, held under leases or subleases by any of the TARGET
Companies are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The policies of fire, theft,
liability, and other insurance maintained with respect to the Assets or
businesses of the TARGET Companies provide adequate coverage under current
industry practices against loss or Liability, and the fidelity and blanket bonds
in effect as to which any of the TARGET Companies is a named insured are
reasonably sufficient. The Assets of the TARGET Companies include all assets
required to operate the business of the TARGET Companies as presently conducted.
4.11 ENVIRONMENTAL MATTERS.
---------------------
(a) Each TARGET Company, its Participation Facilities and its Loan
Properties are, and have been, in compliance with all Environmental Laws, except
for violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TARGET.
(b) There is no Litigation pending or, to the Knowledge of TARGET,
threatened before any court, governmental agency or authority or other forum in
which any TARGET Company or any of its Participation Facilities has been or,
with respect to threatened Litigation, may be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous Material
or oil, whether or not occurring at, on, under or involving a site owned, leased
or operated by any TARGET Company or any of its Participation Facilities, except
for such Litigation pending or, to the Knowledge of TARGET, threatened that is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TARGET.
(c) There is no Litigation pending or, to the Knowledge of TARGET,
threatened before any court, governmental agency or board or other forum in
which any of its Loan Properties (or any TARGET Company in respect of such Loan
Property) has been or, with respect to threatened litigation, may be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material or oil, whether or
not occurring at, on, under or involving a Loan Property, except for such
Litigation pending or, to the Knowledge of TARGET, threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET.
(d) To the Knowledge of TARGET, there is no reasonable basis for
any Litigation of a type described in subsections (b) or (c), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TARGET.
10
(e) During the period of (i) any TARGET Company's ownership or
operation of any of their respective current properties, (ii) any TARGET
Company's participation in the management of any Participation Facility, or
(iii) any TARGET Company's holding of a security interest in a Loan Property,
there have been no releases of Hazardous Material or oil in, on, under or
affecting any such property, Participation Facility, or to the Knowledge of
TARGET Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET.
(f) Prior to the period of (i) any TARGET Company's ownership or
operation of any of their respective current properties, (ii) any TARGET
Company's participation in the management of any Participation Facility, or
(iii) any TARGET Company's holding of a security interest in a Loan Property, to
the Knowledge of TARGET, there were no releases of Hazardous Material or oil in,
on, under or affecting any such property, Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on TARGET.
4.12 COMPLIANCE WITH LAWS.
--------------------
(a) TARGET is duly registered as a bank holding company under the
BHC Act. Each TARGET Company has in effect all Permits necessary for it to own,
lease or operate its Assets and to carry on its business as now conducted,
except for those Permits the absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, and there
has occurred no Default under any such Permit, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET.
(b) Except as Previously Disclosed no TARGET Company:
(i) is in violation of any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for violations
which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on TARGET; and
(ii) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (A) asserting that any TARGET
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TARGET, (B) threatening to revoke
any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, or
(C) requiring any TARGET Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
11
4.13 LABOR RELATIONS. No TARGET Company is the subject of any Litigation
---------------
asserting that it or any other TARGET Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other TARGET Company to bargain with
any labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any TARGET Company, pending or, to its
Knowledge, threatened, or to its Knowledge, is there any activity involving any
TARGET Company's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
4.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) TARGET has Previously Disclosed, and delivered or made
available to PURCHASER prior to the execution of this Agreement, copies in each
case of all pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus, or other
incentive plans all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including, without limitation, "employee benefit plans," as that term is defined
in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in whole
or in part by, or contributed to by any TARGET Company or Affiliate thereof for
the benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate (collectively, the "TARGET Benefit Plans"). Any of
the TARGET Benefit Plans which is an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as a "TARGET
ERISA Plan." Each TARGET ERISA Plan which is also a "defined benefit plan" (as
defined in Section 414(j)) of the Internal Revenue Code) is referred to herein
as a "TARGET Pension Plan." No TARGET Pension Plan is or has been a multi-
employer plan within the meaning of Section 3(37) of ERISA.
(b) All TARGET Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on TARGET. Each TARGET ERISA Plan
which is intended to be qualified under Section 401(a) of the Internal Revenue
Code has received a favorable determination letter from the Internal Revenue
Service, and TARGET is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. To the Knowledge of
TARGET, no TARGET Company has engaged in a transaction with respect to any
TARGET Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof would subject any TARGET Company to a tax or
penalty imposed by either Section 4975 of the Internal Revenue Code or Section
502(i) of ERISA in amounts which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on TARGET.
(c) No TARGET ERISA Plan which is a defined benefit pension plan
has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, based on actuarial assumptions set forth for such plan's
most recent actuarial valuation. Since the date of the
12
most recent actuarial valuation, there has been (i) no material change in the
financial position of any TARGET Pension Plan, (ii) no change in the actuarial
assumptions with respect to any TARGET Pension Plan, and (iii) no increase in
benefits under any TARGET Pension Plan as a result of plan amendments or changes
in applicable law, which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TARGET or materially adversely affect
the funding status of any such plan. Neither any TARGET Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any TARGET Company, or the single-employer
plan of any entity which is considered one employer with TARGET under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, which is reasonably likely to have a Material Adverse
Effect on TARGET. No TARGET Company has provided, or is required to provide,
security to a TARGET Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV or ERISA has been or is expected to
be incurred by any TARGET Company with respect to any ongoing, frozen or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Material Adverse
Effect on TARGET. Except as Previously Disclosed, no TARGET Company has
incurred any withdrawal Liability with respect to a multi-employer plan under
Subtitle B of Title TV or ERISA (regardless of whether based on contributions of
an ERISA Affiliate), which Liability is reasonably likely to have a Material
Adverse Effect on TARGET. No notice of a "reportable event," within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any TARGET Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(e) No TARGET Company has any obligations for retiree health and
life benefits under any of the TARGET Benefit Plans and there are no
restrictions on the rights of such TARGET Company to amend or terminate any such
Plan without incurring any Liability thereunder, which Liability is reasonably
likely to have a Material Adverse Effect on TARGET.
(f) Except as Previously Disclosed, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
director or any employee of any TARGET Company from any TARGET Company under any
TARGET Benefit Plan or otherwise, (ii) increase any benefits otherwise payable
under any TARGET Benefit Plan, or (iii) result in any acceleration of the time
of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including, without limitation, entitlements under any
executive compensation, supplemental retirement, or employment agreement) of
employees and former employees of any TARGET Company and their respective
beneficiaries, other than entitlements accrued pursuant to
13
funded retirement plans subject to the provisions of Section 412 of the Internal
Revenue Code or Section 302 of ERISA, have been fully reflected on the TARGET
Financial Statements to the extent required by and in accordance with GAAP.
4.15 MATERIAL CONTRACTS. Except as Previously Disclosed or otherwise
------------------
reflected in the TARGET Financial Statements, none of the TARGET Companies, nor
any of their respective Assets, businesses or operations, is a party to, or is
bound or affected by, or receives benefits under, (a) any employment, severance,
termination, consulting or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (b) any Contract
relating to the borrowing of money by any TARGET Company or the guarantee by any
TARGET Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully secured repurchase agreements,
trade payables, and Contracts relating to borrowings or guarantees made in the
ordinary course of business), and (c) any Contracts between or among TARGET
Companies (together with all Contracts referred to in Sections 4.10 and 4.14(a)
of this Agreement, the "TARGET Contracts"). None of the TARGET Companies is in
Default under any TARGET Contract, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
TARGET. All of the indebtedness of any TARGET Company for money borrowed is
prepayable at any time by such TARGET Company without penalty or premium.
4.16 LEGAL PROCEEDINGS. Except as Previously Disclosed, there is no
-----------------
Litigation instituted or pending or, to the Knowledge of TARGET, threatened (or
unasserted but considered probable of assertion and which, if asserted, would
have at least a reasonable probability of an unfavorable outcome) against any
TARGET Company, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any TARGET Company,
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TARGET.
4.17 REPORTS. Except as Previously Disclosed since January 1, 1993, each
-------
TARGET Company has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with all Regulatory Authorities. As of their respective dates, each of
such reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of their respective dates, none of such reports or documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
4.18 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument
---------------------------
or other writing furnished or to be furnished by any TARGET Company or any
Affiliate thereof to PURCHASER pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
TARGET
14
Company or any Affiliate thereof for inclusion in the Registration Statement to
be filed by PURCHASER with the SEC, will, when the Registration Statement
becomes effective, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by any TARGET
Company or any Affiliate thereof for inclusion in the Proxy Statement to be
mailed to TARGET's shareholders in connection with the Shareholders' Meeting,
and any other documents to be filed by any TARGET Company or any Affiliate
thereof with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of TARGET, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any TARGET Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
4.19 ACCOUNTING, TAX AND REGULATORY MATTERS. Except as Previously
--------------------------------------
Disclosed, no TARGET Company or any Affiliate thereof has taken any action or
has any Knowledge of any fact or circumstance that is reasonably likely to (a)
prevent the transactions contemplated hereby, including the Merger, from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (b) materially impede or delay receipt of any Consents
of Regulatory Authorities referred to in Section 8.1 (b) of this Agreement or
result in the imposition of a condition or restriction of the referred to in
the second sentence of such Section. To the Knowledge of TARGET, there exists
no fact, circumstance, or reason why the requisite Consents referred to in
Section 8.1(b) of this Agreement cannot be received in a timely manner without
the imposition of any condition or restriction of the type described in the
second sentence of such Section 8.1(b).
4.20 CHARTER PROVISIONS. Each TARGET Company has taken all action so
------------------
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any TARGET Company or restrict or
impair the ability of PURCHASER to vote, or otherwise to exercise the rights of
a shareholder with respect to, shares of any TARGET Company that may be acquired
or controlled by it.
15
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
PURCHASER hereby represents and warrants to TARGET as follows:
5.1 ORGANIZATION, STANDING AND POWER. PURCHASER is a corporation duly
--------------------------------
organized, validly existing, and in good standing under the laws of the State of
Georgia, and is duly registered as a bank holding company under the BHC Act.
PURCHASER has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. PURCHASER is duly qualified
or licensed to transact business as a foreign corporation in good standing in
the States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on PURCHASER.
5.2 AUTHORITY; NO BREACH.
--------------------
(a) PURCHASER has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of PURCHASER.
This Agreement represents a legal, valid and binding obligation of PURCHASER,
enforceable against PURCHASER in accordance with its terms (except in all cases
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
PURCHASER, nor the consummation by PURCHASER of the transactions contemplated
hereby, nor compliance by PURCHASER with any of the provisions hereof will (i)
conflict with or result in a breach of any provision of PURCHASER's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any PURCHASER Company under, any Contract or Permit of any PURCHASER
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER, or, (iii) subject to receipt of the requisite approvals
referred to in Section 8.1(b) of this Agreement, violate any Law or Order
applicable to any PURCHASER Company or any of their respective Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit
16
plans, and other than Consents, filings or notifications which, if not obtained
or made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PURCHASER, no notice to, filing with, or Consent of
any public body or authority is necessary for the consummation by PURCHASER of
the Merger and the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of PURCHASER consists of (i)
10,000,000 shares of PURCHASER Common Stock, of which 3,379,192 shares are
issued and outstanding as of the date of this Agreement, and (ii) 5,000,000
shares of Preferred Stock, none of which are issued or outstanding as of the
date of this Agreement. All of the issued and outstanding shares of PURCHASER
Common Stock are, and all of the shares of PURCHASER Common Stock to be issued
in exchange for shares of TARGET Common Stock upon consummation of the Merger,
when issued in accordance with the terms of this Agreement, will be, duly and
validly issued and outstanding and fully paid and nonassessable under the GBCC.
None of the outstanding shares of PURCHASER Common Stock has been, and none of
the shares of PURCHASER Common Stock to be issued in exchange for shares of
TARGET Common Stock upon consummation of the Merger will be, issued in violation
of any preemptive rights of the current or past shareholders of PURCHASER.
PURCHASER has reserved 6,667 shares of PURCHASER Common Stock for issuance under
the PURCHASER Stock Plans, pursuant to which options to purchase not more than
6,667 shares of PURCHASER Common Stock are outstanding as of the date of this
Agreement.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
Previously Disclosed, there are no shares of capital stock or other equity
securities of PURCHASER outstanding and no outstanding options, warrants, scrip,
rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of PURCHASER or contracts, commitments,
understandings, or arrangements by which PURCHASER is or may be bound to issue
additional shares of its capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock.
5.4 PURCHASER SUBSIDIARIES. PURCHASER has Previously Disclosed all of
----------------------
the PURCHASER Subsidiaries as of the date of this Agreement. PURCHASER owns all
of the issued and outstanding shares of capital stock of each PURCHASER
Subsidiary. No equity securities of any PURCHASER Subsidiary are or may become
required to be issued (other than to a PURCHASER Company) by reason of any
options, warrants, scrip, rights to subscribe to, calls, or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of any such Subsidiary, and there
are no Contracts by which any PURCHASER Subsidiary is bound to issue (other than
to a PURCHASER Company) additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its capital
stock or by which any PURCHASER Company is or may be bound to transfer any
shares of the capital stock of any PURCHASER Subsidiary (other than to a
PURCHASER Company). There are no Contracts relating to the rights of any
PURCHASER Company to vote or to dispose of any shares of the capital stock of
any PURCHASER Subsidiary.
17
All of the shares of capital stock of each PURCHASER Subsidiary held by a
PURCHASER Company are fully paid and nonassessable under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the PURCHASER Company free and clear of any Lien.
Each PURCHASER Subsidiary is either a bank or a corporation, and is duly
organized, validly existing, and (as to corporations) in good standing under the
Laws of the jurisdiction in which it is incorporated or organized, and has the
corporate power and authority necessary for it to own, lease and operate its
Assets and to carry on its business as now conducted. Each PURCHASER Subsidiary
is duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions where
the character of its Assets or the nature or conduct of its business requires it
to be so qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER. Each
PURCHASER Subsidiary that is a depository institution is an insured institution
as defined in the Federal Deposit Insurance Act and applicable regulations
thereunder.
5.5 FINANCIAL STATEMENTS. PURCHASER has Previously Disclosed and
--------------------
delivered to TARGET prior to the execution of this Agreement copies of all
PURCHASER Financial Statements for periods ended prior to the date hereof and
will deliver to TARGET copies of all PURCHASER Financial Statements prepared
subsequent to the date hereof. The PURCHASER Financial Statements (as of the
dates thereof and for the periods covered thereby) (a) are or, if dated after
the date of this Agreement, will be in accordance with the books and records of
the PURCHASER Companies, which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may be, maintained in
accordance with good business practices, and (b) present or will present, as the
case may be, fairly the consolidated financial position of the PURCHASER
Companies as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows of the PURCHASER Companies for
the periods indicated, in accordance with GAAP (subject to exceptions as to
consistency specified therein or as may be indicated in the notes thereto or, in
the case of interim financial statements, to normal recurring year-end
adjustments that are not material).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No PURCHASER Company has any
----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of PURCHASER as
of December 31, 1994 and September 30, 1995 included in the PURCHASER Financial
Statements or reflected in the notes thereto. No PURCHASER Company has incurred
or paid any Liability since September 30, 1995, except for such Liabilities
incurred or paid in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on PURCHASER.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1995,
------------------------------------
except as disclosed in SEC Documents filed by PURCHASER prior to the date of
this Agreement, (a) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PURCHASER, and (b) the
18
PURCHASER Companies have not taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if taken after the
date of this Agreement, would represent or result in a material breach or
violation of any of the covenants and agreements of PURCHASER provided in
Article 7 of this Agreement.
5.8 TAX MATTERS.
-----------
(a) All Tax returns required to be filed by or on behalf of any of
the PURCHASER Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 1994, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on PURCHASER, and all returns filed are complete and accurate to
the Knowledge of PURCHASER. All Taxes shown on filed returns have been paid. As
of the date of this Agreement, there is no audit examination, deficiency, or
refund Litigation with respect to any Taxes that is reasonably likely to result
in a determination that would have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER, except as reserved against in the PURCHASER
Financial Statements delivered prior to the date of this Agreement. All Taxes
and other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) None of the PURCHASER Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect, and no unpaid tax deficiency has been asserted
in writing against or with respect to any PURCHASER Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER.
(c) Adequate provision for any Taxes due or to become due for any
of the PURCHASER Companies for the period or periods through and including the
date of the respective PURCHASER Financial Statements has been made and is
reflected on such PURCHASER Financial Statements.
(d) Deferred Taxes of the PURCHASER Companies have been provided
for in accordance with GAAP.
(e) Effective January 1, 1993, PURCHASER adopted Financial
Accounting Standards Board Statement 109, "Accounting for Income Taxes."
5.9 PURCHASER ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for
--------------------------------------------
possible loan or credit losses (the "PURCHASER Allowance") shown on the
consolidated balance sheets of PURCHASER included in the most recent PURCHASER
Financial Statements dated prior to the date of this Agreement was, and the
PURCHASER Allowance shown on the consolidated balance sheets of PURCHASER
included in the PURCHASER Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof, adequate (within
the meaning of GAAP and applicable regulatory requirements or guidelines) to
provide for losses relating to or
19
inherent in the loan and lease portfolios (including accrued interest
receivables) of the PURCHASER Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
the PURCHASER Companies as of the dates thereof except where the failure of such
PURCHASER Allowance to be so adequate is not reasonably likely to have a
Material Adverse Effect on PURCHASER.
5.10 ASSETS. Except as Previously Disclosed or as disclosed or reserved
------
against in the PURCHASER Financial Statements, the PURCHASER Companies have good
and marketable title, free and clear of all Liens, to all of their respective
Assets. All material tangible properties used in the businesses of the
PURCHASER Companies are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with PURCHASER's
past practices. All Assets which are material to PURCHASER's business on a
consolidated basis, held under leases or subleases by any of the PURCHASER
Companies, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The policies of fire, theft,
liability, and other insurance maintained with respect to the Assets or
businesses of the PURCHASER Companies provide adequate coverage under current
industry practices against loss or Liability, and the fidelity and blanket bonds
in effect as to which any of the PURCHASER Companies is a named insured are
reasonably sufficient. The Assets of the PURCHASER Companies include all assets
required to operate the business of the PURCHASER Companies as presently
conducted.
5.11 ENVIRONMENTAL MATTERS.
---------------------
(a) Each PURCHASER Company, its Participation Facilities and its
Loan Properties are, and have been, in compliance with all Environmental Laws,
except for violations which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on PURCHASER.
(b) There is no Litigation pending or, to the Knowledge of
PURCHASER, threatened before any court, governmental agency or authority or
other forum in which any PURCHASER Company or any of its Participation
Facilities has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material (as defined below) or oil, whether or not occurring at, on,
under or involving a site owned, leased or operated by any PURCHASER Company or
any of its Participation Facilities, except for such Litigation pending or, to
the Knowledge of Purchaser, threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER.
20
(c) There is no Litigation pending or, to the Knowledge of
Purchaser, threatened before any court, governmental agency or board or other
forum in which any of its Loan Properties (or any PURCHASER Company in respect
of such Loan Property) has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor), with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material or oil,
whether or not occurring at, on, under or involving a Loan Property, except for
such Litigation pending or, to the Knowledge of Purchaser, threatened that is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(d) To the Knowledge of PURCHASER, there is no reasonable basis for
any Litigation of a type described in subsections (b) or (c), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(e) During the period of (i) any PURCHASER Company's ownership or
operation of any of their respective current properties, (ii) any PURCHASER
Company's participation in the management of any Participation Facility, or
(iii) any PURCHASER Company's holding of a security interest in a Loan Property,
there have been no releases of Hazardous Material or oil in, on, under or
affecting such property, Participation Facility or Loan Property, except such as
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(f) Prior to the period of (i) any PURCHASER Company's ownership or
operation of any of their respective current properties, (ii) any PURCHASER
Company's participation in the management of any Participation Facility, or
(iii) any PURCHASER Company's holding of a security interest in a Loan Property,
to the Knowledge of PURCHASER, there were no releases of Hazardous Material or
oil in, on, under or affecting any such property, Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on PURCHASER.
5.12 COMPLIANCE WITH LAWS. PURCHASER is duly registered as a bank
--------------------
holding company under the BHC Act. Each PURCHASER Company has in effect all
Permits necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER, and there has occurred no Default under any such Permit,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on PURCHASER.
(a) No PURCHASER Company:
(i) is in violation of any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for violations
which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on PURCHASER; or
21
(ii) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (A) asserting that any PURCHASER
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER, (B) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER,
or (C) requiring any PURCHASER Company to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment or memorandum of understanding, or to adopt any Board resolution
or similar undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
5.13 LABOR RELATIONS. No PURCHASER Company is the subject of any
---------------
Litigation asserting that it or any other PURCHASER Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other PURCHASER Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any PURCHASER Company,
pending or, to its Knowledge, threatened, or to its Knowledge, is there any
activity involving any PURCHASER Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.14 EMPLOYEE BENEFIT PLANS.
----------------------
(a) PURCHASER has Previously Disclosed and delivered or made
available to TARGET prior to the execution of this Agreement copies in each case
of all pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus, or other incentive
plans, all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including, without
limitation, "employee benefit plans," as that term is defined in Section 3(3) of
ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any PURCHASER Company or Affiliate thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "PURCHASER Benefit Plans). Any of the PURCHASER
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "PURCHASER ERISA
Plan." Each PURCHASER ERISA Plan which is also a "defined benefit plan" (as
defined in Section 414(j)) of the Internal Revenue Code) is referred to herein
as a "PURCHASER Pension Plan." No PURCHASER Pension Plan is or has been a multi-
employer plan within the meaning of Section 3(37) of ERISA.
(b) All PURCHASER Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation
22
of which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PURCHASER. Each PURCHASER ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue Service, and
PURCHASER is not aware of any circumstances likely to result in revocation of
any such favorable determination letter. To the Knowledge of PURCHASER, no
PURCHASER Company has engaged in a transaction with respect to any PURCHASER
Benefit Plan that, assuming the taxable period of such transaction expired as of
the date hereof would subject any PURCHASER Company to a tax or penalty imposed
by either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA
in amounts which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER.
(c) No PURCHASER ERISA Plan which is a defined benefit pension plan
has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, based on actuarial assumptions set forth for such plan's
most recent actuarial valuation. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any PURCHASER Pension Plan, (ii) no change in the actuarial assumptions with
respect to any PURCHASER Pension Plan, and (iii) no increase in benefits under
any PURCHASER Pension Plan as a result of plan amendments or changes in
applicable Law which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER or materially adversely affect
the funding status of any such plan. Neither any PURCHASER Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any PURCHASER Company, or the single-
employer plan of any ERISA Affiliate has an "accumulated funding deficiency"
within the meaning of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, which is reasonably likely to have a Material Adverse Effect on
PURCHASER. No PURCHASER Company has provided, or is required to provide,
security to a PURCHASER Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV or ERISA has
been or is expected to be incurred by any PURCHASER Company with respect to any
ongoing, frozen or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate, which Liability is reasonably likely to have a Material
Adverse Effect on PURCHASER. No PURCHASER Company has incurred any withdrawal
Liability with respect to a multi-employer plan under Subtitle B of Title IV or
ERISA (regardless of whether based on contributions of an ERISA Affiliate),
which Liability is reasonably likely to have a Material Adverse Effect on
PURCHASER. No notice of a "reportable event" within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any PURCHASER Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof
(e) Except as Previously Disclosed, (i) no PURCHASER Company has
any obligations for retiree health and life benefits under any of the PURCHASER
Benefit Plans and (ii) there are no restrictions on the rights of such PURCHASER
Company to amend or terminate any such Plan without incurring any Liability
thereunder, which Liability is reasonably likely to have a Material Adverse
Effect on PURCHASER.
23
(f) Except as Previously Disclosed, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
director or any employee of any PURCHASER Company from any PURCHASER Company
under any PURCHASER Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any PURCHASER Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including, without limitation, entitlements under any
executive compensation, supplemental retirement, or employment agreement) of
employees and former employees of any PURCHASER Company and their respective
beneficiaries, other than entitlements accrued pursuant to funded retirement
plans subject to the provisions of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, have been fully reflected on the PURCHASER Financial
Statements to the extent required by and in accordance with GAAP.
5.15 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
-----------------
or, to the Knowledge of PURCHASER, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any PURCHASER Company, or against
any Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any PURCHASER Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER.
5.16 REPORTS. Since January 1, 1993, each PURCHASER Company has timely
-------
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (a) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy
statements, (b) other Regulatory Authorities, and (c) any applicable state
securities or banking authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER). As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, none of such
reports and documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
5.17 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument
---------------------------
or other writing furnished or to be furnished by any PURCHASER Company or any
Affiliate thereof to TARGET pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
PURCHASER
24
Company or any Affiliate thereof for inclusion in the Registration Statement to
be filed by PURCHASER with the SEC, will, when the Registration Statement
becomes effective, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by any PURCHASER
Company or any Affiliate thereof for inclusion in the Proxy Statement to be
mailed to TARGET's shareholders in connection with the Shareholders' Meeting,
and any other documents to be filed by any PURCHASER Company or any Affiliate
thereof with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of TARGET, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any PURCHASER Company or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.18 ACCOUNTING, TAX AND REGULATORY MATTERS. No PURCHASER Company or any
--------------------------------------
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (a) prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the second sentence of such
Section. To the Knowledge of PURCHASER, there exists no fact, circumstance, or
reason why the requisite Consents referred to in Section 9.1(b) of this
Agreement cannot be received in a timely manner without the imposition of any
condition or restriction of the type described in the second sentence of such
Section 9.1(b).
5.19 CHARTER PROVISIONS. Each PURCHASER Company has taken all action so
------------------
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any PURCHASER Company or restrict or
impair the ability of any TARGET shareholder to vote, or otherwise to exercise
the rights of a shareholder with respect to, shares of PURCHASER Common Stock
that may be acquired or controlled by it.
25
ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
6.1 AFFIRMATIVE COVENANTS OF TARGET. Unless the prior written consent
-------------------------------
of PURCHASER shall have been obtained, and except as otherwise contemplated
herein, TARGET shall, and shall cause each of its Subsidiaries: (a) to operate
its business in the usual, regular, and ordinary course; (b) to preserve intact
its business organization and Assets and maintain its rights and franchises; (c)
to use its reasonable efforts to cause its representations and warranties to be
correct at all times; and (d) to take no action which would (i) adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the second sentence of Section 8.1(b) of this Agreement or (ii)
adversely affect in any material respect the ability of either Party to perform
its covenants and agreements under this Agreement.
6.2 NEGATIVE COVENANTS OF TARGET. From the date of this Agreement until
----------------------------
the earlier of the Effective Time or the termination of this Agreement, TARGET
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer or chief financial
officer of PURCHASER, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any TARGET Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a TARGET Company to another TARGET
Company) in excess of an aggregate of $50,000 (for the TARGET Companies on a
consolidated basis) except in the ordinary course of the business of TARGET
Companies consistent with past practices (which shall include, for TARGET
Subsidiaries that are depository institutions, creation of deposit liabilities,
purchases of federal funds, receipt of Federal Home Loan Bank advances, and
entry into repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any share of stock held by
any TARGET Company of any Lien or permit any such Lien to exist; or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any TARGET Company, or declare or pay any dividend or make any
other distribution in respect of TARGET's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereto, or as Previously Disclosed, issue, sell, pledge,
encumber, authorize the issuance of, or enter into any Contract to issue, sell,
pledge, encumber, or authorize the issuance of or otherwise permit to become
outstanding, any additional shares of TARGET Common Stock or any other capital
stock
26
of any TARGET Company, or any stock appreciation rights, or any option, warrant,
conversion, or other right to acquire any such stock, or any security
convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of any
TARGET Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of TARGET Common Stock or sell, lease,
mortgage or otherwise dispose of or otherwise encumber (i) any shares of capital
stock of any TARGET Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another TARGET Company) or (ii) any Asset having a book
value in excess of $50,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) acquire direct or indirect control over any Person, other than
in connection with (i) internal reorganizations or consolidations involving
existing Subsidiaries, (ii) foreclosures in the ordinary course of business, or
(iii) acquisitions of control by a depository institution Subsidiary in its
fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees
or officers of any TARGET Company (including such discretionary increases as may
be contemplated by existing employment agreements), except in accordance with
past practice Previously Disclosed or as required by Law; pay any bonus except
in accordance with past practice Previously Disclosed or the provisions of any
applicable program or plan adopted by its Board of Directors prior to the date
of this Agreement; enter into or amend any severance agreements with officers of
any TARGET Company; grant any increase in fees or other increases in
compensation or other benefits to directors of any TARGET Company except for the
payment of an amount not to exceed $10,000 to each director of TARGET Bank in
consideration of the termination of TARGET Bank's Director's Defined Benefit
Plan or in accordance with past practice Previously Disclosed; or
(h) enter into or amend any employment Contract between any TARGET
Company and any Person (unless such amendment is required by Law) that the
TARGET Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time on
or after the Effective Time; or
(i) adopt any new employee benefit plan of any TARGET Company or
make any material change in or to any existing employee benefit plans of any
TARGET Company other than any such change that is required by Law or that, in
the opinion of counsel, is necessary or advisable to maintain the tax qualified
status of any such plan; or
(j) make any significant change in any accounting methods or
systems of internal accounting controls, except as may be appropriate to conform
to changes in regulatory accounting requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any TARGET Company
for money damages in excess of $50,000 or which involves material restrictions
upon the operations of any TARGET Company; or
27
(l) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive, release, compromise or assign any
material rights or claims.
6.3 COVENANTS OF PURCHASER. From the date of this Agreement until the
----------------------
earlier of the Effective Time or the termination of this Agreement, PURCHASER
covenants and agrees that it shall continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the PURCHASER Common Stock and the business
prospects of the PURCHASER Companies and, to the extent consistent therewith, to
use all reasonable efforts to preserve intact the PURCHASER Companies' core
businesses and goodwill with their respective employees and the communities they
serve.
6.4 ADVERSE CHANGES IN CONDITION. Each Party agrees 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 (a) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (b) is reasonably likely to 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.
6.5 REPORTS. Each Party and its Subsidiaries shall file all reports
-------
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 7
ADDITIONAL AGREEMENTS
---------------------
7.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL. As
-------------------------------------------------------------
soon as practicable after execution of this Agreement, PURCHASER shall file the
Registration Statement with the SEC, and shall use its best efforts to cause the
Registration Statement to become effective under the 1933 Act and take any
action required to be taken under the applicable state Blue Sky or securities
Laws in connection with the issuance of the shares of PURCHASER Common Stock
upon consummation of the Merger. TARGET shall furnish all information
concerning it and the holders of its capital stock as PURCHASER may reasonably
request in connection with such action. TARGET shall call a Shareholders'
Meeting, to be held as soon as reasonably practicable after the
28
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of the merger and this Agreement and such other related
matters as it deems appropriate. In connection with the Shareholders' Meeting,
(a) PURCHASER shall prepare and file on TARGET's behalf a Proxy Statement (which
shall be included in the Registration Statement) with the SEC and mail it to its
shareholders, (b) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Proxy
Statement, (c) the Board of Directors of TARGET shall recommend (subject to
compliance with their fiduciary duties as advised by counsel) to its
shareholders that they approve this Agreement, and (d) the Board of Directors
and officers of TARGET shall use their reasonable efforts to obtain such
shareholders' approval (subject to compliance with their fiduciary duties as
advised by counsel).
7.2 LISTING. PURCHASER shall use its best efforts to list, prior to the
-------
Effective Time, on the NASDAQ/NMS, the shares of PURCHASER Common Stock to be
issued to the holders of TARGET Common Stock pursuant to the Merger.
7.3 APPLICATIONS. PURCHASER shall promptly prepare and file, and TARGET
------------
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
7.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
--------------------------
conditions of this Agreement, PURCHASER shall execute and file the Georgia
Articles of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
7.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
-------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws, as promptly as practicable so as to permit
consummation of the Merger at the earliest possible date and to otherwise enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the other Party hereto to that end (it being understood that any amendments
to the Registration Statement filed by PURCHASER in connection with the
PURCHASER Common Stock to be issued in the Merger or a resolicitation of proxies
as a consequence of an acquisition agreement by PURCHASER or any of its
Subsidiaries shall not violate this covenant), including, without limitation,
using its efforts to lift or rescind any Order adversely affecting its ability
to consummate the transactions contemplated herein and to cause to be satisfied
the conditions referred to in Article 9 of this Agreement. Each Party shall
use, and shall cause each of its Subsidiaries to use, its best efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
7.6 INVESTIGATION AND CONFIDENTIALITY.
---------------------------------
(a) Prior to the Effective Time, each Party will keep the other
Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties
29
of it and its Subsidiaries and of their respective financial and legal
conditions as the other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. No
investigation by a Party shall affect the representations and warranties of the
other Party.
(b) Except as may be required by applicable Law or legal process,
and except for such disclosure to those of its directors, officers, employees
and representatives as may be appropriate or required in connection with the
transactions contemplated hereby, each Party shall hold in confidence all
nonpublic information obtained from the other Party (including work papers and
other material derived therefrom) as a result of this Agreement or in connection
with the transactions contemplated hereby (whether so obtained before or after
the execution hereof) until such time as the Party providing such information
consents to its disclosure or such information becomes otherwise publicly
available. Promptly following any termination of this Agreement, each of the
Parties agrees to use its best efforts to cause its respective directors,
officers, employees and representatives to destroy or return to the providing
party all such nonpublic information (including work papers and other material
retrieved therefrom), including all copies thereof. Each Party shall, and shall
cause its advisers and agents to, maintain the confidentiality of all
confidential information furnished to it by the other Party concerning its and
its Subsidiaries' businesses, operations, and financial positions and shall not
use such information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return all documents and copies
thereof and all work papers containing confidential information received from
the other Party, except one copy of certain materials that can be retained for
legal files in accordance with the provisions of the Confidentiality Agreements.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Material Adverse Effect on
the other Party.
7.7 PRESS RELEASES. Prior to the Effective Time, TARGET and PURCHASER
--------------
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing in this Section
7.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
7.8 NO SOLICITATION. (a) TARGET shall not, nor shall it permit any of
---------------
its Subsidiaries to, nor shall it authorize or permit any officer, director of
employee of, or any investment banker, attorney or other advisor or
representative of, TARGET or any of its Subsidiaries to, (i) solicit or
initiate, or encourage the submission of, any takeover proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that
30
constitutes, or may reasonably be expected to lead to, any takeover proposal;
provided, however, that, if in the opinion of its Board of Directors, after
consultation with counsel, such failure to act would be inconsistent with its
fiduciary duties to shareholders under applicable law, TARGET may, in response
to an unsolicited takeover proposal, and subject to compliance with subparagraph
(c) below, (A) furnish information with respect to TARGET to any Person pursuant
to a confidentiality agreement and (B) participate in negotiations regarding
such takeover proposal. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the immediately preceding
sentence by any executive officer of TARGET or any of its Subsidiaries or any
investment banker, attorney or other advisor or representative of TARGET or any
of its Subsidiaries, whether or not such person is purporting to act on behalf
of TARGET or any of its Subsidiaries or otherwise, shall be deemed to be a
breach of this Section 7.8 by TARGET. For purposes of this Agreement, "takeover
proposal" means an inquiry, proposal or acquisition or purchase of a substantial
amount of assets of TARGET or any of its Subsidiaries (other than investors in
the ordinary course of business) or of over 20% of any class of equity
securities of TARGET or any of its Subsidiaries or any tender offer or exchange
offer that if consummated would result in any Person beneficially owning 20% or
more of any class of equity securities of TARGET or any of its Subsidiaries, or
any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving TARGET or any of its Subsidiaries other than the transactions
contemplated by this Agreement, or any other transaction the consummation of
which would reasonably be expected to impede, interfere with, prevent or
materially delay the Merger or which would reasonably be expected to dilute
materially the benefits to PURCHASER of the transactions contemplated hereby.
(b) Except as set forth herein, neither the Board of Directors of TARGET
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to PURCHASER, the approval or recommendation of
such Board of Directors or any such committee of this Agreement or the Merger,
(ii) approve or recommend, or propose to approve or recommend, any takeover
proposal or (iii) enter into any agreement with respect to any takeover
proposal. Notwithstanding the foregoing, if in the opinion of the TARGET Board
of Directors, after consultation with counsel, failure to do so would be
inconsistent with its fiduciary duties to TARGET shareholders under applicable
law, then, prior to the Shareholders' Meeting, the TARGET Board of Directors may
(subject to the terms of this and the following sentences) withdraw or modify
its approval or recommendation of this Agreement or the Merger, approve or
recommend a superior proposal, or enter into an agreement with respect to a
superior proposal, in each case at any time after the second business day
following PURCHASER'S receipt of written notice (a "Notice of Superior
Proposal") advising PURCHASER that the TARGET Board of Directors has received a
superior proposal, specifying the material terms and conditions of such superior
proposal and identifying the Person making such superior proposal; provided that
TARGET shall not enter into an agreement with respect to a superior proposal
unless TARGET shall have furnished PURCHASER with written notice no later than
12:00 noon one (1) day in advance of any date that it intends to enter into such
agreement. In addition, if TARGET proposes to enter into an agreement with
respect to any takeover proposal, it shall concurrently with entering into such
agreement pay, or cause to be paid, to PURCHASER the Expenses and the
Termination Fee (as defined in Section 10.2(b). For purposes of this Agreement,
a "superior proposal" means any bona fide takeover
31
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the shares of TARGET Common Stock or
TARGET Bank then outstanding or all or substantially all of the assets of TARGET
or TARGET Bank and otherwise on terms which the TARGET Board of Directors
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to its
shareholders than the Merger.
(c) In addition to the obligations of TARGET set forth in paragraph (b)
above, TARGET shall immediately advise PURCHASER orally and in writing of any
request for information or of any takeover proposal, or any inquiry with respect
to or which could lead to any takeover proposal, the material terms and
conditions of such request, takeover proposal or inquiry, and the identity of
the person making any takeover proposal or inquiry. TARGET shall keep PURCHASER
fully informed of the status and details (including amendments or proposed
amendments) of any such request, takeover proposal or inquiry.
(d) Nothing contained in this Section 7.8 shall prohibit TARGET from
making any disclosure to TARGET's shareholders if, in the opinion of the TARGET
Board of Directors, after consultation with counsel, failure to so disclose
would be inconsistent with its fiduciary duties to its shareholders under
applicable law; provided that TARGET does not, except as permitted by
subparagraph (b) above, withdraw or modify, or propose to withdraw or modify,
its position with respect to the Merger or approve or recommend, or propose to
approve or recommend, a takeover proposal.
7.9 TAX TREATMENT. Each of the Parties undertakes and agrees to use its
-------------
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify for treatment as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes.
7.10 AGREEMENT OF AFFILIATES. TARGET has Previously Disclosed all
-----------------------
Persons whom it reasonably believes are "affiliates" of TARGET for purposes of
Rule 145 under the 1933 Act. TARGET shall use its reasonable efforts to cause
each such Person to deliver to PURCHASER not later than thirty (30) days after
the date of this Agreement, a written agreement, substantially in the form of
Exhibit 1 hereto, providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of TARGET Common Stock held by such Person
except as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of PURCHASER Common Stock
to be received by such Person upon consummation of the Merger except in
compliance with applicable provisions of the 1933 Act and the rules and
regulations thereunder. Regardless of whether each such affiliate has provided
the written agreement referred to in this Section, PURCHASER shall be entitled
to place restrictive legends upon certificates for shares of PURCHASER Common
Stock issued to affiliates of TARGET pursuant to this Agreement to enforce the
provisions of this Section.
32
7.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
-------------------------------
PURCHASER shall provide generally to officers and employees of the TARGET
Companies employee benefits under employee benefit plans (other than stock
option or other plans involving the potential issuance of PURCHASER Common
Stock), on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the PURCHASER Companies to their
similarly situated officers and employees, provided that for a period of twelve
(12) months after the Effective Time, PURCHASER shall provide generally to
officers and employees of TARGET Companies severance benefits in accordance with
the policies of either (i) TARGET as Previously Disclosed, or (ii) PURCHASER,
whichever of (i) or (ii) will provide the greater benefit to the officer or
employee. For purposes of participation and vesting under such employee benefit
plans, the service of the employees of the TARGET Companies prior to the
Effective Time shall be treated as service with a PURCHASER Company
participating in such employee benefit plans. PURCHASER also shall honor in
accordance with their terms all employment, severance, consulting and other
compensation Contracts Previously Disclosed to PURCHASER between any TARGET
Company and any current or former director, officer, or employee thereof and all
provisions for vested benefits or other vested amounts earned or accrued through
the Effective Time under the TARGET Benefit Plans.
7.12 LARGE DEPOSITS. Prior to the Closing, TARGET will provide PURCHASER
--------------
with a list of all certificates of deposit or checking, savings or other
deposits owned by persons who, to the Knowledge of the TARGET, had deposits
aggregating more than $100,000 and a list of all certificates of deposit or
checking, savings or other deposits owned by directors and officers of TARGET
and the Bank and their affiliates in an amount aggregating more than $100,000 as
of the last day of the calendar month immediately prior to the Closing.
7.13 INDEMNIFICATION. PURCHASER agrees that all rights to
---------------
indemnification and all limitations of liability existing in favor of the
officers and directors of TARGET and TARGET Bank ("Indemnified Parties") as
provided in their respective articles of incorporation and bylaws as of the date
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto, for a period of not less than six (6) years from the
Effective Time; provided, however, that all rights to any indemnification in
respect of any claim asserted or made within such period shall continue until
the final disposition of such claim.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
---------------------------------------
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 10.6 of
this Agreement:
33
(a) SHAREHOLDER APPROVAL. The shareholders of TARGET shall have
--------------------
approved this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law or by the
provisions of any governing instruments.
(b) REGULATORY APPROVALS. All Consents of, filings and
--------------------
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect, and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner (including, without limitation, requirements relating to
the raising of additional capital or the disposition of Assets) which, in the
reasonable judgment of the Board of Directors of either Party, would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger; provided, however, that no such condition or
restriction shall be deemed to be materially adverse unless it materially
differs from terms and conditions customarily imposed by any Regulatory
Authority in connection with similar transactions.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any and
----------------------
all Consents required for consummation of the Merger (other than those referred
to in Section 8.1(b) of this Agreement) or for the preventing of any Default
under any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party.
(d) LEGAL PROCEEDINGS. No court or governmental or regulatory
-----------------
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, materially restricts or
makes illegal consummation of the transactions contemplated by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall be
----------------------
effective under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
Laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of PURCHASER Common Stock issuable pursuant to the Merger shall have been
received.
(f) NASD LISTING. The shares of PURCHASER Common Stock issuable
------------
pursuant to the Merger shall have been approved for listing on the NASDAQ/NMS.
(g) TAX MATTERS. TARGET shall have received a written opinion of
-----------
counsel from Rogers & Hardin, in form reasonably satisfactory to it,
substantially to the effect that for federal income tax purposes (a) the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, and (b) the exchange in the Merger of TARGET
34
Common Stock for PURCHASER Common Stock will not give rise to gain or loss to
the shareholders of TARGET with respect to such exchange (except to the extent
of any cash received).
8.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
--------------------------------------
PURCHASER to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by PURCHASER pursuant to Section 10.6(a) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of TARGET set forth or referred to in this Agreement shall be true
and correct in all respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 4.3 of this Agreement, which
shall be true in all respects) the inaccuracies of which relate to matters that
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TARGET.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of TARGET to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) TARGET shall have delivered to PURCHASER (i) a certificate,
dated as of the Effective Time and signed on its behalf by its chief executive
officer, to the effect that the conditions of its obligations set forth in
Sections 8.2(a) and 8.2(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by TARGET's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as PURCHASER and its counsel shall reasonably request.
(d) OPINION OF COUNSEL. TARGET shall have delivered to PURCHASER
------------------
an opinion of Powell, Goldstein, Frazer & Murphy, counsel to TARGET, dated as of
the Closing, in substantially the form of Exhibit 2 hereto.
(e) ACCOUNTANT'S LETTERS. PURCHASER shall have received from
--------------------
Mauldin & Jenkins letters dated not more than five (5) days prior to (i) the
date of the Proxy Statement and (ii) the Effective Time, with respect to certain
financial information regarding TARGET, in form and substance reasonably
satisfactory to PURCHASER, which letters shall be based upon customary specified
procedures undertaken by such firm.
(f) EMPLOYMENT AGREEMENTS. Robert L. Evans shall have executed and
---------------------
delivered an Employment Agreement substantially in the form of Exhibit 4 hereto,
and Roxie W.
35
Bagwell shall have executed and delivered an Employment Agreement substantially
in the form of Exhibit 5 hereto.
(g) TERMINATION OF DIRECTOR'S DEFINED BENEFIT PLAN. TARGET shall
----------------------------------------------
have caused TARGET Bank to terminate TARGET Bank's Director's Defined Benefit
Plan.
8.3 CONDITIONS TO OBLIGATIONS OF TARGET. The obligations of TARGET to
-----------------------------------
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by TARGET pursuant to Section 10.6(b) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of PURCHASER set forth or referred to in this Agreement shall be true
and correct in all respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 5.3 of this Agreement, which
shall be true in all respects) the inaccuracies of which relate to matters that
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of PURCHASER to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) CERTIFICATES. PURCHASER shall have delivered to TARGET (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 8.3(a) and 8.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by PURCHASER's Board of Directors evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as TARGET and its counsel shall reasonably request.
(d) OPINION OF COUNSEL. PURCHASER shall have delivered to TARGET
------------------
an opinion of Rogers & Hardin, counsel to PURCHASER, dated as of the Closing, in
substantially the form of Exhibit 3 hereto.
36
ARTICLE 9
TERMINATION
-----------
9.1 TERMINATION. Notwithstanding any other provision of this Agreement,
-----------
and notwithstanding the approval of this Agreement by the shareholders of
TARGET, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of the Board of Directors of PURCHASER and
the Board of Directors of TARGET; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a material breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within thirty
(30) days after the giving of written notice to the breaching Party of such
breach and which breach would provide the non-breaching party the ability to
refuse to consummate the Merger under the standard set forth in Section 8.2(a)
of this Agreement in the case of PURCHASER and Section 8.3(a) of this Agreement
in the case of TARGET; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within (30) days after
the giving of written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
(i) any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby has been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) if the shareholders of
TARGET fail to approve this Agreement and the transactions contemplated hereby
as required by the GBCC at the Shareholders' Meetings where the transactions
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 October 31, 1996, but only 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 9.1 (e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 9.1(e) of this Agreement.
37
(g) By the Board of Directors of TARGET in connection with entering
into a definitive agreement in accordance with Section 7.8(b), provided that it
has complied with all provisions thereof, including the notice provisions
therein, and that it makes simultaneous payment of the Expenses and the
Termination Fee.
9.2 EFFECT OF TERMINATION. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 9.1 of this Agreement, this
Agreement shall become void and have no effect, except (i) as provided in
Section 10.14, and (ii) a termination pursuant to Section 9.1 of this Agreement
shall not relieve the breaching Party from Liability for an uncured willful
breach of a representation, warranty, covenant, or agreement giving rise to such
termination.
ARTICLE 10
MISCELLANEOUS
-------------
10.1 DEFINITIONS. Except as otherwise provided herein, the capitalized
-----------
terms set forth below (in their singular and plural forms as applicable) shall
have the following meanings:
"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 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: (a) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person or (b) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person.
"Agreement" shall mean this Agreement and Plan of Merger and the Exhibits
delivered pursuant hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"Base Period Trading Price" shall mean the average of the daily high and
low sales prices of a share of PURCHASER Common Stock as reported on NASDAQ/NMS
for the twenty (20) consecutive trading days immediately preceding five (5)
consecutive calendar days immediately preceding the Effective Time; provided
however, that for purposes of this calculation, the Base Period Trading Price
shall be deemed to equal (i) $16.80 in the event the Base Period Trading Price
is greater than $16.80 or (ii) $11.20 in the event the Base Period Trading Price
is less than $11.20.
38
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Closing" shall mean the closing of the transactions contemplated hereby,
as described in Section 1.2 of this Agreement.
"Closing Date" shall have the meaning provided in Section 1.2 of this
Agreement.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets or business.
"Default" shall mean (a) any breach or violation of or default under any
Contract, Order or Permit, (b) any occurrence of any event that with the passage
of time or the giving of notice or both would constitute a breach or violation
of or default under any Contract, Order or Permit, or (c) any occurrence of any
event that with or without the passage of or the giving of notice would give
rise to a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability under, any
Contract, Order or Permit.
"Dissenting Shares" shall have the meaning provided in Section 3.1(b) of
this Agreement.
"Dissenting TARGET Shareholders" shall have the meaning provided in Section
3.1(l) of this Agreement.
"Effective Time" shall mean the date and time at which the Merger becomes
effective as defined in Section 1.3 of this Agreement.
"Environmental Laws" shall mean all Laws which are administered,
interpreted or enforced by the United States Environmental Protection Agency and
state and local agencies with primary jurisdiction over pollution or protection
of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plan" shall have the meaning provided in Section 4.14 of this
Agreement.
"Exchange Agent" shall have the meaning provided in Section 3.2 of this
Agreement.
"Exchange Ratio" shall have the meaning provided in Section 3.1(b) of this
Agreement.
"Exhibits" 1 through 3, 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
39
a part hereof and may be referred to in this Agreement and any other related
instrument or document without being attached hereto.
"Expenses" shall have the meaning provided in Section 10.2 of this
Agreement.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"Georgia Articles of Merger" shall mean the Articles of Merger to be
executed by PURCHASER and filed with the Secretary of State of the State of
Georgia relating to the Merger as contemplated by Section 1.3 of this Agreement.
"GBCC" shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean any pollutant, contaminant, or hazardous
substance within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.,
or any similar federal, state or local Law.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" as used with respect to a Person shall mean the Knowledge after
reasonable due inquiry of the Chairman, President, Chief Financial Officer,
Chief Accounting Officer, Chief Credit Officer, or any Senior or Executive Vice
President of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including, without limitation, those promulgated,
interpreted or enforced by any of the Regulatory Authorities.
"Letter of Transmittal" shall have the meaning provided in Section 3.2 of
this Agreement.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than endorsements
of notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other
40
than (i) Liens for current property Taxes not yet due and payable, (ii) for
depository institution Subsidiaries of a Party, pledges to secure deposits and
other Liens incurred in the ordinary course of the banking business, and (iii)
Liens which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on a Party.
"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including, without limitation, Contracts related to it),
or the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their Affiliates
by Regulatory Authorities.
"Loan Property" shall mean any property owned by the Party in question or
by any of its Subsidiaries or in which such Party or Subsidiary holds a security
interest, and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
"Material" for purposes of this Agreement shall be determined in light of
the facts and circumstances of the matter in question, provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"Material Adverse Effect" on a Party shall mean an event, change or
occurrence which has a material adverse impact on (a) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken as
a whole, or (b) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "material adverse impact" shall not be deemed to
include the impact of (x) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(y) changes in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies, and (z)
the Merger and compliance with the provisions of this Agreement on the operating
performance of the Parties.
"Merger" shall mean the merger of TARGET with and into PURCHASER referred
to in Section 1.1 of this Agreement.
"Merger Consideration" shall have the meaning provided in Section 3.1(b) of
this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ/NMS" shall mean the National Market System of the National
Association of Securities Dealers Automated Quotations System.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
41
"Old Certificates" shall have the meaning provided in Section 3.2 of this
Agreement.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"Outstanding TARGET Shares" shall have the meaning provided in Section
3.1(b) of this Agreement.
"Participation Facility" shall mean any facility or property in which the
Party in question or any of its Subsidiaries participates in the management
(including any property or facility held in a joint venture) and, where required
by the context, said term means the owner or operator of such facility or
property, but only with respect to such facility or property.
"Party" shall mean either TARGET or PURCHASER, and "Parties" shall mean
both TARGET and PURCHASER.
"Permit" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any, Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its capital stock, Assets,
Liabilities, or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Previously Disclosed" shall mean information (a) delivered in writing
prior to the date of this Agreement in the manner and to the Party and counsel
described in Section 10.8 of this Agreement and describing in reasonable detail
the matters contained therein, provided that in the case of Subsidiaries
acquired after the date of this Agreement, such information may be so delivered
by the acquiring Party to the other Party prior to the date of such acquisition,
or (b) disclosed prior to the date of this Agreement by one Party to the other
in an SEC Document delivered to such other Party in which the specific
information has been identified by the Party making the disclosure.
"Proxy Statement" shall mean the proxy statement used by TARGET to solicit
the approval of its shareholders of the transactions contemplated by this
Agreement and shall include the prospectus of PURCHASER relating to shares of
PURCHASER Common Stock to be issued to the shareholders of TARGET.
"PURCHASER Allowance" shall have the meaning provided in Section 5.9 of
this Agreement.
42
"PURCHASER Benefit Plans" shall have the meaning set forth in Section 5.14
of this Agreement.
"PURCHASER Common Stock" shall mean the $1.00 par value common stock of
PURCHASER.
"PURCHASER Companies" shall mean, collectively, PURCHASER and all PURCHASER
Subsidiaries.
"PURCHASER Financial Statements" shall mean (i) the consolidated statements
of condition (including related notes and schedules, if any) of PURCHASER as of
September 30, 1995, and as of December 31, 1994 and 1993, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the nine months ended September 30,
1995, and for each of the three years ended December 31, 1994, 1993, and 1992,
as filed by PURCHASER in SEC Documents and (ii) the consolidated statements of
condition of PURCHASER (including related notes and schedules, if any) and
related statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to September 30, 1995.
"PURCHASER Stock Plans" shall mean the existing stock option and other
stock-based compensation plans.
"PURCHASER Subsidiaries" shall mean the Subsidiaries of PURCHASER.
"Record Date" shall have the meaning provided in Section 3.1(e) of this
Agreement.
"Registration Statement" shall mean the Registration Statement on Form S-4,
or other appropriate form, filed with the SEC by PURCHASER under the 1933 Act in
connection with the transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Office of the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, all state banking and other
regulatory agencies having jurisdiction over the Parties and their respective
Subsidiaries, the NASD, and the SEC.
"SEC Documents" shall mean all reports and registration statements filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, state blue sky laws, and
the rules and regulations of any Regulatory Authority promulgated thereunder.
43
"Shareholders' Meeting" shall mean the meeting of the shareholders of
TARGET to be held pursuant to Section 7.1 of this Agreement, including any
adjournment or adjournments thereof.
"Subsidiaries" shall mean all those corporations, banks, associations, or
other entities of which the entity in question owns or controls 5% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 5 % or more of the outstanding equity securities
is owned directly or indirectly by its parent; provided, however, there shall
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
"Surviving Corporation" shall mean PURCHASER as the surviving corporation
resulting from the Merger.
"TARGET Allowance" shall have the meaning provided in Section 4.9 of this
Agreement.
"TARGET Bank" shall mean Central Bank & Trust, a Georgia state-chartered
bank and a TARGET Subsidiary.
"TARGET Benefit Plans" shall have the meaning set forth in Section 5.14 of
this Agreement.
"TARGET Common Stock" shall mean the $1.00 par value Common Stock of
TARGET.
"TARGET Companies" shall mean, collectively, TARGET and all TARGET
Subsidiaries.
"TARGET Financial Statements" shall mean (a) the consolidated balance
sheets (including related notes and schedules, if any) of TARGET as of September
30, 1995, and as of December 31, 1994 and 1993, and the related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) for the nine months ended September 30, 1995, and for
each of the three fiscal years ended December 31, 1994, 1993, 1992, as
previously furnished by TARGET to Purchaser, and (b) the consolidated balance
sheets of TARGET (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) with respect to periods ended subsequent to
September 30, 1993.
"TARGET Stock Plans" shall mean the existing stock option and other stock-
based compensation plans of TARGET.
"TARGET Subsidiaries" shall mean the Subsidiaries of TARGET, which shall
include the TARGET Subsidiaries described in Section 4.4 of this Agreement and
any Person acquired as a Subsidiary of TARGET in the future and owned by TARGET
at the Effective Time.
"Taxes" shall mean any federal, state, county, local, foreign and other
taxes, assessments, charges, fares, and impositions, including interest and
penalties thereon or with respect thereto.
44
"Termination Fee" shall have the meaning provided in Section 10.2 of this
Agreement.
"Total Equity of TARGET" shall mean TARGET's total stockholders' equity
contemplated under GAAP as of the close of business on the day immediately
preceding the Closing Date.
10.2 EXPENSES.
--------
(a) Except as otherwise provided in this Section 10.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants, and
counsel (the "Expenses"), except that each of the Parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection with
the printing of the Registration Statement and the Proxy Statement.
(b) TARGET shall pay, or cause to be paid, in same day funds to
PURCHASER the sum of (i) all of PURCHASER'S Expenses plus (ii) $400,000 (the
"Termination Fee") upon demand if (A) TARGET terminates this Agreement pursuant
to Section 9.1(g) or (B) prior to the termination of this Agreement (other than
by TARGET pursuant to Section 9.1(b)), a takeover proposal shall have been made
and within one (1) year of such termination, TARGET enters into an agreement
with respect to, or approves or recommends or takes any action to facilitate,
such takeover proposal. The amount of Expenses so payable shall be the amount
set forth in an estimate delivered by PURCHASER, subject to an upward or
downward adjustment.
10.3 BROKERS AND FINDERS. Except as Previously Disclosed, each of the
-------------------
Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon its representing or being retained by or
allegedly representing or being retained by TARGET or PURCHASER, each of TARGET
and PURCHASER, as the case may be, agrees to indemnify and hold the other Party
harmless of and from any Liability in respect of any such claim.
10.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
----------------
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b) of this Agreement, with respect to the Confidentiality Agreements).
Nothing in this Agreement expressed or implied, is intended to confer upon any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
other than as provided in Section 7.13 of this Agreement.
10.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
----------
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors
45
of each of the Parties; provided, however, that after any such approval by the
holders of TARGET Common Stock, there shall be made no amendment decreasing the
consideration to be received by TARGET shareholders without the further approval
of such shareholders.
10.6 WAIVERS.
-------
(a) Prior to or at the Effective Time, PURCHASER, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by TARGET, to waive or extend the time for the compliance or
fulfillment by TARGET of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
PURCHASER under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of PURCHASER.
(b) Prior to or at the Effective Time, TARGET, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by PURCHASER, to waive or extend the time for the compliance or
fulfillment by PURCHASER of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of TARGET
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in
writing signed by a duly authorized officer of TARGET.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
10.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the immediately
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by the Parties and their respective successors and
assigns.
10.8 NOTICES. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
46
PURCHASER: ABC Bancorp
310 First Street, S.E.
Moultrie, Georgia 31768
Telecopy Number: (912) 890-2235
Attention: President
Copy to Counsel: Rogers & Hardin
2700 Cain Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy Number: (404) 525-2224
Attention: Steven E. Fox
TARGET: Central Bankshares, Inc.
P.O. Box 40
Cordele, Georgia 31015
Telecopy Number: (912) 273-7750
Attention: President
Copy to Counsel: Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, N.E.
Sixteenth Floor
Atlanta, Georgia 30303
Telecopy Number: (404) 572-5958
Attention: Walter G. Moeling, IV
10.9 GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws, except to the extent that the federal laws of the
United States may apply to the Merger.
10.10 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.11 CAPTIONS. The captions contained in this Agreement are for
--------
reference purposes only and are not part of this Agreement.
10.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be
47
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
10.13 SEVERABILITY. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
10.14 SURVIVAL. The respective representations, warranties, obligations,
--------
covenants and agreements of the Parties shall not survive the Effective Time or
the termination and abandonment of this Agreement, except that (i) Articles Two,
Three and Ten and Sections 7.6(b), 7.9, 7.11 and 7.13 of this Agreement shall
survive the Effective Time; and (ii) Sections 7.6(b), 7.8(b), 9.2, 10.2 and
10.14 shall survive the termination and abandonment of this Agreement.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by its officers as of the day and year first above written.
ATTEST: ABC BANCORP
/S/ SARA R. HALL By: /S/ KENNETH J. HUNNICUTT
- ---------------- ------------------------
Secretary President
[CORPORATE SEAL]
ATTEST: CENTRAL BANKSHARES, INC.
/S/ ROXIE W. BAGWELL By: /S/ ROBERT L. EVANS
- -------------------- ------------------------
Secretary President
[CORPORATE SEAL]
48
EXHIBIT 1
---------
AFFILIATE AGREEMENT
-------------------
ABC Bancorp
310 First Street, S.E.
Moultrie, Georgia 31768
Attention: President
Ladies and Gentlemen:
The undersigned is a shareholder of Central Bankshares, Inc. ("Target"), a
corporation organized under the laws of the State of Georgia and located in
Cordele, Georgia, and will become a shareholder of ABC Bancorp ("Purchaser")
pursuant to the transactions described in the Agreement and Plan of Merger,
dated as of December 29, 1995 (the "Agreement"), by and between Target and
Purchaser. Under the terms of the Agreement, Target will be merged into and
with Purchaser (the "Merger"), and the shares of the $1.00 par value common
stock of Target ("Target Common Stock") will be converted into and exchanged for
a combination of shares of the $1.00 par value common stock of Purchaser
("Purchaser Common Stock"). This Affiliate Agreement represents an agreement
between the undersigned and Purchaser regarding certain rights and obligations
of the undersigned in connection with the shares of Purchaser to be received by
the undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and Purchaser hereby agree as follows:
1. AFFILIATE STATUS. The undersigned understands and agrees that as to
----------------
Target the undersigned is an "affiliate" under Rule 145(c) as defined in Rule
405 of the Rules and Regulations of the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended ("1933 Act"), and the
undersigned anticipates that the undersigned will be such an "affiliate" at the
time of the Merger.
2. COVENANTS AND WARRANTIES OF UNDERSIGNED. The undersigned
---------------------------------------
represents, warrants and agrees that:
(a) The Purchaser Common Stock received by the undersigned as a
result of the Merger will be taken for his or her own account and not for
others, directly or indirectly, in whole or in part.
(b) Purchaser has informed the undersigned that any distribution by
the undersigned of Purchaser Common Stock has not been registered under the 1933
Act and that shares
of Purchaser Common Stock received pursuant to the Merger can only be sold by
the undersigned (i) following registration under the 1933 Act, or (ii) in
conformity with the volume and other requirements of Rule 145(d) promulgated by
the SEC as the same now exist or may hereafter be amended, or (iii) to the
extent some other exemption from registration under the 1933 Act might be
available. The undersigned understands that Purchaser is under no obligation to
file a registration statement with the SEC covering the disposition of the
undersigned's shares of Purchaser Common Stock.
3. RESTRICTIONS ON TRANSFER.
------------------------
(a) The undersigned understands and agrees that stop transfer
instructions with respect to the shares of Purchaser Common Stock received by
the undersigned pursuant to the Merger will be given to Purchaser's Transfer
Agent and that there will be placed on the certificates for such shares, or
shares issued in substitution thereof, a legend stating in substance:
"The shares represented by this certificate may not be sold, transferred or
otherwise disposed of except or unless (i) covered by an effective
registration statement under the Securities Act of 1933, as amended, (ii)
in accordance with (x) Rule 145(d) (in the case of shares issued to an
individual who is not an affiliate of Purchaser) or (y) Rule 144 (in the
---
case of shares issued to an individual who is an affiliate of Purchaser) of
the Rules and Regulations of such Act, or (iii) in accordance with a legal
opinion satisfactory to counsel for Purchaser that such sale or transfer is
otherwise exempt from the registration requirements of such Act."
(b) Such legend will also be placed on any certificate representing
Purchaser securities issued subsequent to the original issuance of the Purchaser
Common Stock pursuant to the Merger as a result of any stock dividend, stock
split, or other recapitalization as long as the Purchaser Common Stock issued to
the undersigned pursuant to the Merger has not been transferred in such manner
to justify the removal of the legend therefrom. In addition, if the provisions
of Rules 144 and 145 are amended to eliminate restrictions applicable to the
Purchaser Common Stock received by the undersigned pursuant to the Merger, or at
the expiration of the restrictive period set forth in Rule 145(d), Purchaser,
upon the request of the undersigned, will cause the certificates representing
the shares of Purchaser Common Stock issued to the undersigned in connection
with the Merger to be reissued free of any legend relating to the restrictions
set forth in Rules 144 and 145(d) upon receipt by Purchaser of an opinion of its
counsel to the effect that such legend may be removed.
4. UNDERSTANDING OF RESTRICTIONS ON DISPOSITIONS. The undersigned has
---------------------------------------------
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his or her ability to sell, transfer, or otherwise
dispose of the shares of Purchaser Common Stock received by the undersigned in
connection with the Merger, to the extent he or she believes necessary, with his
or her counsel or counsel for Target.
2
5. FILING OF REPORTS BY PURCHASER. Purchaser agrees for a period of
------------------------------
three years after the effective date of the Merger, to file on a timely basis
all reports required to be filed by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, so that the public information provisions of
Rule 145(d) promulgated by the SEC as the same are presently in effect will be
available to the undersigned in the event the undersigned desires to transfer
any shares of Purchaser Common Stock issued to the undersigned pursuant to the
Merger.
6. TRANSFER UNDER RULE 145(D). If the undersigned desires to sell or
--------------------------
otherwise transfer the shares of Purchaser Common Stock received by him or her
in connection with the Merger at any time during the restrictive period set
forth in Rule 145(d), the undersigned will provide the necessary representation
letter to the Transfer Agent for Purchaser Common Stock, together with such
additional information as the Transfer Agent may reasonably request. If
Purchaser's counsel concludes that such proposed sale or transfer complies with
the requirements of Rule 145(d), Purchaser shall cause such counsel to provide
such opinions as may be necessary to Purchaser's Transfer Agent so that the
undersigned may complete the proposed sale or transfer.
7. ACKNOWLEDGMENTS. The undersigned recognizes and agrees that the
---------------
foregoing provisions also apply with respect to Target Common Stock held by, and
Purchaser Common Stock issued in connection with the Merger to, (a) the
undersigned's spouse, (b) any relative of the undersigned or of the
undersigned's spouse who has the same home as the undersigned, (c) any trust or
estate in which the undersigned, the undersigned's spouse, and any such relative
collectively own at least a 10% beneficial interest or of which any of the
foregoing serves as trustee, executor or in any similar capacity, and (d) any
corporation or other organization in which the undersigned, the undersigned's
spouse and any such relative collectively own at least 10% of any class of
equity securities or of the equity interest. The undersigned further recognizes
that, in the event that the undersigned is a director or executive officer of
Purchaser or becomes a director or executive officer of Purchaser upon
consummation of the Merger, among other things, any sale of Purchaser Common
Stock by the undersigned within a period of less than six months following the
effective time of the Merger may subject the undersigned to liability pursuant
to Section 16(b) of the Securities Exchange Act of 1934, as amended.
8. MISCELLANEOUS. This Affiliate Agreement is the complete agreement
-------------
between Purchaser and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any parry hereunder shall be sent by registered or
certified mail, return receipt requested, using the addresses set forth herein
or such other address as shall be furnished in writing by the parties. This
Affiliate Agreement shall be governed by the laws of the State of Georgia.
3
This Affiliate Agreement is executed as of the _____ day of______________
199__.
Very truly yours,
____________________________
Signature
____________________________
Print Name
____________________________
____________________________
____________________________
____________________________
Address
____________________________
Telephone No.
AGREED TO AND ACCEPTED as of
____________________, 199__
ABC BANCORP
By:_________________________
Its:_____________________
4
EXHIBIT 2
---------
MATTERS AS TO WHICH
POWELL, GOLDSTEIN, FRAZER & MURPHY WILL OPINE
1. Target is a corporation duly organized, existing and in good
standing under the laws of the State of Georgia with corporate power and
authority (a) to conduct its business as described in the proxy statement used
to solicit the approval by the shareholders of Target of the transactions
contemplated by the Agreement ("Proxy Statement"), and (b) to own and use its
Assets.
2. Target Bank is a Georgia chartered state bank duly organized and
validly existing under the laws of the State of Georgia with all requisite power
and authority to conduct its business as described in the Proxy Statement, and
to own and use its Assets. The deposits of Target Bank are insured by the
Federal Deposit Insurance Corporation to the extent provided by law.
3. Target's authorized shares consist of 10,000,000 shares of Common
Stock, $1.00 par value, of which ________ shares were outstanding as of
_________________. The outstanding shares of Target Common Stock have been duly
authorized and validly issued, were not issued in violation of any statutory
preemptive rights of shareholders, and are fully paid and nonassessable. To our
Knowledge, except as Previously Disclosed, there are no options, subscriptions,
warrants, calls, rights or commitments obligating Target to issue equity
securities or acquire its equity securities.
4. Target owns directly or indirectly all the issued and outstanding
shares of the capital stock of Target Bank. To our knowledge, there are no
options, subscriptions, warrants, calls, rights or commitments obligating Target
Bank to issue equity securities or acquire its equity securities.
5. The execution and delivery by Target of the Agreement do not, and if
Target were now to perform its obligations under the Agreement such performance
would not, result in any violation of the Articles of Incorporation or Bylaws of
Target or the Articles of Incorporation or Bylaws of Target Bank or, to our
Knowledge, result in any breach of, or default or acceleration under, any
material Contract or Order to which Target or Target Bank is a party or by which
Target or Target Bank is bound.
6. Target has duly authorized the execution and delivery of the
Agreement and all performance by Target thereunder and has duly executed and
delivered the Agreement.
7. The Agreement is enforceable against Target.
EXHIBIT 3
---------
MATTERS AS TO WHICH
ROGERS & HARDIN WILL OPINE
1. Purchaser is a corporation duly organized, existing and in good
standing under the laws of the State of Georgia with corporate power and
authority (a) to conduct its business as described in the proxy statement used
to solicit the approval by the shareholders of Target of the transactions
contemplated by the Agreement ("Proxy Statement"), and (b) to own and use its
Assets.
2. Purchaser's authorized shares consist of 10,000,000 shares of Common
Stock, no par value, of which __________ shares were outstanding as of
_____________, and 5,000,000 shares of Preferred Stock, none of which were
outstanding as of ____________. The outstanding shares of Purchaser Common
Stock have been duly authorized and validly issued, were not issued in violation
of any statutory preemptive rights of shareholders, and are fully paid and
nonassessable. To our Knowledge, except as Previously Disclosed, there are no
options, subscriptions, warrants, calls, rights or commitments obligating
Purchaser to issue equity securities or acquire its equity securities. The
shares of Purchaser Common Stock to be issued to the shareholders of Target upon
consummation of the Merger have been registered under the Securities Act of
1933, as amended, and when issued in accordance with the Agreement, will be
validly issued, fully paid and nonassessable.
3. The execution and delivery by Purchaser of the Agreement do not, and
if Purchaser were now to perform its obligations under the Agreement such
performance would not, result in any violation of the Articles of Incorporation
or Bylaws of Purchaser or, to our knowledge, result in any breach of, or default
or acceleration under, any material Contract or Order to which Purchaser is a
party or by which Purchaser is bound.
4. Purchaser has duly authorized the execution and delivery of the
Agreement and all performance by Purchaser thereunder and has duly executed and
delivered the Agreement.
5. The Agreement is enforceable against Purchaser.
EXHIBIT 4
---------
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of ___________,
1996, by and between CENTRAL BANK & TRUST, a Georgia bank (the "Bank"), and
ROBERT L. EVANS, a resident of the State of Georgia (the "Executive").
WHEREAS, ABC Bancorp, a Georgia corporation ("ABC"), has acquired all of
the equity interest of the Bank by means of a merger pursuant to a Merger
Agreement dated as of December 29, 1995 the ("Merger Agreement");
WHEREAS, the Bank is now a wholly-owned subsidiary of ABC;
WHEREAS, the Executive is the President and Chief Executive Officer of the
Bank and desires to continue his employment with the Bank in such capacity;
WHEREAS, ABC desires that the Executive continue to serve in the capacity
of President and Chief Executive Officer of the Bank; and
WHEREAS, the Bank and the Executive, in conjunction with and pursuant to
the terms of the Merger Agreement, desire to set forth in writing the terms and
conditions of the Executive's continued employment with the Bank.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. EMPLOYMENT AND DUTIES.
---------------------
(a) The Bank hereby agrees to continue to employ the Executive and
the Executive agrees to continue employment in his capacity as President and
Chief Executive Officer of the Bank to act in accordance with the terms and
conditions set forth herein. The Executive also consents to serve, if elected,
as a director of the Bank without additional compensation therefor for the first
twelve (12) months of such service and thereafter at the rate then in effect for
directors of the Bank. During the term of this Agreement, the Executive agrees
that this position will be his principal employment, that he will serve the Bank
faithfully and to the best of his ability and that he will devote his full
business time, attention and skills to the operation of the business of the
Bank, subject to reasonable absences for vacation and illness, and that he will
perform such duties, functions and responsibilities in connection with such
position and consistent with the foregoing as are from time to time delegated to
the Executive by the Board of Directors of the Bank (the "Board"); provided,
--------
however, that the foregoing shall not be deemed to restrict the Executive from
- -------
devoting a reasonable amount of time and attention to the management of his
personal affairs and investments, so long as such activities do not interfere
with the responsible performance of the Executive's duties hereunder. The
Executive shall provide the Board with periodic reports on, and keep it informed
on a current basis concerning, the business and affairs of the Bank.
(b) The Bank shall provide the Executive with a private office,
secretarial and administrative assistance, office equipment, supplies and other
facilities and services suitable to the Executive's position to be located at
502 Second Street South, Cordele, Georgia 31015, or at a comparable location
within Crisp County, Georgia.
2. TERM. The term ("Term") of this Agreement shall commence on the
----
date hereof and shall continue until the first anniversary of the date hereof
unless earlier terminated pursuant to Section 4 hereof.
3. COMPENSATION. In consideration of the services to be rendered by
------------
the Executive to the Bank hereunder, the Bank hereby agrees to pay or otherwise
provide the Executive the following compensation and benefits, it being
understood that the Bank shall have the right to deduct therefrom all taxes
which may be required to be deducted or withheld under any provision of
applicable law (including, without limitation, Social Security payments, income
tax withholding and other required deductions now in effect or which may become
effective by law any time during the Term):
(a) SALARY. The Executive shall receive an annual salary of
------
("Salary") of $94,000.00 to be paid in equal installments in accordance with the
Bank's salary payment practices in effect from time to time for executives of
the Bank.
(b) BONUS PAYMENT. In addition to Salary, the Executive shall be
-------------
entitled to receive an annual bonus pursuant to any annual incentive
compensation plan adopted by the Board; provided, however, that if (i) no such
-------- -------
plan is adopted or (ii) the bonus payable pursuant to such plan would be less
than an amount equal to (a) the lesser of (1) any bonus paid to the Executive by
the Bank in respect of services rendered by the Executive to the Bank for the
year ended December 31, 1995 or (2) $17,860.00 minus (b) the present value of
-----
any compensation received by or accrued for the benefit of the Executive
pursuant to the Executive's participation in any employee benefit, retirement
and compensation plans as specified in Section 3(c) hereof (the "Minimum Bonus
Amount"), then the bonus payable to the Executive (if any) shall be equal to the
Minimum Bonus Amount.
(c) COMPENSATION PURSUANT TO PLANS. During the Term, the Executive
------------------------------
shall be included as a participant in all present and future employee benefit,
retirement and compensation plans generally available to employees of the Bank,
consistent with his Salary and his position with the Bank, including, without
limitation, the Bank's (or ABC's) pension plan and hospitalization, major
medical, disability and group life insurance plans.
-2-
(d) EXPENSES. The Executive shall be entitled to receive
--------
reimbursement for all reasonable expenses incurred by him in connection with the
fulfillment of his duties hereunder, upon receipt of appropriate vouchers
therefor, provided that the Executive has complied with all reasonable policies
and procedures relating to the reimbursement of such expenses as shall, from
time to time, be established by the Bank.
(e) VACATION AND PERQUISITES. For so long as the Executive is
------------------------
employed by the Bank hereunder, the Bank shall continue in effect the vacation
policies applicable to the Executive no less favorable from his point of view
than those written policies in effect as of the date of the Merger Agreement,
and the Executive shall continue to be entitled to receive perquisites,
including, without limitation, the use of an automobile and country club
memberships, no less favorable from his point of view than those to which he is
entitled as of the date of the Merger Agreement.
4. TERMINATION.
-----------
(a) This Agreement shall terminate on the earliest to occur of the
following events: (i) on the mutual agreement of the Bank and the Executive;
(ii) the death of the Executive or Executive's voluntary retirement; (iii) the
Executive becoming unable to perform a substantial portion of his duties as
described herein due to injury, illness or disability (mental or physical) as
determined by an independent physician selected by the Bank and reasonably
satisfactory to the Executive for a period of two (2) consecutive months or any
aggregate period of four (4) months in any twelve (12) month period
("Disability"); or (iv) immediately upon the Bank giving written notice to the
Executive of termination for Cause (as defined herein).
(b) The Bank may terminate the Executive's employment under this
Agreement at any time for Cause. The termination shall be evidenced by written
notice to the Executive, which shall specify the cause for termination. "Cause"
shall exist if: (i) the Executive is convicted of (from which no appeal may be
taken), or pleads guilty to, any act of fraud, misappropriation or embezzlement,
or any felony; (ii) in the reasonable determination of the Board, the Executive
has engaged in conduct or activity materially damaging to the business of the
Bank (it being understood, however, that unintentional physical damage to any
property of the Bank by the Executive shall not be a ground for such a
determination by the Board); or (iii) the Executive has failed, without
reasonable cause, to devote his full business time and best efforts to the
business of the Bank as provided in Section 1(a) hereof and, after written
notice from the Bank of such failure, the Executive at any time thereafter again
so fails.
5. REPRESENTATIONS AND WARRANTIES.
------------------------------
(a) The Executive represents and warrants to the Bank that: (i) he
has the full power and authority to execute, deliver and perform this Agreement,
and that he has taken all actions necessary to secure all approvals required in
connection herewith and therewith; (ii) this Agreement has been duly authorized,
executed and delivered by him and constitutes his valid and binding agreement,
enforceable against him in accordance with its terms; and (iii) the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will
-3-
not, with the passage of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of or entitle any party
to accelerate any obligation under or pursuant to, any material mortgage, lien,
leases, agreement, instrument, order, arbitration award, judgment or decree to
which he is a party or by which he or any of his assets are bound.
(b) The Bank hereby represents and warrants to the Executive that:
(i) this Agreement has been duly authorized, executed and delivered by it, and
constitutes the valid and binding agreement of it, enforceable against it in
accordance with its terms; (ii) it has the full power authority to execute,
deliver and perform this Agreement and has taken all necessary action to secure
all approvals required in connection herewith; and (iii) the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, its
charter or bylaws or any material mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which it is a party or by which
it or any of its assets are bound.
6. RESTRICTIVE COVENANTS. Acknowledging that (i) he has intimate
---------------------
knowledge of the business of the Bank which, if exploited by him, in
contravention of this Agreement, would seriously adversely and irreparably
affect the value of the Bank and the ability of ABC to continue to operate the
Bank following the consummation of the merger contemplated by the Merger
Agreement; (ii) the provisions of this Section 6 are reasonable and necessary to
protect the legitimate interests of ABC; (iii) the provisions of this Section 6
are reasonable and necessary to protect the goodwill of the Bank acquired by ABC
pursuant to the Merger Agreement; (iv) any violation of this Section 6 will
result in irreparable injury to ABC and the Bank and that damages at law would
not be reasonable or adequate compensation to ABC and the Bank for a violation
of this Section 6; and (v) that in the course of his employment with the Bank,
as contemplated by this Agreement, and as a result of the position of trust that
he will hold under this Agreement, he will obtain private and confidential
information and proprietary data relating to ABC, the Bank and other affiliates
of ABC, including, without limitation, financial information, product
information and other data that are valuable assets and property rights of the
Bank and ABC and its affiliates (collectively referred to as "Confidential
Information"), the Executive hereby agrees as follows:
(a) The Executive shall not, during the Term of this Agreement or
any time after the termination of this Agreement, either directly or indirectly,
disclose or use any Confidential Information acquired during his employment with
the Bank, unless (i) the Confidential Information has been made public through
no action or fault of the Executive, or (ii) its disclosure is requested or
compelled by applicable law or regulatory agency. The Executive further agrees
that after the termination of this Agreement, or at such other time as the Bank
requests, the Executive will return to the Bank all documents, papers and
records constituting Confidential Information, and all copies of same in the
Executive's possession and control.
-4-
(b) For a period of one (1) year after termination of the
Executive's employment hereunder for any reason, the Executive shall not
directly or indirectly provide banking or bank-related services to, or solicit
the banking or bank-related business of, any customer of the Bank at the time of
such provision of services or solicitation which the Executive served either
alone or with others while employed by the Bank in any city, town, borough,
township, village or other place in which the Executive performed services for
the Bank while employed by it, or assist any actual or potential competitor of
the Bank to provide banking or bank-related services to or solicit any such
customer's banking or bank-related business in any such place.
(c) While the Executive is employed by the Bank and for a period of
one (1) year after termination of the Executive's employment hereunder for any
reason, the Executive shall not, directly or indirectly, as principal, agent, or
trustee, or through the agency of any corporation, partnership, trade
association, agent or agency, engage in any banking or bank-related business or
venture which competes with the business of the Bank as conducted during the
Executive's employment by the Bank within a radius of fifty (50) miles of the
Bank's main office.
(d) In addition to all other remedies provided at law or at equity,
the Bank may petition and obtain from a court of law or equity both temporary
and permanent injunctive relief without the necessity of proving actual damages
and without posting bond or other security to prevent a breach by the Executive
of any covenant contained in this Section 6, as well as to an equitable
accounting of all earnings and profits and other benefits arising out of any
such violations.
7. NOTICES. Any notice or other communication required or permitted to
-------
be given hereunder shall be in writing and deemed to have been given when
delivered in person or when dispatched by telegram or electronic facsimile
transfer (confirmed in writing by mail, registered or certified, return receipt
requested, postage prepaid, simultaneously dispatched) to the addresses
specified below.
If to the Executive: Robert L. Evans
502 Second Street South
Cordele, Georgia 31015
Facsimile: (912) 273-7750
If to the Bank: Central Bank & Trust
c/o ABC Bancorp
310 First Street, S.E.
Moultrie, Georgia 31768
Facsimile: (912) 890-2235
Attn: President
or to such other address or fax number as either party may from time to time
designate in writing to the other.
-5-
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same. No modification, alteration, amendment or recision of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by both parties hereto.
9. GOVERNING LAW. This Agreement and the rights and duties of the
-------------
parties hereunder shall be governed by, construed under and enforced in
accordance with the laws of the State of Georgia.
10. ASSIGNMENT. This Agreement shall inure to the benefit of and be
----------
binding upon the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns. The rights, duties and
obligations under this Agreement are assignable by the Bank to a successor of
all or substantially all of the business or assets of the Bank. The rights,
duties and obligations of the Executive under this Agreement shall not be
assignable.
11. SURVIVAL. The respective obligations of the parties under Section 6
--------
hereof shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
delivered, and the Executive has executed and delivered this Agreement, all as
of the day and year first above written.
CENTRAL BANK & TRUST
By:_________________________________________
Its:_______________________________
_______________________________(SEAL)
ROBERT L. EVANS
-6-
EXHIBIT 5
---------
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of ___________,
1996, by and between CENTRAL BANK & TRUST, a Georgia bank (the "Bank"), and
ROXIE W. BAGWELL, a resident of the State of Georgia (the "Executive").
WHEREAS, ABC Bancorp, a Georgia corporation ("ABC"), has acquired all of
the equity interest of the Bank by means of a merger pursuant to a Merger
Agreement dated as of December 29, 1995 the ("Merger Agreement");
WHEREAS, the Bank is now a wholly-owned subsidiary of ABC;
WHEREAS, the Executive is the Vice President of the Bank and desires to
continue her employment with the Bank in such capacity;
WHEREAS, ABC desires that the Executive continue to serve in the capacity
of Vice President of the Bank; and
WHEREAS, the Bank and the Executive, in conjunction with and pursuant to
the terms of the Merger Agreement, desire to set forth in writing the terms and
conditions of the Executive's continued employment with the Bank.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. EMPLOYMENT AND DUTIES.
---------------------
(a) The Bank hereby agrees to continue to employ the Executive and
the Executive agrees to continue employment in her capacity as Vice President of
the Bank to act in accordance with the terms and conditions set forth herein.
The Executive also consents to serve, if elected, as a director of the Bank
without additional compensation therefor for the first twelve (12) months of
such service and thereafter at the rate then in effect for directors of the
Bank. During the term of this Agreement, the Executive agrees that this
position will be her principal employment, that she will serve the Bank
faithfully and to the best of her ability and that she will devote her full
business time, attention and skills to the operation of the business of the
Bank, subject to reasonable absences for vacation and illness, and that she will
perform such duties, functions and responsibilities in connection with such
position and consistent with the foregoing as are from time to time delegated to
the Executive by the Board of Directors of the Bank (the "Board") or the Bank's
Chief Executive
Officer; provided, however, that the foregoing shall not be deemed to restrict
-------- -------
the Executive from devoting a reasonable amount of time and attention to the
management of her personal affairs and investments, so long as such activities
do not interfere with the responsible performance of the Executive's duties
hereunder. The Executive shall provide the Board or the Bank's Chief Executive
Officer with periodic reports on, and keep the Board or such officer informed on
a current basis concerning, the business and affairs of the Bank.
(b) The Bank shall provide the Executive with a private office,
secretarial and administrative assistance, office equipment, supplies and other
facilities and services suitable to the Executive's position to be located at
502 Second Street South, Cordele, Georgia 31015, or at a comparable location
within Crisp County, Georgia.
2. TERM. The term ("Term") of this Agreement shall commence on the
----
date hereof and shall continue until the first anniversary of the date hereof
unless earlier terminated pursuant to Section 4 hereof.
3. COMPENSATION. In consideration of the services to be rendered by
------------
the Executive to the Bank hereunder, the Bank hereby agrees to pay or otherwise
provide the Executive the following compensation and benefits, it being
understood that the Bank shall have the right to deduct therefrom all taxes
which may be required to be deducted or withheld under any provision of
applicable law (including, without limitation, Social Security payments, income
tax withholding and other required deductions now in effect or which may become
effective by law any time during the Term):
(a) SALARY. The Executive shall receive an annual salary of
------
("Salary") of $70,000.00 to be paid in equal installments in accordance with the
Bank's salary payment practices in effect from time to time for executives of
the Bank.
(b) BONUS PAYMENT. In addition to Salary, the Executive shall be
-------------
entitled to receive an annual bonus pursuant to any annual incentive
compensation plan adopted by the Board; provided, however, that if (i) no such
-------- -------
plan is adopted or (ii) the bonus payable pursuant to such plan would be less
than an amount equal to (a) the lesser of (1) any bonus paid to the Executive by
the Bank in respect of services rendered by the Executive to the Bank for the
year ended December 31, 1995 or (2) $6,300.00 minus (b) the present value of any
-----
compensation received by or accrued for the benefit of the Executive pursuant to
the Executive's participation in any employee benefit, retirement and
compensation plans as specified in Section 3(c) hereof (the "Minimum Bonus
Amount"), then the bonus payable to the Executive (if any) shall be equal to the
Minimum Bonus Amount.
(c) COMPENSATION PURSUANT TO PLANS. During the Term, the Executive
------------------------------
shall be included as a participant in all present and future employee benefit,
retirement and compensation plans generally available to employees of the Bank,
consistent with her Salary and her position with the Bank, including, without
limitation, the Bank's (or ABC's) pension plan and hospitalization, major
medical, disability and group life insurance plans.
-2-
(d) EXPENSES. The Executive shall be entitled to receive
--------
reimbursement for all reasonable expenses incurred by him in connection with the
fulfillment of her duties hereunder, upon receipt of appropriate vouchers
therefor, provided that the Executive has complied with all reasonable policies
and procedures relating to the reimbursement of such expenses as shall, from
time to time, be established by the Bank.
(e) VACATION AND PERQUISITES. For so long as the Executive is
------------------------
employed by the Bank hereunder, the Bank shall continue in effect the vacation
policies applicable to the Executive no less favorable from her point of view
than those written policies in effect as of the date of the Merger Agreement,
and the Executive shall continue to be entitled to receive perquisites,
including, without limitation, the use of an automobile and country club
memberships, no less favorable from her point of view than those to which she is
entitled as of the date of the Merger Agreement.
4. TERMINATION.
-----------
(a) This Agreement shall terminate on the earliest to occur of the
following events: (i) on the mutual agreement of the Bank and the Executive;
(ii) the death of the Executive or Executive's voluntary retirement; (iii) the
Executive becoming unable to perform a substantial portion of her duties as
described herein due to injury, illness or disability (mental or physical) as
determined by an independent physician selected by the Bank and reasonably
satisfactory to the Executive for a period of two (2) consecutive months or any
aggregate period of four (4) months in any twelve (12) month period
("Disability"); or (iv) immediately upon the Bank giving written notice to the
Executive of termination for Cause (as defined herein).
(b) The Bank may terminate the Executive's employment under this
Agreement at any time for Cause. The termination shall be evidenced by written
notice to the Executive, which shall specify the cause for termination. "Cause"
shall exist if: (i) the Executive is convicted of (from which no appeal may be
taken), or pleads guilty to, any act of fraud, misappropriation or embezzlement,
or any felony; (ii) in the reasonable determination of the Board, the Executive
has engaged in conduct or activity materially damaging to the business of the
Bank (it being understood, however, that unintentional physical damage to any
property of the Bank by the Executive shall not be a ground for such a
determination by the Board); or (iii) the Executive has failed, without
reasonable cause, to devote her full business time and best efforts to the
business of the Bank as provided in Section 1(a) hereof and, after written
notice from the Bank of such failure, the Executive at any time thereafter again
so fails.
5. REPRESENTATIONS AND WARRANTIES.
------------------------------
(a) The Executive represents and warrants to the Bank that: (i) she
has the full power and authority to execute, deliver and perform this Agreement,
and that she has taken all actions necessary to secure all approvals required in
connection herewith and therewith; (ii) this Agreement has been duly authorized,
executed and delivered by him and constitutes her valid and binding agreement,
enforceable against him in accordance with its terms; and (iii) the execution,
-3-
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not, with the passage of time or the
giving of notice or both, violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under, or permit the
acceleration of or entitle any party to accelerate any obligation under or
pursuant to, any material mortgage, lien, leases, agreement, instrument, order,
arbitration award, judgment or decree to which she is a party or by which she or
any of her assets are bound.
(b) The Bank hereby represents and warrants to the Executive that:
(i) this Agreement has been duly authorized, executed and delivered by it, and
constitutes the valid and binding agreement of it, enforceable against it in
accordance with its terms; (ii) it has the full power authority to execute,
deliver and perform this Agreement and has taken all necessary action to secure
all approvals required in connection herewith; and (iii) the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, its
charter or bylaws or any material mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which it is a party or by which
it or any of its assets are bound.
6. RESTRICTIVE COVENANTS. Acknowledging that (i) she has intimate
---------------------
knowledge of the business of the Bank which, if exploited by him, in
contravention of this Agreement, would seriously adversely and irreparably
affect the value of the Bank and the ability of ABC to continue to operate the
Bank following the consummation of the merger contemplated by the Merger
Agreement; (ii) the provisions of this Section 6 are reasonable and necessary to
protect the legitimate interests of ABC; (iii) the provisions of this Section 6
are reasonable and necessary to protect the goodwill of the Bank acquired by ABC
pursuant to the Merger Agreement; (iv) any violation of this Section 6 will
result in irreparable injury to ABC and the Bank and that damages at law would
not be reasonable or adequate compensation to ABC and the Bank for a violation
of this Section 6; and (v) that in the course of her employment with the Bank,
as contemplated by this Agreement, and as a result of the position of trust that
she will hold under this Agreement, she will obtain private and confidential
information and proprietary data relating to ABC, the Bank and other affiliates
of ABC, including, without limitation, financial information, product
information and other data that are valuable assets and property rights of the
Bank and ABC and its affiliates (collectively referred to as "Confidential
Information"), the Executive hereby agrees as follows:
(a) The Executive shall not, during the Term of this Agreement or
any time after the termination of this Agreement, either directly or indirectly,
disclose or use any Confidential Information acquired during her employment with
the Bank, unless (i) the Confidential Information has been made public through
no action or fault of the Executive, or (ii) its disclosure is requested or
compelled by applicable law or regulatory agency. The Executive further agrees
that after the termination of this Agreement, or at such other time as the Bank
requests, the Executive will return to the Bank all documents, papers and
records constituting Confidential Information, and all copies of same in the
Executive's possession and control.
-4-
(b) For a period of one (1) year after termination of the
Executive's employment hereunder for any reason, the Executive shall not
directly or indirectly provide banking or bank-related services to, or solicit
the banking or bank-related business of, any customer of the Bank at the time of
such provision of services or solicitation which the Executive served either
alone or with others while employed by the Bank in any city, town, borough,
township, village or other place in which the Executive performed services for
the Bank while employed by it, or assist any actual or potential competitor of
the Bank to provide banking or bank-related services to or solicit any such
customer's banking or bank-related business in any such place.
(c) While the Executive is employed by the Bank and for a period of
one (1) year after termination of the Executive's employment hereunder for any
reason, the Executive shall not, directly or indirectly, as principal, agent, or
trustee, or through the agency of any corporation, partnership, trade
association, agent or agency, engage in any banking or bank-related business or
venture which competes with the business of the Bank as conducted during the
Executive's employment by the Bank within a radius of fifty (50) miles of the
Bank's main office.
(d) In addition to all other remedies provided at law or at equity,
the Bank may petition and obtain from a court of law or equity both temporary
and permanent injunctive relief without the necessity of proving actual damages
and without posting bond or other security to prevent a breach by the Executive
of any covenant contained in this Section 6, as well as to an equitable
accounting of all earnings and profits and other benefits arising out of any
such violations.
7. NOTICES. Any notice or other communication required or permitted to
-------
be given hereunder shall be in writing and deemed to have been given when
delivered in person or when dispatched by telegram or electronic facsimile
transfer (confirmed in writing by mail, registered or certified, return receipt
requested, postage prepaid, simultaneously dispatched) to the addresses
specified below.
If to the Executive: Roxie W. Bagwell
502 Second Street South
Cordele, Georgia 31015
Facsimile: (912) 273-7750
If to the Bank: Central Bank & Trust
c/o ABC Bancorp
310 First Street, S.E.
Moultrie, Georgia 31768
Facsimile: (912) 890-2235
Attn: President
or to such other address or fax number as either party may from time to time
designate in writing to the other.
-5-
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same. No modification, alteration, amendment or recision of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by both parties hereto.
9. GOVERNING LAW. This Agreement and the rights and duties of the
-------------
parties hereunder shall be governed by, construed under and enforced in
accordance with the laws of the State of Georgia.
10. ASSIGNMENT. This Agreement shall inure to the benefit of and be
----------
binding upon the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns. The rights, duties and
obligations under this Agreement are assignable by the Bank to a successor of
all or substantially all of the business or assets of the Bank. The rights,
duties and obligations of the Executive under this Agreement shall not be
assignable.
11. SURVIVAL. The respective obligations of the parties under Section 6
--------
hereof shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
delivered, and the Executive has executed and delivered this Agreement, all as
of the day and year first above written.
CENTRAL BANK & TRUST
By:______________________________________
Its:____________________________
___________________________________(SEAL)
ROXIE W. BAGWELL
-6-