Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of April 6, 2005, by and between Coastal
Banking Company, Inc. ("Coastal"), a corporation organized and
existing under the laws of the State of South Carolina, with its
principal office located in Beaufort, South Carolina, and First
Capital Bank Holding Corporation ("First Capital"), a corporation
organized and existing under the laws of the State of Florida, with
its principal office located in Fernandina Beach,
Florida.
Preamble
The
Boards of Directors of First Capital and Coastal are of the opinion
that the transaction described herein is in the best interest of
the parties and their respective shareholders. This Agreement
provides for the merger of First Capital with and into Coastal (the
"Merger"). At the effective time of the Merger, the outstanding
shares of the capital stock of First Capital shall be converted
into the right to receive shares of the common stock of Coastal
(except as provided herein). As a result, shareholders of First
Capital shall become shareholders of Coastal. The transaction
described in this Agreement is subject to the approvals of the
shareholders of First Capital, the shareholders of Coastal, the
Board of Governors of the Federal Reserve System, 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 of 1986.
Immediately
following the Closing of the Merger, Lowcountry National Bank, a
national banking association and wholly owned subsidiary of Coastal
("Lowcountry") will remain in existence under its Articles of
Incorporation and Bylaws as in effect immediately prior to the
Effective Time as a wholly owned subsidiary of Coastal. First
National Bank of Nassau County, a national banking association and
wholly owned subsidiary of First Capital ("First National"), will
remain in existence under its Articles of Incorporation and Bylaws
as in effect immediately prior to the Effective Time as a wholly
owned subsidiary of Coastal.
Certain
terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE , in consideration of the above and the
mutual warranties, representations, covenants, and agreements set
forth herein, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
TRANSACTION AND TERMS OF MERGER
1.1
Merger.
Subject to the terms and conditions of this
Agreement, at the Effective Time, First Capital shall be merged
with and into Coastal in accordance with the provisions of
Section 33-11-101 of the South Carolina Business Corporation
Act of 1988 and Section 607.1101 of the Florida Business
Corporation Act. Coastal shall be the Surviving Corporation
resulting from the Merger and the separate existence of First
Capital shall cease. 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 First Capital and
Coastal.
1.2
Time and Place of Closing.
The Closing will take place at
9:30 a.m. on the date that the Effective Time occurs (or the
immediately preceding day if the Effective Time is earlier than
9:30 a.m.), or at such other time as the Parties, acting
through their chief executive officers, may mutually agree. The
place of Closing shall be at the offices of Nelson Mullins
Riley & Scarborough LLP, Atlanta, Georgia, or such other
place as may be mutually agreed upon by the Parties.
1.3
Effective Time.
The Merger contemplated by this Agreement
shall become effective on the date (the "Effective Date") and at
the time that the Articles of Merger are filed with the
Department
of State of Florida and the
Secretary of State of South Carolina. 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 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, (ii) the date on which the shareholders
of each Party, voting separately, approve this Agreement, or
(iii) such later date as may be mutually agreed upon in
writing by the chief executive officers of each Party.
1.4
Execution of Support Agreements.
Immediately prior to the execution of this
Agreement and as a condition hereto, each of the executive officers
and directors of each Party shall have executed and delivered to
the other Party a Support Agreement in substantially the form
attached hereto as Exhibit A (for the executive
officers and directors of First Capital) or Exhibit A-1
(for the executive officers and directors of Coastal).
ARTICLE 2
TERMS OF MERGER
2.1
Articles of Incorporation.
The Articles of Incorporation of Coastal 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 Coastal in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed.
2.3
Directors of Coastal.
Upon the Effective Time, Coastal shall have
12 directors determined as follows:
(a) Immediately
prior to the Effective Time, all but six directors of Coastal will
resign as directors of Coastal. The remaining directors shall be
Randolph C. Kohn, Ladson F. Howell, Dennis O. Green, James W.
Holden, James C. Key, and Robert B. Pinkerton. Such remaining
directors shall be apportioned evenly among Class I,
Class II, and Class III directors. It is the intent of
the Parties as evidenced in the forms of Support Agreements
attached hereto as Exhibit A and
Exhibit A-1 that if any of the directors set forth this
subsection cease to be a director of Coastal prior to date of the
2007 Coastal annual meeting of shareholders, a majority of the
remaining directors set forth in this subsection shall have the
right to nominate the replacement director or replacement directors
and, so long as the replacements are reasonably acceptable to the
remaining board members, the full board will vote to fill the
vacancy with such nominees; and
(b) Six
of the resulting vacancies on the board of directors of Coastal
will be filled by those six nominees designated by the board of
directors of First Capital such that two nominees will fill
Class I vacancies, two nominees will fill Class II
vacancies, and two nominees will fill Class III vacancies. The
nominees shall be Ron Anderson, Christina H. Bryan, Suellen
Rodeffer Garner, Robert L. Peters, Michael G. Sanchez, and Edward
E. Wilson. It is the intent of the Parties as evidenced in the
forms of Support Agreements attached hereto as
Exhibit A and Exhibit A-1 that if any of
the directors set forth in this subsection cease to be a director
prior to the date of the 2007 Coastal annual meeting of
shareholders, a majority of the remaining directors set forth in
this subsection shall have the right to nominate the replacement
director or replacement directors and, so long as the replacements
are reasonably acceptable to the remaining board members, the full
board will vote to fill the vacancy with such nominees.
(c) It
is the intent of the Parties as evidenced in the forms of Support
Agreements attached hereto as Exhibit A and
Exhibit A-1 that a majority of the directors set forth
in Section 2.3(a) of this Agreement shall have the right to
nominate two directors for the 2006 Coastal annual
meeting
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of
shareholders and a majority of the directors set forth in
Section 2.3(b) of this Agreement shall have the right to
nominate two directors for the 2006 Coastal annual meeting of
shareholders, so long as the nominations are reasonably acceptable
to the nominating committee;
(d) It
is the intent of the Parties as evidenced in the forms of Support
Agreements attached hereto as Exhibit A and
Exhibit A-1 that following the Merger and at least
through the day immediately preceding the 2007 Coastal annual
meeting of shareholders, the Chairman of the Board of Coastal shall
be elected by a vote of a majority of the directors of Coastal then
in office, provided that in the case of a tie vote, the Chairman of
the Board of Costal should be nominated by the directors set forth
in Section 2.3(b) of this Agreement and, so long as the
nominee is reasonably acceptable to the remaining board members,
the full board will vote in favor of such nominee to serve as
Chairman.
2.4
Directors of Lowcountry and First
National. From and after the Effective
Time, the current boards of directors of Lowcountry and First
National shall remain intact except that each bank will increase
its number of members by one and Michael G. Sanchez will be
appointed to serve as a director of Lowcountry and Randolph C. Kohn
will be appointed to serve as a director of First
National.
2.5
Officers.
From and after the Effective Time, the
officers of Coastal, First Capital, Lowcountry, and First National
shall be as follows:
(a)
Randolph C. Kohn, chief executive
officer of Coastal and president and chief executive officer of
Lowcountry;
(b)
Michael G. Sanchez, president of
Coastal and president and chief executive officer of First
National;
(c)
James L. Pate, III, chief financial
officer of Coastal, Lowcountry, and First National; and
(d)
Timothy S. Ayers, chief operating officer of
Coastal, Lowcountry, and First National.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1
Conversion of Shares.
Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, the shares
of the constituent corporations shall be converted as
follows:
(a) Each
share of Coastal Common Stock issued and outstanding immediately
prior to the Effective Time excluding shares held by Coastal
shareholders who perfect their dissenters' rights of appraisal as
provided in Section 3.4 of the Agreement shall remain issued
and outstanding from and after the Effective Time; and
(b) Subject
to adjustment as outlined below and the conditions set forth
herein, each share of First Capital Common Stock issued and
outstanding at the Effective Time (excluding shares held by Coastal
or any of its Subsidiaries or by First Capital, in each case other
than in a fiduciary capacity or as a result of debts previously
contracted, and excluding shares held by First Capital shareholders
who perfect their dissenters' rights of appraisal as provided in
Section 3.4 of this Agreement) shall be exchanged for 1.054
shares of Coastal Common Stock. The aggregate number of shares of
Coastal Common Stock issuable pursuant to the immediately preceding
sentence is sometimes hereinafter referred to as the "Merger
Consideration."
(c) As
of the Effective Time, each share of First Capital Common Stock as
set forth in Section 3.1(b) of this Agreement shall cease to
be outstanding and each holder of a certificate representing any
such shares of First Capital Common Stock shall cease to have any
rights with
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respect
thereto, except the right to receive such holders' pro rata portion
of the Merger Consideration and any cash in lieu of fractional
shares of Coastal Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in
accordance with Section 4.1 of this Agreement, without
interest.
3.2
Anti-Dilution Provisions.
In the event First Capital or Coastal
changes the number of shares of First Capital Common Stock or
Coastal 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 Merger
Consideration shall be proportionately adjusted.
3.3
Shares Held by First Capital or
Coastal. Each of the shares of First
Capital Common Stock held by First Capital or by any Coastal
Companies, 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.
3.4
Dissenting Shareholders.
Each holder of shares of First Capital
Common Stock or Coastal Common Stock, as the case may be, shall be
entitled to exercise dissenters' rights of appraisal in accordance
with and as contemplated by Sections 607.1301 et seq . of
the Florida Business Corporation Act and Sections 33-13-101 et
seq . of the South Carolina Business Corporation Act of 1988.
Any holder of shares of First Capital Common Stock or Coastal
Common Stock, as the case may be, who perfects his dissenter's
right of appraisal shall be entitled to receive the value of such
shares in cash as determined pursuant to such provision of Law;
provided, however , that no such payment shall be made to
any dissenting shareholder unless and until such dissenting
shareholder has complied with the applicable provisions set forth
above and surrendered to the appropriate Party the certificate or
certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting
shareholder of First Capital fails to perfect, or effectively
withdraws or loses, his right to appraisal and of payment for his
shares, Coastal shall issue and deliver the consideration, to which
such holder of shares of the common stock of First Capital is
entitled under this Article 3 (without interest) upon
surrender by such holder of the certificate or certificates
representing the shares of First Coastal held by him. In the event
that after the Effective Time a dissenting shareholder of Coastal
fails to perfect, or effectively withdraws or loses, his right to
appraisal and of payment for his shares, Coastal shall not be
obligated to take any action with respect to such
holder.
3.5
Fractional Shares.
Notwithstanding any other provision of this
Agreement, each holder of shares of First Capital Common Stock
exchanged pursuant to the Merger, who would otherwise have been
entitled to receive a fraction of a share of Coastal 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 Coastal
Common Stock multiplied by the market value of one share of Coastal
Common Stock at the Effective Time. The market value of one share
of Coastal Common Stock at the Effective Time shall be calculated
based on the 10-day average closing price of Coastal Common Stock
on the OTCBB immediately preceding the Effective Time. No such
holder will be entitled to dividends, voting rights, or any other
rights as a shareholder in respect of any fractional
shares.
3.6
Conversion of Stock Options and Stock
Appreciation Rights.
(a) At
the Effective Time, all rights with respect to First Capital Common
Stock pursuant to stock options (the "First Capital Options")
granted by First Capital under the First Capital Bank Holding
Corporation 1999 Stock Incentive Plan (the "First Capital Option
Plan"), which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect
to Coastal Common Stock, and Coastal shall assume each First
Capital Option
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in accordance with the terms of the
First Capital Option Plan and the stock option agreement by which
it is evidenced. From and after the Effective Time, (i) each
First Capital Option assumed by Coastal may be exercised solely for
shares of Coastal Common Stock, (ii) the number of shares of
Coastal Common Stock subject to each First Capital Option shall be
equal to the product of the number of shares of First Capital
Common Stock subject to such First Capital Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, and
(iii) the per share exercise price under each such First
Capital Option shall be adjusted by dividing the per share exercise
price under each such First Capital Option by the Exchange Ratio
and rounding down to the nearest cent. First Capital agrees to take
all necessary steps to effectuate the foregoing provisions of this
Section 3.6.
(b) At
the Effective Time, all interests with respect to stock
appreciation rights (the "First Capital SARs") granted by First
Capital under the First Capital Phantom Stock Appreciation Rights
Plan (the "First Capital SAR Plan"), which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into
and become interests with respect to Coastal Common Stock, and
Coastal shall assume each First Capital SAR in accordance with the
terms of the First Capital SAR Plan and phantom stock appreciation
rights agreement by which it is evidenced. From and after the
Effective Time, (i) the number of shares of Coastal Common
Stock subject to each First Capital SAR shall be equal to the
product of the number of shares of First Capital Common Stock
subject to such First Capital SAR immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iii) the
per share fair market value under each such First Capital SAR (as
defined in phantom stock appreciation rights agreement by which it
is evidenced) shall be adjusted by dividing the per share fair
market value under each such First Capital SAR by the Exchange
Ratio and rounding down to the nearest cent. First Capital agrees
to take all necessary steps to effectuate the foregoing provisions
of this Section 3.6.
(c) All
restrictions or limitations on transfer with respect to First
Capital Common Stock awarded under the First Capital Option Plan or
any other plan, program, or arrangement of any First Capital
Company, to the extent that such restrictions or limitations shall
not have already lapsed, and except as otherwise expressly provided
in such plan, program, or arrangement, shall remain in full force
and effect with respect to shares of Coastal Common Stock into
which such restricted stock is converted pursuant to
Section 3.1 of this Agreement.
(d) Shares
of Coastal Common Stock to be issued upon exercise of First Capital
Options shall be the subject of a timely filed and effective
Form S-8 registration statement covering such
shares.
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ARTICLE
4
EXCHANGE OF SHARES
4.1
Exchange Procedures.
As soon as reasonably practicable after the
Effective Time, Coastal's exchange agent shall mail to the former
shareholders of First Capital appropriate transmittal materials
(which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing shares
of First Capital Common Stock shall pass, only upon proper delivery
of such certificates to the exchange agent). After the Effective
Time, each holder of shares of First Capital Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which dissenters' rights of appraisal have been
perfected as provided in Section 3.4 of this Agreement) issued
and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the
exchange agent and shall as soon as reasonably practicable after
surrender thereof receive in exchange therefor the consideration
provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares
(without interest thereon) pursuant to Section 4.2 of this
Agreement. To the extent required by Section 3.5 of this
Agreement, each holder of shares of First Capital Common Stock
issued and outstanding at the Effective Time also shall receive,
upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of Coastal Common
Stock to which such holder may be otherwise entitled (without
interest). Coastal shall not be obligated to deliver the
consideration to which any former holder of First Capital Common
Stock is entitled as a result of the Merger until such holder
surrenders his certificate or certificates representing the shares
of First Capital Common Stock for exchange as provided in this
Section 4.1. The certificate or certificates of First Capital
Common Stock so surrendered shall be duly endorsed as Coastal may
require. Any other provision of this Agreement notwithstanding,
Coastal shall not be liable to a holder of First Capital Common
Stock for any amounts paid or property delivered in good faith to a
public official pursuant to any applicable abandoned property
Law.
4.2
Rights of Former Shareholders.
At the Effective Time, the stock transfer
books of First Capital shall be closed as to holders of First
Capital Common Stock immediately prior to the Effective Time, and
no transfer of First Capital Common Stock by any such holder shall
thereafter be made or recognized. Until surrendered for exchange in
accordance with the provisions of Section 4.1 of this
Agreement, each certificate theretofore representing shares of
First Capital Common Stock (other than shares to be canceled
pursuant to Sections 3.3 and 3.4 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right
to receive the consideration provided in Sections 3.1 and 3.5 of
this Agreement in exchange therefor. To the extent permitted by
Law, former shareholders of record of First Capital shall be
entitled to vote after the Effective Time at any meeting of Coastal
shareholders the number of whole shares of Coastal Common Stock
into which their respective shares of First Capital Common Stock
are converted, regardless of whether such holders have exchanged
their certificates representing First Capital Common Stock for
certificates representing Coastal Common Stock in accordance with
the provisions of this Agreement. Whenever a dividend or other
distribution is declared by Coastal on the Coastal 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 Coastal
Common Stock as of any time subsequent to the Effective Time shall
be delivered to the holder of any certificate representing shares
of First Capital Common Stock issued and outstanding at the
Effective Time until such holder surrenders such certificate for
exchange as provided in Section 4.1 of this Agreement.
However, upon surrender of such First Capital Common Stock
certificate, both the Coastal 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.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FIRST CAPITAL
First
Capital represents and warrants to Coastal, except as set forth in
the First Capital Disclosure Letter, as follows:
5.1
Organization, Standing, and Power.
First Capital is a corporation duly
organized, validly existing, and in good standing under the Laws of
the State of Florida and is a bank holding company within the
meaning of the BHC Act. First National is a national banking
association, duly organized, validly existing, and in good standing
under the laws of the United States of America. Each of First
Capital and First National has the corporate power and authority to
carry on its business as now conducted and to own, lease, and
operate its Assets. Each of First Capital and First National 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. First National is an "insured institution" as defined in
the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits held by First National are insured by
the FDIC's Bank Insurance Fund to the maximum extent provided by
law.
5.2
Authority of First Capital; No Breach By
Agreement.
(a) First
Capital has the corporate power and authority necessary to execute,
deliver, and, other than with respect to the Merger, perform this
Agreement, and with respect to the Merger, upon the approval of the
Merger by First Capital's shareholders in accordance with this
Agreement and the Florida Business Corporation Act, to 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 First Capital, subject to the approval of
this Agreement by the affirmative vote of the holders of a majority
of the outstanding shares of First Capital Common Stock. Subject to
the Consents of Regulatory Authorities and shareholder approval,
this Agreement represents a legal, valid, and binding obligation of
First Capital, enforceable against First Capital 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 First Capital, nor
the consummation by First Capital and First National of the
transactions contemplated hereby, nor compliance by First Capital
and First National with any of the provisions hereof, will
(i) conflict with or result in a breach of any provision of
First Capital'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 First Capital Company under, any Contract or Permit of
any First Capital Company or, (iii) subject to receipt of the
requisite Consents violate any Law or Order applicable to any First
Capital Company or any of their respective Assets.
(c) No
notice to, filing with, or Consent of any public body or authority
is necessary for the consummation by First Capital of the Merger
and the transaction contemplated in this Agreement other than
(i) in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws,
and rules of the NASD, (ii) Consents required from Regulatory
Authorities, (iii) notices to or filings with the IRS or the
Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, (iv) under the HSR Act, and (v) 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 First Capital.
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5.3
Capital Stock.
(a) The
authorized capital stock of First Capital consists only of
10,000,000 shares of First Capital Common Stock, of which 1,182,700
shares are issued and outstanding as of the date of this Agreement,
1,000,000 shares of preferred stock, none of which are issued and
outstanding as of the date of this Agreement. As of the date of
this Agreement, 86,400 shares of First Capital Common Stock were
reserved for issuance upon the exercise of issued and outstanding
stock options under the First Capital Option Plan. All of the
issued and outstanding shares of capital stock of First Capital are
duly and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of capital stock of
First Capital has been issued in violation of any preemptive rights
of the current or past shareholders of First Capital.
(b) Except
as specifically set forth in this Section, there are no shares of
capital stock or other equity securities of First Capital
outstanding and there are no outstanding options, warrants, scrip,
stock appreciation rights, 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 First Capital or contracts, commitments,
understandings, or arrangements by which First Capital 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
First Capital's Subsidiaries.
(a) The
First Capital Disclosure Letter sets forth with respect to each
First Capital Company its name, its jurisdiction of incorporation,
First Capital's percentage ownership, the number of shares of stock
owned or controlled by First Capital, and the name and number of
shares held by any other person who owns any stock of the First
Capital Company. First Capital owns of record and beneficially all
the capital stock of each First Capital Company free and clear of
any Liens. There are no contracts, commitments, agreements, or
understandings relating to First Capital's right to vote or dispose
of any equity securities of the First Capital Companies. First
Capital's ownership interest in each First Capital Company is in
compliance with all applicable laws, rules, and regulations
relating to equity investments by bank holding companies or
national banking associations.
(b) Each
First Capital Company is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation, has
all requisite corporate power and authority to own, lease, and
operate its properties, and to conduct the business currently being
conducted by it and is duly qualified or licensed as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which the character of the properties owned or
leased by it or the nature of the business conducted by it makes
such qualification or licensing necessary.
(c) The
outstanding shares of capital stock of each First Capital Company
have been validly authorized and are validly issued, fully paid,
and nonassessable. No shares of capital stock of any First Capital
Company are or may be required to be issued by virtue of any
options, warrants or other rights, no securities exist that are
convertible into or exchangeable for shares of such capital stock,
or any other debt or equity security of any First Capital Company,
and there are no contracts, commitments, agreements, or
understandings of any kind for the issuance of additional shares of
capital stock or other debt or equity security of any First Capital
Company or options, warrants, or other rights with respect to such
securities.
5.5
Exchange Act Filings; Financial
Statements.
(a) First
Capital has timely filed and made available to Coastal all SEC
Documents required to be filed by First Capital since
December 31, 2000. The First Capital SEC Documents (i) at
the time filed, complied in all material respects with the
applicable requirements of the Securities Laws and other applicable
Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing or, in the case of
registration
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statements, at the effective date
thereof) contain any untrue statement of a material fact or omit to
state a material fact required to be stated in such First Capital
SEC Documents or necessary in order to make the statements in such
First Capital SEC Documents not misleading. First Capital has made
available to Coastal all comment letters received by First Capital
from the staffs of the SEC and the OCC and all responses to such
comment letters by or on behalf of First Capital with respect to
all filings under the Securities Laws. First Capital's principal
executive officer and principal financial officer (and First
Capital's former principal executive officers and principal
financial officers, as applicable) have made the certifications
required by Sections 302 and 906 of the Sarbanes-Oxley Act and the
rules and regulations of the Exchange Act thereunder with respect
to the First Capital SEC Documents. For purposes of the preceding
sentence, "principal executive officer" and "principal financial
officer" shall have the meanings given to such terms in the
Sarbanes-Oxley Act. Such certifications contain no qualifications
or exceptions to the matters certified therein and have not been
modified or withdrawn; and neither First Capital nor any of its
officers has received notice from any Regulatory Authority
questioning or challenging the accuracy, completeness, content,
form, or manner of filing or submission of such certifications. No
First Capital Company is required to file any reports under the
Exchange Act.
(b) Each
of the First Capital Financial Statements (including, in each case,
any related notes) contained in the First Capital SEC Documents,
including any First Capital SEC Documents filed after the date of
this Agreement until the Effective Time, complied as to form in all
material respects with the Exchange Act, was prepared in accordance
with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as
permitted by Form 10-QSB of the Exchange Act), and fairly
presented the financial position of First Capital and each First
Capital Company as at the respective dates and the results of
operations and cash flows for the periods indicated, including the
fair values of the assets and liabilities shown therein except that
the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect and were certified to
the extent required by the Sarbanes-Oxley Act.
(c) First
Capital's independent public accountants, which have expressed
their opinion with respect to the First Capital Financial
Statements included in the First Capital SEC Documents (including
the related notes), are and have been throughout the periods
covered by such First Capital Financial Statements (x) a
registered public accounting firm (as defined in
Section 2(a)(12) of the Sarbanes-Oxley Act) (to the extent
applicable during such period), (y) "independent" with respect
to First Capital within the meaning of Regulation S-X and
(z) with respect to First Capital, in compliance with
subsections (g) through (l) of Section 10A of the
Exchange Act and related Securities Laws. Section 5.5 of the
First Capital Disclosure Letter lists all non-audit services
preformed by First Capital's independent public accountants for
First Capital and each First Capital Company.
(d) First
Capital maintains disclosure controls and procedures required by
Rule 13a-15 or 15d-15 under the Exchange Act; such controls
and procedures are effective to ensure that all material
information concerning First Capital and each First Capital Company
is made known on a timely basis to the individuals responsible for
the preparation of the First Capital SEC Documents.
5.6
Absence of Undisclosed Liabilities.
No First Capital Company has any
Liabilities that are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on any First Capital
Company, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of First Capital as of
December 31, 2004 included in the First Capital Financial
Statements or reflected in the notes thereto. No First Capital
Company has incurred or paid any Liability since December 31,
2004, 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 First Capital.
9
5.7
Absence of Certain Changes or
Events. Since December 31, 2004,
except as disclosed in the First Capital Financial Statements or as
disclosed in the First Capital Disclosure Letter, (i) 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 First Capital, (ii) no First
Capital Company has 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 First Capital, and (iii) each First Capital
Company has conducted its respective businesses in the ordinary and
usual course (excluding the incurrence of expenses in connection
with this Agreement and the transactions contemplated
hereby).
5.8
Tax Matters.
(a) All
Tax Returns required to be filed by or on behalf of any First
Capital Company 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, 2004, and all returns filed
are complete and accurate in all Material respects. All Taxes shown
on filed returns have been paid as of the date of this Agreement,
and 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 First Capital, except as
reserved against in the First Capital 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) No
First Capital Company 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 First
Capital Company.
(c) Adequate
provision for any Taxes due or to become due by any First Capital
Company for the period or periods through and including the date of
the respective First Capital Financial Statements has been made and
is reflected on such First Capital Financial Statements.
(d) Each
First Capital Company is in compliance with, and their respective
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 First Capital.
(e) No
First Capital Company has made any payments, is obligated to make
any payments, or is a party to any contract, agreement, or other
arrangement that could obligate it to make any payments that would
be disallowed as a deduction under Section 280G or 162(m) of
the Internal Revenue Code.
(f) There
are no Material Liens with respect to Taxes upon any of the Assets
of any First Capital Company.
(g) There
has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of any First Capital Company that
occurred during or after any Taxable Period in which any First
Capital Company incurred a net operating loss that carries over to
any Taxable Period ending after December 31, 2004.
(h) No
First Capital Company has filed any consent under
Section 341(f) of the Internal Revenue Code concerning
collapsible corporations.
(i) No
First Capital Company has or has had a permanent establishment in
any foreign country, as defined in any applicable tax treaty or
convention between the United States and such foreign
country.
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5.9
Allowance for Possible Loan Losses; Loan
and Investment Portfolio, etc. The
Allowance shown on the consolidated balance sheets of First Capital
included in the most recent First Capital Financial Statements
dated prior to the date of this Agreement was, and the Allowance
shown on the consolidated balance sheets of First Capital included
in the First Capital Financial Statements as of dates subsequent to
the execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for losses relating to or
inherent in the loan and lease portfolios (including accrued
interest receivables) of First National and other extensions of
credit by First National as of the dates thereof, except where the
failure of such Allowance to be so adequate is not reasonably
likely to have a Material Adverse Effect on First
Capital.
5.10
Assets.
(a) Except
as disclosed or reserved against in the First Capital Financial
Statements delivered prior to the date of this Agreement, each
First Capital Company has good and marketable fee title, free and
clear of all Liens, to all of their respective Assets in the name
of such First Capital Company. All tangible properties used in the
businesses of each First Capital Company are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with each First Capital Company's
past practices.
(b) All
Assets which are material to First Capital's business, held under
leases or subleases by any of the First Capital Companies, are held
under valid Contracts enforceable in accordance with their
respective terms, and each such Contract is in full force and
effect.
(c) Each
First Capital Company currently maintains insurance, including
bankers' blanket bonds, with insurers of recognized financial
responsibility, similar in amounts, scope, and coverage to that
maintained by other peer organizations. None of the First Capital
Companies has received notice from any insurance carrier that
(i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium
costs with respect to such policies of insurance will be
substantially increased, or (iii) that similar coverage will
be denied or limited or not extended or renewed with respect to any
First Capital Company, any act or occurrence, or that any Asset,
officer, director, employee, or agent of any First Capital will not
be covered by such insurance or bond. There are presently no claims
for amounts exceeding $25,000 individually or in the aggregate
pending under such policies of insurance or bonds, and no notices
of claims in excess of such amounts have been given by any First
Capital Company under such policies. First Capital has made no
claims, and no claims are contemplated to be made, under its
directors' and officers' errors and omissions or other insurance or
bankers' blanket bond.
(d) The
Assets of the First Capital Companies include all Assets required
to operate the business of the First Capital Companies as presently
conducted.
5.11
Intellectual Property.
Each First Capital Company owns or has a
license to use all of the Intellectual Property used by such First
Capital Company in the course of its business, including sufficient
rights in each copy possessed by each First Capital Company. Each
First Capital Company is the owner of or has a license, with the
right to sublicense, to any Intellectual Property sold or licensed
to a third party by such First Capital Company in connection with
such First Capital Company's business operations, and such First
Capital Company has the right to convey by sale or license any
Intellectual Property so conveyed. No First Capital Company is in
Default under any of its Intellectual Property licenses. No
proceedings have been instituted, or are pending or overtly
threatened, which challenge the rights of any First Capital Company
with respect to Intellectual Property used, sold or licensed by
such First Capital Company in the course of its business, nor has
any person claimed or alleged any rights to such Intellectual
Property. The conduct of the business of the First Capital
Companies does not infringe any Intellectual Property of any other
person. No First Capital Company is obligated to pay any recurring
royalties to any Person with respect to any such Intellectual
Property.
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No officer, director or employee
of any First Capital Company is party to any confidentiality,
nonsolicitation, noncompetition, or other Contract which restricts
or prohibits such officer, director or employee from engaging in
activities competitive with any Person, including any First Capital
Company.
5.12
Environmental Matters.
(a) The
First Capital Companies and their respective Participation
Facilities and 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 the First Capital Companies.
(b) There
is no Litigation pending or overtly threatened before any court,
governmental agency, board, authority, or other forum in which the
First Capital Companies or any of their respective Participation
Facilities and Loan Properties 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 of any Hazardous Material, whether or not occurring
at, on, under or involving a site owned, leased, or operated by the
First Capital Companies or any of their respective Participation
Facilities and Loan Properties, except for such Litigation pending
or threatened which is not likely to have, individually or in the
aggregate, a Material Adverse Effect on the First Capital
Companies.
(c) There
is no reasonable basis for any Litigation of a type described in
subsection (b), except such as is not likely to have, individually
or in the aggregate, a Material Adverse Effect on the First Capital
Companies.
(d) During
the period of (i) the First Capital Companies' ownership or
operation of any of their respective current properties,
(ii) the First Capital Companies' participation in the
management of any Participation Facility or (iii) the First
Capital Companies' holding of a security interest in a Loan
Property, there have been no Releases of Hazardous Material in, on,
under, or affecting any Participation Facility or Loan
Property.
5.13
Compliance with Laws.
(a) First
Capital is a bank holding company duly registered and in good
standing as such with the Federal Reserve and the Florida
Department of Financial Services. First National is a member in
good standing of the Federal Reserve System and the
FDIC.
(b) Compliance
with Permits, Laws and Orders.
(i) Each
First Capital Company has in effect all Permits and has made all
filings, applications, and registrations with Regulatory
Authorities that are material and required for it to own, lease, or
operate its material assets and to carry on its business as now
conducted, and there has occurred no Default under any such Permit
applicable to their respective businesses or employees conducting
their respective businesses.
(ii) No
First Capital Company is in Default under any Laws or Orders
applicable to its business or employees conducting its
business.
(iii) No
First Capital Company has received any notification or
communication from any Regulatory Authority, (A) asserting any
First Capital Company is in Default under any of the Permits, Laws
or Orders which such Regulatory Authority enforces,
(B) threatening to revoke any Permits, or (C) requiring
any First Capital Company (x) to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or (y) to adopt
any resolution of its board of directors or similar undertaking,
which restricts materially the conduct of its business, or in any
material manner relates to its management.
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(iv) There
(A) is no unresolved violation, criticism, or exception by any
Regulatory Authority with respect to any report or statement
relating to any examinations or inspections of any First Capital
Company, (B) and no notices or correspondence received by any
First Capital Company with respect to formal or informal inquiries
by, or disagreements or disputes with, any Governmental Authority
with respect to any First Capital Company's business, operations,
policies, or procedures since December 31, 2004, and
(C) is not any pending or, to its Knowledge, threatened, nor
has any Regulatory Authority indicated an intention to conduct any,
investigation or review of it or any of the First Capital
Companies.
(v) No
First Capital Company nor any of its directors, officers,
employees, or representatives acting on its behalf has offered,
paid, or agreed to pay any Person, including any Regulatory
Authority, directly or indirectly, any thing of value for the
purpose of, or with the intent of obtaining or retaining any
business in violation of applicable Laws, including (1) using
any corporate funds for any unlawful contribution, gift,
entertainment, or other unlawful expense relating to political
activity, (2) making any direct or indirect unlawful payment
to any foreign or domestic government official or employee from
corporate funds, (3) violating any provision of the Foreign
Corrupt Practices Act of 1977, or (4) making any bribe,
rebate, payoff, influence payment, kickback, or other unlawful
payment.
(vi) Each
First Capital Company has complied in all material respects with
all requirements of Law under the Bank Secrecy Act and the USA
Patriot Act, and each First Capital Company has timely filed all
reports of suspicious activity, including those required under 12
C.F.R. § 21.11.
5.14
Labor Relations.
No First Capital Company is the subject of
any Litigation asserting that any of them has committed an unfair
labor practice (within the meaning of the National Labor Relations
Act or comparable state law) or seeking to compel any First Capital
Company to bargain with any labor organization as to wages or
conditions of employment, nor is any First Capital Company a party
to or bound by any collective bargaining agreement, Contract or
other agreement or understanding with a labor union or labor
organization, nor is there any strike or other labor dispute
involving either of them, pending or to their respective Knowledge
threatened, nor to their respective Knowledge, is there any
activity involving any First Capital Companies' employees seeking
to certify a collective bargaining unit or engaging in any other
organization activity.
5.15
Employee Benefit Plans.
(a) The
First Capital Companies have Previously Disclosed, and delivered or
made available to Coastal prior to the execution of this Agreement,
correct and complete 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 First Capital Companies or any
Affiliate thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other
beneficiaries and under which such persons are eligible to
participate (collectively, the "First Capital Benefit Plans" and
each, a "First Capital Benefit Plan"). Any of the First Capital
Benefit Plans which is an "employee welfare benefit plan," as that
term is defined in Section 3(l) of ERISA, or an "employee
pension benefit plan," as that term is defined in Section 3(2)
of ERISA, is referred to herein as a "First Capital ERISA Plan." No
First Capital Benefit Plan is or has been a "multi-employer plan"
(within the meaning of Section 3(37) of ERISA). The First
Capital Companies do not participate in or have any liability
arising in relation to a multi-employer plan (within the meaning of
Section 3(37) of ERISA), a multiple employer plan, or a plan
which is subject to Code Section 412 or Title IV of
ERISA.
13
(b) The
First Capital Companies have delivered or made available to Coastal
prior to the execution of this Agreement correct and complete
copies of the following documents: (i) all trust agreements or
other funding arrangements for such First Capital Benefit Plans
(including insurance contracts), and all amendments thereto,
(ii) with respect to any such First Capital Benefit Plans or
amendments, all determination letters, Material rulings, Material
opinion letters, Material information letters or Material advisory
opinions issued by the IRS, the United States Department of Labor
or the Pension Benefit Guaranty Corporation after December 31,
2002, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports and summary
annual reports prepared for any First Capital Benefit Plan with
respect to the most recent plan year, and (iv) the most recent
summary plan descriptions and any Material modifications
thereto.
(c) All
First Capital 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 First Capital. Each First Capital ERISA Plan which is intended
to be qualified under Section 401(a) of the Internal Revenue
Code is the subject of a favorable determination letter or opinion
letter from the IRS, and no First Capital Company is aware of any
circumstances likely to reasonably result in revocation of any such
letter or failure of a First Capital ERISA Plan intended to satisfy
Internal Revenue Code Section 401 to satisfy the Tax
qualification provisions of the Internal Revenue Code applicable
thereto. No First Capital Company has engaged in a transaction with
respect to any First Capital Benefit Plan that, assuming the
Taxable Period of such transaction expired as of the date hereof,
would subject any First Capital Company to a Material 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 any First Capital Company.
(d) Except
as required under Title I, Part 6 of ERISA and Internal
Revenue Code Section 4980 B, no First Capital Company has any
obligations to provide health or life benefits under any of the
First Capital Benefit Plans to former employees, and there are no
restrictions on the rights of First Capital to amend or terminate
any such plan without incurring any Liability thereunder, which
Liability is reasonably likely to have a Material Adverse Effect on
the First Capital Companies.
(e) Neither
the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby solely as a result of such
actions, will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute,
or otherwise) becoming due to any officer, director, or any
employee of the First Capital Companies from the First Capital
Companies under any First Capital Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any First
Capital Benefit Plan, or (iii) result in any acceleration of
the time of payment or vesting of any such benefit, where such
payment, increase or acceleration is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
First Capital Companies.
(f) The
actuarial present values of all accrued deferred compensation
entitlements (including, without limitation, entitlements under any
executive compensation, supplemental retirement, or employment
agreement) of directors and employees and former directors and
employees of the First Capital Companies and its respective
beneficiaries, have been fully reflected on the First Capital
Financial Statements to the extent required by and in accordance
with GAAP.
5.16
Material Contracts.
Except as reflected in the First Capital
Financial Statements, no First Capital Company nor any of their
respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any
employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any
calendar year in excess of $50,000, (ii) any Contract relating
to the borrowing of money by any First Capital Company or the
guarantee by any First Capital Company of any such obligation
(other than Contracts evidencing
14
deposit liabilities, purchases of
federal funds, fully-secured repurchase agreements, trade payables,
letters of credit, and Contracts relating to borrowings or
guarantees made in the ordinary course of business), and
(iii) any other Contract or amendment thereto would be
required to be filed as an exhibit to a First Capital Regulatory
Report filed by First Capital with any Regulatory Authority as of
the date of this Agreement that has not been filed by First Capital
with any Regulatory Authority as an exhibit to any First Capital
Regulatory Report for the fiscal year ended December 31, 2004
(together with all Contracts referred to in Sections 5.10 and
5.15(a) of this Agreement, the "First Capital Contracts"). With
respect to each First Capital Contract, (i) the Contract is in
full force and effect, (ii) no First Capital Company is in
Default thereunder, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on the First Capital Companies, (iii) no First
Capital Company has repudiated or waived any material provision of
any such Contract, and (iv) no other party to any such
Contract is, to the knowledge of the First Capital Companies, in
Default in any respect, or has repudiated or waived any Material
provision thereunder. All of the indebtedness of the First Capital
Companies for money borrowed is prepayable at any time by the First
Capital Companies without penalty or premium.
5.17
Privacy of Customer Information.
(a) Each
First Capital Company is the sole owner of all individually
identifiable personal information relating to identifiable or
identified natural person ("IIPI") relating to customers, former
customers, and prospective customers that will be transferred to
Coastal and the Coastal Companies pursuant to this
Agreement.
(b) Each
First Capital Company's collection and use of such IIPI, the
transfer of such IIPI to Coastal and the Coastal Companies, and the
use of such IIPI by the Coastal Companies as contemplated by this
Agreement complies with First Capital's privacy policy, the Fair
Credit Reporting Act, the Gramm-Leach-Bliley Act, and all other
applicable privacy Laws, and any Contract and industry standard
relating to privacy.
5.18
Legal Proceedings.
There is no Litigation instituted or
pending or overtly threatened against any First Capital Company, or
against any Asset, interest or right of any of them, nor are there
any Orders of any Regulatory Authorities, other governmental
authorities or arbitrators outstanding against the First Capital
Companies.
5.19
Loans to Executive Officers and
Directors. First Capital has not, since
December 31, 2004, extended or maintained credit, arranged for
the extension of credit, or renewed an extension of credit, in the
form of a personal loan to or for any director or executive officer
(or equivalent thereof) of First Capital, except as permitted by
Section 13(k) of the Exchange Act and Federal Reserve
Regulation O. First Capital has Previously Disclosed any loan
or extension of credit maintained by First Capital to which the
second sentence of Section 13(k)(1) of the Exchange Act
applies.
5.20
Regulatory Matters.
No First Capital Company or any Affiliate
thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or
(ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) 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.
5.21
State Takeover Laws.
The First Capital Companies have taken all
necessary action to exempt the transactions contemplated by this
Agreement from any applicable "moratorium," "control share," "fair
price," "business combination," or other state takeover
Law.
5.22
Brokers and Finders; Opinion of
Financial Advisor. Except for First
Capital Financial Advisor and the Transaction Financial Advisor,
neither First Capital nor its subsidiaries, or any of their
respective officers, directors, employees, or representatives, has
employed any broker, finder, or
15
investment banker or incurred any
Liability for any financial advisory fees, investment bankers fees,
brokerage fees, commissions, or finder's or other fees in
connection with this Agreement or the transactions contemplated
hereby. First Capital has received from the First Capital Financial
Advisor an opinion that, as of the date hereof, the Exchange Ratio
is fair to the shareholders of First Capital from a financial point
of view.
5.23
Statements True and Correct.
No statement, certificate, instrument, or
other writing furnished or to be furnished by the First Capital
Companies or any Affiliate thereof to Coastal 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 the First Capital Companies or any Affiliate thereof
for inclusion in the Registration Statement to be filed by Coastal
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 the First Capital Companies or any Affiliate
thereof for inclusion in the Joint Proxy Statement to be mailed to
the First Capital Companies' shareholders and Coastal shareholders
in connection with the First Capital Meeting and the Coastal
Meeting, respectively, and any other documents to be filed by any
First Capital 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 Joint Proxy Statement, when
first mailed to the shareholders of the First Capital Companies and
Coastal be false or misleading with respect to any Material fact,
or omit to state any Material fact necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Joint Proxy Statement or any
amendment thereof or supplement thereto, at the time of the First
Capital Meeting and the Coastal 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 either of such
shareholders' meetings. All documents any First Capital 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.
5.24
Articles of Incorporation
Provisions. The First Capital Companies
have taken all actions so that the entering into of this Agreement
and the consummation of the Merger contemplated hereby do not and
will not result in the grant of any rights to any Person under the
Articles of Incorporation, Bylaws, or other governing instruments
of the First Capital Companies (other than voting, dissenters'
rights of appraisal, or other similar rights) or restrict or impair
the ability of Coastal or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to,
shares of the First Capital Common Stock that may be acquired or
controlled by it.
5.25
Delivery of First Capital Disclosure
Letter. First Capital has delivered to
Coastal a complete First Capital Disclosure Letter.
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ARTICLE
6
REPRESENTATIONS AND WARRANTIES OF COASTAL
Coastal
represents and warrants to First Capital, except as set forth in
the Coastal Disclosure Letter, as follows:
6.1
Organization, Standing, and Power.
Coastal is a corporation duly organized,
validly existing, and in good standing under the Laws of the State
of South Carolina and is a bank holding company within the meaning
of the BHC Act. Lowcountry is a national banking association, duly
organized, validly existing, and in good standing under the laws of
the United States of America. Each of Coastal and Lowcountry has
the corporate power and authority to carry on its business as now
conducted and to own, lease, and operate its Assets. Each of
Coastal and Lowcountry 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. Lowcountry is an "insured institution"
as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, and the deposits held by Lowcountry are
insured by the FDIC's Bank Insurance Fund to the maximum extent
provided by law.
6.2
Authority of Coastal; No Breach By
Agreement.
(a) Coastal
has the corporate power and authority necessary to execute,
deliver, and, other than with respect to the Merger, perform this
Agreement, and with respect to the Merger, upon the approval of the
Merger by Coastal's shareholders in accordance with this Agreement
and the South Carolina Business Corporation Act of 1988, to 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 Coastal, subject to the approval of
this Agreement by the affirmative vote of the holders of two-thirds
of the outstanding shares of Coastal Common Stock. Subject to the
Consents of Regulatory Authorities and shareholder approval, this
Agreement represents a legal, valid, and binding obligation of
Coastal, enforceable against Coastal 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 Coastal, nor the
consummation by Coastal and Lowcountry of the transactions
contemplated hereby, nor compliance by Coastal and Lowcountry with
any of the provisions hereof, will (i) conflict with or result
in a breach of any provision of Coastal'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 Coastal Company under, any Contract or
Permit of any Coastal Company or, (iii) subject to receipt of
the requisite Consents violate any Law or Order applicable to any
Coastal Company or any of their respective Assets.
(c) No
notice to, filing with, or Consent of any public body or authority
is necessary for the consummation by Coastal of the Merger and the
transaction contemplated in this Agreement other than (i) in
connection or compliance with the provisions of the Securities
Laws, applicable state corporate and securities Laws, and rules of
the NASD, (ii) Consents required from Regulatory Authorities,
(iii) notices to or filings with the IRS or the Pension
Benefit Guaranty Corporation with respect to any employee benefit
plans, (iv) under the HSR Act, and (v) 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 Coastal.
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6.3
Capital Stock.
(a) The
authorized capital stock of Coastal consists only of 10,000,000
shares of Coastal Common Stock, of which 1,010,379 shares are
issued and outstanding as of the date of this Agreement, 10,000,000
shares of preferred stock, none of which are issued and outstanding
as of the date of this Agreement. As of the date of this Agreement,
117,571 shares of Coastal Common Stock were reserved for issuance
upon the exercise of issued and outstanding stock options under the
Coastal Option Plan. As of the date of this Agreement, warrants to
purchase 190,050 shares of Coastal Common Stock were issued and
outstanding. All of the issued and outstanding shares of capital
stock of Coastal are duly and validly issued and outstanding and
are fully paid and nonassessable. None of the outstanding shares of
capital stock of Coastal has been issued in violation of any
preemptive rights of the current or past shareholders of
Coastal.
(b) Except
as specifically set forth in this Section, there are no shares of
capital stock or other equity securities of Coastal outstanding and
there are 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 Coastal or
contracts, commitments, understandings, or arrangements by which
Coastal 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.
6.4
Coastal's Subsidiaries.
(a) The
Coastal Disclosure Letter sets forth with respect to each Coastal
Company its name, its jurisdiction of incorporation, Coastal's
percentage ownership, the number of shares of stock owned or
controlled by Coastal, and the name and number of shares held by
any other person who owns any stock of the Coastal Company. Coastal
owns of record and beneficially all the capital stock of each
Coastal Company free and clear of any Liens. There are no
contracts, commitments, agreements, or understandings relating to
Coastal's right to vote or dispose of any equity securities of the
Coastal Companies. Coastal's ownership interest in each Coastal
Company is in compliance with all applicable laws, rules, and
regulations relating to equity investments by bank holding
companies or national banking associations.
(b) Each
Coastal Company is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation, has
all requisite corporate power and authority to own, lease, and
operate its properties, and to conduct the business currently being
conducted by it and is duly qualified or licensed as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which the character of the properties owned or
leased by it or the nature of the business conducted by it makes
such qualification or licensing necessary.
(c) The
outstanding shares of capital stock of each Coastal Company have
been validly authorized and are validly issued, fully paid, and
nonassessable. No shares of capital stock of any Coastal Company
are or may be required to be issued by virtue of any options,
warrants or other rights, no securities exist that are convertible
into or exchangeable for shares of such capital stock, or any other
debt or equity security of any Coastal Company, and there are no
contracts, commitments, agreements, or understandings of any kind
for the issuance of additional shares of capital stock or other
debt or equity security of any Coastal Company or options,
warrants, or other rights with respect to such
securities.
6.5
Exchange Act Filings; Financial
Statements.
(a) Coastal
has timely filed and made available to Coastal all SEC Documents
required to be filed by Coastal since December 31, 2000. The
Coastal SEC Documents (i) at the time filed, complied in all
material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at
the time they were filed (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such
filing or, in the case of registration statements, at
the
18
effective date thereof) contain
any untrue statement of a material fact or omit to state a material
fact required to be stated in such Coastal SEC Documents or
necessary in order to make the statements in such Coastal SEC
Documents not misleading. Coastal has made available to First
Capital all comment letters received by Coastal from the staffs of
the SEC and the OCC and all responses to such comment letters by or
on behalf of Coastal with respect to all filings under the
Securities Laws. Coastal's principal executive officer and
principal financial officer (and Coastal's former principal
executive officers and principal financial officers, as applicable)
have made the certifications required by Sections 302 and 906 of
the Sarbanes-Oxley Act and the rules and regulations of the
Exchange Act thereunder with respect to the Coastal SEC Documents.
For purposes of the preceding sentence, "principal executive
officer" and "principal financial officer" shall have the meanings
given to such terms in the Sarbanes-Oxley Act. Such certifications
contain no qualifications or exceptions to the matters certified
therein and have not been modified or withdrawn; and neither
Coastal nor any of its officers has received notice from any
Regulatory Authority questioning or challenging the accuracy,
completeness, content, form, or manner of filing or submission of
such certifications. No Coastal Company is required to file any
reports under the Exchange Act.
(b) Each
of the Coastal Financial Statements (including, in each case, any
related notes) contained in the Coastal SEC Documents, including
any Coastal SEC Documents filed after the date of this Agreement
until the Effective Time, complied as to form in all material
respects with the Exchange Act, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as
permitted by Form 10-QSB of the Exchange Act), and fairly
presented the financial position of Coastal and each Coastal
Company as at the respecti
