Exhibit 2
AGREEMENT AND PLAN OF MERGER
By And Between
SCBT FINANCIAL CORPORATION
(Buyer)
AND
NEW COMMERCE BANCORP
(Seller)
Dated as of
DECEMBER 16, 2004
TABLE OF CONTENTS
i
ii
LIST OF
EXHIBITS
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Exhibit
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Description
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A
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Form of Support Agreement
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B
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Form of Employment Agreement
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C
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Form of Consulting Agreement
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D
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Form of Director’s Agreement
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E
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Form of Claims Letter
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iii
AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT AND PLAN OF
MERGER (this “
Agreement ”) dated as of December 16, 2004 is by and
between SCBT Financial Corporation, a South Carolina corporation
(“ Buyer ”) and New Commerce BanCorp, a South
Carolina corporation (“ Seller ”).
Preamble
The respective Boards of Directors
of Buyer and Seller have determined that the transactions described
herein are in the best interests of the Parties to this Agreement
and their respective shareholders. This Agreement provides
for the acquisition of Seller by Buyer pursuant to the merger of
Seller with and into Buyer, subject to Section 1.4 below. The
transactions described in this Agreement are subject to the
approvals of the shareholders of Seller, the Board of Governors of
the Federal Reserve System or its delegee (“ Federal
Reserve ”), the South Carolina Board of
Financial Institutions (the “ South Carolina Board
”), and the Office of the Comptroller of the Currency
(“ OCC ”) as well as the satisfaction of certain
other conditions described in this Agreement.
Concurrently with the execution and
delivery of this Agreement, as a condition and inducement to
Buyer’s willingness to enter into this Agreement, certain of
the holders of the outstanding shares of Seller’s Common
Stock have executed and delivered to Buyer an agreement in
substantially the form of Exhibit A (the “ Support
Agreements ” ) pursuant to which they have agreed, among
other things, subject to the terms of the Support Agreement, to
vote the shares of Seller Common Stock held of record by such
Persons to approve and adopt this Agreement.
Certain capitalized 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, and other good and valuable consideration and the
receipt and sufficiency of which are acknowledged, the Parties,
intending to be legally bound, agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1
Merger.
Subject to the terms and conditions
of this Agreement, at the Effective Time, Seller shall be merged
with and into Buyer pursuant to and with the effect provided in
Section 3-11-106 of the SCBCA (the “ Merger ”),
and Buyer shall be the Surviving Corporation resulting from the
Merger and shall continue to be governed by the Laws of the State
of South Carolina and New Commerce Bank, N.A. (the “
Bank ”) shall become a wholly-owned subsidiary of
Buyer. 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 Seller and Buyer.
1.2
Time and Pl ace of Closing.
The closing of the transactions
contemplated hereby (the “ Closing ”) will take
place at 9:00 A.M. Eastern Time on the date that the Effective Time
occurs (or the immediately preceding day if the Effective Time is
earlier than 9:00 A.M. Eastern Time), or at such other time as the
Parties, acting through their authorized officers, may mutually
agree. The Closing shall be held at such location as may be
mutually agreed upon by the Parties.
1.3
Effectiv e Time.
The Merger and other transactions
contemplated by this Agreement shall become effective on the date
and time the Articles of Merger (the “ Articles of
Merger ”) reflecting the Merger shall be filed
and
become effective with the South Carolina
Secretary of State (the “ Effective Time
”). Subject to the terms and conditions hereof, unless
otherwise mutually agreed upon in writing by the authorized
officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur within five business
days of the last of the following dates to occur: (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 Seller approve this
Agreement to the extent such approval is required by applicable Law
or such later date within 30 days thereof as may be specified by
Buyer.
1.4
Restructu re of Transaction
Buyer shall have the right to revise
the structure of the Merger contemplated by this Agreement by
merging Seller with and into a wholly-owned subsidiary of Buyer,
provided, that no such revision to the structure of the
Merger shall result in (i) any changes in the amount or type
of the consideration which the holders of shares of Seller Common
Stock or Seller Rights are entitled to receive under this
Agreement, or (ii) would unreasonably impede or delay
consummation of the Merger. Buyer may exercise this right of
revision by giving written notice to Seller in the manner provided
in Section 11.8, which notice shall be in the form of an amendment
to this Agreement or in the form of an Amended and Restated
Agreement and Plan of Merger, and the addition of such other
exhibits hereto as are reasonably necessary or appropriate to
effect such change.
2.1
Charter .
The Articles of Incorporation of
Buyer in effect immediately prior to the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation until
otherwise duly amended or repealed.
2.2
Bylaw s.
The Bylaws of Buyer in effect
immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation until otherwise duly amended or
repealed.
2.3
Directors and Officers.
The directors of Buyer in office
immediately prior to the Effective Time, together with such
additional persons as may thereafter be elected, shall serve as the
directors of the Surviving Corporation from and after the Effective
Time in accordance with the Surviving Corporation’s Bylaws,
until the earlier of their resignation or removal or otherwise
ceasing to be a director. The officers of Buyer in office
immediately prior to the Effective Time, together with such
additional persons as may thereafter be elected, shall serve as the
officers of the Surviving Corporation from and after the Effective
Time in accordance with the Surviving Corporation’s Bylaws,
until the earlier of their resignation or removal or otherwise
ceasing to be an officer.
3.1
Effect on Se ller Common Stock.
(a)
At the Effective
Time, in each case subject to Section 3.1(d), by virtue of the
Merger and without any action on the part of the Parties or the
holder thereof, each share of Seller Common Stock that is issued
and outstanding immediately prior to the Effective Time (other than
shares of Seller Common
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Stock held by either Party
or any Subsidiary of a Party (in each case other than shares of
Seller Common Stock held on behalf of third parties or held by any
Buyer Entity or Seller Entity, as a result of debts previously
contracted) or shares of the Common Stock that are owned by
shareholders properly exercising their dissenters’ rights
pursuant to Sections 33-13-101 through 33-13-310 of the SCBCA) (the
“ Dissenter Shares ”) shall be converted into
the right to receive $18.00 (the “ Per Share Purchase
Price ”) in cash, less any applicable withholding
Taxes. The aggregate Merger Consideration, including payments
for the Seller Options and Seller Warrants, shall not exceed
$20,183,000 (the “ Merger Consideration
”).
(b)
At the Effective
Time, all shares of Seller Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and
shall cease to exist as of the Effective Time, and each certificate
previously representing any such shares of Seller Common Stock (the
“ Certificates ”) shall thereafter represent
only the right to receive the Merger Consideration and any
Dissenting Shares shall thereafter represent only the right to
receive applicable payments as set forth in Section
3.5.
(c)
If, prior to the
Effective Time, the outstanding shares of Seller Common Stock shall
have been increased, decreased, changed into or exchanged for a
different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, or other similar change in
capitalization, then an appropriate and proportionate adjustment
shall be made to the Per Share Purchase Price.
(d)
Each share of
Seller Common Stock issued and outstanding immediately prior to the
Effective Time and owned by any of the Parties or their respective
Subsidiaries (in each case other than shares of Seller Common Stock
held on behalf of third parties or as a result of debts previously
contracted) shall, by virtue of the Merger and without any action
on the part of the holder thereof, cease to be outstanding, shall
be cancelled and retired without payment of any consideration
therefore and shall cease to exist (the “ Excluded
Shares ”).
3.2 Buyer Common Sto ck.
At and after the Effective Time,
each share of Buyer Common Stock issued and outstanding immediately
prior to the Effective Time shall remain an issued and outstanding
share of Buyer Common Stock and shall not be affected by the
Merger.
3.3
Seller Option s.
(a)
At the Effective
Time, each outstanding option (each, a “ Seller Option
”) to acquire a share of Seller Common Stock granted pursuant
to Seller’s 1999 Stock Incentive Plan then outstanding shall
be cancelled and shall entitle the holder of each Seller Option to
receive from Buyer, an amount of cash (without interest) equal to
the excess, if any, of the amount of the Per Share Purchase Price
over the exercise price per share of Seller Common Stock under such
Seller Option (with the aggregate amount of such payment rounded
down to the nearest cent) less applicable Taxes, if any, required
to be withheld with respect to such payment. No consideration
shall be paid with respect to any Seller Option, the exercise price
of which exceeds the Per Share Purchase Price.
(b)
The
Seller’s Board of Directors or its Compensation Committee
shall make such adjustments and amendments to or make such
determinations with respect to the Seller Options to effect the
foregoing provisions of this Section 3.3.
3.4
Seller Warra nts.
Buyer shall pay each holder (each a
“ Warrantholder ”) of an outstanding warrant to
purchase shares of Seller Common Stock (each, a “ Seller
Warrant ” and collectively with the Seller Options, the
“ Seller Rights” ) upon surrender of each
Warrant, an amount in cash (without interest) equal to the product
obtained by multiplying (x) the total number of shares of
Seller Common Stock issuable upon the exercise in full of each
Seller Warrant held by such Warrantholder by (y) the excess,
if any, of the amount
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of the Per Share Purchase Price over the
exercise price per share of Seller Common Stock under such Seller
Warrant (with the aggregate amount of such payment rounded down to
the nearest cent) less applicable Taxes, if any, required to be
withheld with respect to such payment. No consideration shall
be paid for any Seller Warrant the exercise price per share of
Seller Common Stock under which exceeds the Per Share Purchase
Price, and each such Seller Warrant shall be cancelled as of the
Effective Time.
3.5 Dissenting Shareholder
s.
Any holder of shares of Seller
Common Stock who perfects such holder’s dissenters’
rights in accordance with and as contemplated by Sections 33-13-101
through 33-13-310 of the SCBCA shall be entitled to receive from
the Surviving Corporation, in lieu of the Per Share Purchase Price,
the value of such shares as to which dissenters rights have been
perfected in cash as determined pursuant to such provision of Law;
provided , that no such payment shall be made to any
dissenting shareholder unless and until such dissenting shareholder
has complied with all applicable provisions of such Law, and
surrendered to Seller 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 Seller fails
to perfect, or effectively withdraws or loses, such holder’s
right to appraisal of and payment for such holder’s
Dissenting Shares, Buyer or the Surviving Corporation shall issue
and deliver the consideration to which such holder of shares of
Seller Common Stock is entitled under this Article 3 (without
interest) upon surrender by such holder of the certificate or
certificates representing such shares of Seller Common Stock held
by such holder.
4.1 Payment Procedures .
(a)
Promptly after
the Effective Time, Buyer shall cause the exchange agent selected
by Buyer (the “ Exchange Agent ”) to mail to the
former shareholders of Seller and former holders of Seller Rights
appropriate transmittal materials (which shall specify that
delivery shall be effected, and risk of loss and title to the
certificates or other instruments theretofore representing shares
of Seller Common Stock and Seller Rights shall pass, only upon
proper delivery of such certificates or other instruments to the
Exchange Agent). The certificate or certificates of Seller
Common Stock and instruments representing Seller Rights so
surrendered shall be duly endorsed as the Exchange Agent may
reasonably require. In the event of a transfer of ownership
of shares of Seller Common Stock represented by certificates that
is not registered in the transfer records of Seller, the Merger
Consideration payable for such shares as provided in Section 3.1
may be issued to a transferee if the certificates representing such
shares are delivered to the Exchange Agent, accompanied by all
documents required to evidence such transfer and by evidence
reasonably satisfactory to the Exchange Agent that such transfer is
proper and that any applicable stock transfer taxes have been
paid. In the event any certificate representing Seller Common
Stock certificate or Seller Right shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
person claiming such certificate to be lost, stolen or destroyed
and the posting by such person of a bond in such amount as Buyer
may reasonably direct as indemnity against any claim that may be
made against it with respect to such certificate, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed
certificate the Merger Consideration as provided for in Section
3.1. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it
may deem appropriate. Buyer shall pay all charges and
expenses, including those of the Exchange Agent in connection with
the distribution of the Merger Consideration as provided in Section
3.1.
(b)
After the
Effective Time, each holder of shares of Seller Common Stock (other
than Excluded Shares) issued and outstanding at the Effective Time
shall surrender the Certificate or Certificates
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representing such shares to
the Exchange Agent and shall promptly upon surrender thereof
receive in exchange therefor the consideration provided in Section
3.1, without interest, pursuant to this Section 4.1. Buyer
shall not be obligated to deliver the consideration to which any
former holder of Seller Common Stock is entitled as a result of the
Merger until such holder surrenders such holder’s Certificate
or Certificates for exchange as provided in this Section 4.1.
Any other provision of this Agreement notwithstanding, neither any
Buyer Entity, nor any Seller Entity, nor the Exchange Agent shall
be liable to any holder of Seller Common Stock or to any holder of
Seller Rights for any amounts paid or properly delivered in good
faith to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
(c)
Each of Buyer and
the Exchange Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Seller Common Stock and Seller Rights such
amounts, if any, as it is required to deduct and withhold with
respect to the making of such payment under the Code or any
provision of state, local or foreign Tax Law or by any Taxing
Authority or Governmental Authority. To the extent that any
amounts are so withheld by Buyer, the Surviving Corporation or the
Exchange Agent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to
the holder of the shares of Seller Common Stock or Seller Rights,
as applicable in respect of which such deduction and withholding
was made by Buyer, the Surviving Corporation or the Exchange Agent,
as the case may be.
(d)
Adoption of this
Agreement by the shareholders of Seller shall constitute
ratification of the appointment of the Exchange Agent.
4.2 Rights of Former Seller Shar
eholders.
At the Effective Time, the stock
transfer books of Seller shall be closed as to holders of Seller
Common Stock and no transfer of Seller Common Stock by any holder
of such shares shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of
Section 4.1, each Certificate theretofore representing shares of
Seller Common Stock (other than certificates representing Excluded
Shares and Dissenting Shares), shall from and after the Effective
Time represent for all purposes only the right to receive the
Merger Consideration, without interest, as provided in Article
3.
Seller represents and warrants to
Buyer, except as set forth on the Seller Disclosure Memorandum with
respect to each such Section below, as follows:
5.1
Organization , Standing, and Power.
Seller 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 Bank Holding Company Act of 1956, as amended
(the “ BHCA ” ). The Bank is a national
banking association, duly organized, validly existing and in good
standing under the laws of the United States of America. Each
of Seller and the Bank has the corporate power and authority to
carry on its business as now conducted and to own, lease and
operate its Assets. Each of the Seller and the Bank 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 where the failure to be so qualified
or licensed is not reasonably likely to have, individually or in
the aggregate, a Seller Material Adverse Effect. The minute
book and other organizational documents for each of Seller and the
Bank have been made available to
5
Buyer for its review and, except as disclosed in
Section 5.1 of the Seller Disclosure Memorandum, are true and
complete in all material respects as in effect as of the date of
this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the respective Board of
Directors (including any committees of the Board of Directors) and
shareholders thereof. The Bank is an “insured
institution” as defined in the Federal Deposit Insurance Act
and applicable regulations thereunder, and the deposits held by
Bank are insured by the FDIC’s Bank Insurance
Fund.
5.2 Authority of Seller ; No Breach By
Agreement.
(a)
Seller 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
Seller’s shareholders in accordance with this Agreement and
the SCBCA, 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 each of Seller,
subject to the approval of this Agreement by the holders of
two-thirds of the outstanding shares of Seller Common Stock, which
is the only shareholder vote required for approval of this
Agreement and consummation of the Merger. Subject to such
requisite shareholder approval, this Agreement represents a legal,
valid, and binding obligation of each of Seller and the Bank,
enforceable against each of Seller and the Bank in accordance with
its terms.
(b)
Neither the
execution and delivery of this Agreement by Seller, nor the
consummation by Seller and the Bank of the transactions
contemplated hereby, nor compliance by Seller and the Bank with any
of the provisions hereof, will (i) conflict with or result in
a breach of any provision of Seller’s Articles of
Incorporation or Bylaws or the certificate or articles of
incorporation or association or bylaws of any Seller Subsidiary or
any resolution adopted by the board of directors or the
shareholders of any Seller Entity, or (ii) except as disclosed
in Section 5.2 of the Seller Disclosure Memorandum, constitute or
result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any Seller
Entity under, any Contract or Permit of any Seller Entity or,
(iii) subject to receipt of the requisite Consents referred to
in Section 9.1(c), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to any
Seller Entity or any of their respective material Assets (including
any Buyer Entity or any Seller Entity becoming subject to or liable
for the payment of any Tax or any of the Assets owned by any Buyer
Entity or any Seller Entity being reassessed or revalued by any
Regulatory Authority).
(c)
Other than in
connection or compliance with the provisions of the Securities Laws
and 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, no notice to, filing with, or Consent of, any
Governmental Authority is necessary for the consummation by Seller
of the Merger and the other transactions contemplated in this
Agreement.
5.3
Capital Stock .
(a)
The authorized
capital stock of Seller consists only of 10,000,000 shares of
Seller Common Stock, of which 1,000,000 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, and, assuming that all of the issued and
outstanding Seller Options or Seller Warrants are exercised, not
more than 1,244,500 shares will be issued and outstanding at the
Effective Time. All of the issued and outstanding shares of
capital stock of Seller are duly and validly issued and outstanding
and are fully paid and nonassessable. None of the outstanding
shares of capital stock of Seller has been issued in violation of
any preemptive rights of the current or past shareholders of
Seller.
6
(b)
Except for the
154,500 shares of Seller Common Stock reserved for issuance
pursuant to outstanding Seller Options and 90,000 shares of Seller
Common Stock reserved for issuance pursuant to outstanding Seller
Warrants, each as disclosed in Section 5.3(b) of the Seller
Disclosure Memorandum, there are no shares of capital stock or
other equity securities of Seller reserved for issuance and no
outstanding Rights relating to the capital stock of
Seller.
(c)
Except as
specifically set forth in this Section 5.3, there are no shares of
Seller capital stock or other equity securities of Seller
outstanding and there are no outstanding Rights with respect to any
Seller securities or any right or privilege (whether pre-emptive or
contractual) capable of becoming a Contract or Right for the
purchase, subscription, exchange or issuance of any securities of
Seller.
5.4 Seller Subsidiaries
.
Seller has disclosed in Section 5.4
of the Seller Disclosure Memorandum each of the Seller Subsidiaries
that is a corporation (identifying its jurisdiction of
incorporation, each jurisdiction in which it is qualified and/or
licensed to transact business, and the number of shares owned and
percentage ownership interest represented by such share ownership)
and each of the Seller Subsidiaries that is a general or limited
partnership, limited liability company, or other non-corporate
entity (identifying the form of organization and the Law under
which such entity is organized, each jurisdiction in which it is
qualified and/or licensed to transact business, and the amount and
nature of the ownership interest therein). Except as
disclosed in Section 5.4 of the Seller Disclosure Memorandum,
Seller owns, directly or indirectly all of the issued and
outstanding shares of capital stock (or other equity interests) of
each Seller Subsidiary. No capital stock (or other equity
interest) of any Seller Subsidiary is or may become required to be
issued (other than to another Seller Entity) by reason of any
Rights, and there are no Contracts by which any Seller Subsidiary
is bound to issue (other than to another Seller Entity) additional
shares of its capital stock (or other equity interests) or Rights
or by which any Seller Entity is or may be bound to transfer any
shares of the capital stock (or other equity interests) of any
Seller Subsidiary (other than to another Seller Entity).
There are no Contracts relating to the rights of any Seller Entity
to vote or to dispose of any shares of the capital stock (or other
equity interests) of any Seller Subsidiary. All of the shares
of capital stock (or other equity interests) of each Seller
Subsidiary are fully paid and nonassessable (except as provided in
12 U.S.C. 55 with respect to the Bank) and are owned directly or
indirectly by Seller free and clear of any Lien. Except as
disclosed in Section 5.4 of the Seller Disclosure Memorandum, each
Seller Subsidiary is a national banking association, corporation,
limited liability company, limited partnership or limited liability
partnership, and each such Subsidiary is duly organized, validly
existing, and in good standing under the Laws of the jurisdiction
in which it is incorporated or organized, and has the corporate or
entity power and authority necessary for it to own, lease, and
operate its Assets and to carry on its business as now
conducted. Each Seller Subsidiary is duly qualified or
licensed to transact business as a foreign entity 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 Seller Material Adverse Effect. The minute book
and other organizational documents for each Seller Subsidiary have
been made available to Buyer for its review, and, except as
disclosed in Section 5.4 of the Seller Disclosure Memorandum, are
true and complete in all material respects as in effect as of the
date of this Agreement and accurately reflect in all material
respects all amendments thereto and all proceedings of the Board of
Directors and shareholders thereof.
5.5 Exchange Act Filing s; Financial
Statements.
(a)
Seller has timely
filed and made available to Buyer all Exchange Act Documents
required to be filed by Seller since December 31, 1999
(the “
Seller Exchange Act Reports ”) as listed in Section
5.5 of the Seller Disclosure Memo. The Seller Exchange Act
Reports (i) at the time filed, complied in all
7
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 effective date thereof) contain any
untrue statement of a material fact or omit to state a material
fact required to be stated in such Seller Exchange Act Reports or
necessary in order to make the statements in such Seller Exchange
Act Reports not misleading. Seller has delivered to Buyer all
comment letters received by Seller from the staffs of the SEC and
the OCC and all responses to such comment letters by or on behalf
of Seller with respect to all filings under the Securities
Laws. Seller’s principal executive officer and
principal financial officer (and Seller’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 Seller’s Exchange Act
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 Seller
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 Seller Subsidiary is required to file any
Exchange Act Documents.
(b)
Each of the
Seller Financial Statements (including, in each case, any related
notes) contained in the Seller Exchange Act Reports, including any
Seller Exchange Act Reports 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 Seller and its Subsidiaries 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)
Seller’s
independent public accountants, which have expressed their opinion
with respect to the Financial Statements of Seller and its
Subsidiaries included in Seller’s Exchange Act Reports
(including the related notes), are and have been throughout the
periods covered by such 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 Seller within the
meaning of Regulation S-X and (z) with respect to Seller, in
compliance with subsections (g) through (l) of Section 10A of the
Exchange Act and related Securities Laws. Section 5.5(c) of
the Seller Disclosure Memorandum lists all non-audit services
preformed by Seller’s independent public accountants for
Seller and its Subsidiaries.
(d)
Seller 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 Seller
and its Subsidiaries is made known on a timely basis to the
individuals responsible for the preparation of Seller’s
Exchange Act Documents. Seller and its directors and
executive officers have complied at all times with Section 16(a) of
the Exchange Act, including the filing requirements
thereunder.
5.6 Absence of Undisclosed
Liabilities.
No Seller Entity has any Liabilities
required under GAAP to be set forth on a consolidated balance sheet
or in the notes thereto that are reasonably likely to have,
individually or in the aggregate, a Seller Material Adverse Effect,
except Liabilities which are (i) accrued or reserved against in the
consolidated balance sheet of Seller as of September 30, 2004,
included in the Seller Financial Statements delivered prior to the
date of this Agreement or reflected in the notes thereto, (ii)
incurred in the ordinary course of
8
business consistent with past practices, or
(iii) incurred in connection with the transactions contemplated by
this Agreement. Section 5.6 of the Seller Disclosure
Memorandum lists, and Seller has attached and delivered to Buyer
copies of the documentation creating or governing, all
securitization transactions and “ off-balance sheet
arrangements ” (as defined in Item 303(a)(4)(ii) of
Regulation S-K of the Exchange Act) effected by Seller or its
Subsidiaries other than letters of credit and unfunded loan
commitments or credit lines. Except as disclosed in Section
5.6 of the Seller Disclosure Memorandum, no Seller Entity is
directly or indirectly liable, by guarantee, indemnity, or
otherwise, upon or with respect to, or obligated, by discount or
repurchase agreement or in any other way, to provide funds in
respect to, or obligated to guarantee or assume any Liability of
any Person for any amount in excess of $50,000. Except (x) as
reflected in Seller’s balance sheet at September 30, 2004 or
liabilities described in any notes thereto (or liabilities for
which neither accrual nor footnote disclosure is required pursuant
to GAAP or any applicable Regulatory Authority) or (y) for
liabilities incurred in the ordinary course of business since
September 30, 2004 consistent with past practice or in connection
with this Agreement or the transactions contemplated hereby,
neither Seller nor any of its Subsidiaries has any Material
Liabilities or obligations of any nature.
5.7 Absence of Certain Cha nges or
Events.
Except as disclosed in the Seller
Financial Statements delivered prior to the date of this Agreement
or as disclosed in Section 5.7 of the Seller Disclosure Memorandum,
(i) there have been no events, changes, or occurrences which
have had, or are reasonably likely to have, individually or in the
aggregate, a Seller Material Adverse Effect, (ii) none of the
Seller Entities 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 Seller provided in Article 7, and (iii) since
December 31, 2003 the Seller Entities have conducted their
respective businesses in the ordinary course of business consistent
with past practice.
5.8
Tax Matter s.
(a)
All Seller
Entities have timely filed with the appropriate Taxing Authorities,
all Tax Returns in all jurisdictions in which Tax Returns are
required to be filed, and such Tax Returns are correct and complete
in all respects. None of the Seller Entities is the
beneficiary of any extension of time within which to file any Tax
Return. All Taxes of the Seller Entities (whether or not
shown on any Tax Return) have been fully and timely paid.
There are no Liens for any Taxes (other than a Lien for current
real property or ad valorem Taxes not yet due and payable)
on any of the Assets of any of the Seller Entities. No claim
has ever been made by an authority in a jurisdiction where any
Seller Entity does not file a Tax Return that such Seller Entity
may be subject to Taxes by that jurisdiction.
(b)
None of the
Seller Entities has received any notice of assessment or proposed
assessment in connection with any Taxes, and there are no
threatened or pending disputes, claims, audits or examinations
regarding any Taxes of any Seller Entity or the assets of any
Seller Entity. No officer or employee responsible for Tax
matters of any Seller Entity expects any Taxing Authority to assess
any additional Taxes for any period for which Tax Returns have been
filed. No issue has been raised by a Taxing Authority in any
prior examination of the company which, by application of the same
or similar principles, could be expected to result in a proposed
deficiency for any subsequent taxable period. None of the Seller
Entities has waived any statute of limitations in respect of any
Taxes or agreed to a Tax assessment or deficiency.
(c)
Each Seller
Entity has complied with all applicable Laws relating to the
withholding of Taxes and the payment thereof to appropriate
authorities, including Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee or
independent contractor, and Taxes required to be withheld and paid
pursuant to Sections 1441 and 1442 of the Code or similar
provisions under foreign Law.
9
(d)
The unpaid Taxes
of each Seller Entity (i) did not, as of the most recent fiscal
month end, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of
the most recent balance sheet (rather than in any notes thereto)
for such Seller Entity and (ii) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in
accordance with past custom and practice of the Seller Entities in
filing their Tax Returns.
(e)
Except as
described in Section 5.8(e) of the Seller Disclosure Memorandum,
none of the Seller Entities is a party to any Tax allocation or
sharing agreement and none of the Seller Entities has been a member
of an affiliated group filing a consolidated federal income Tax
Return or has any Tax Liability of any Person under Treasury
Regulation Section 1.1502-6 or any similar provision of state,
local or foreign Law, or as a transferee or successor, by contract
or otherwise.
(f)
During the
five-year period ending on the date hereof, none of the Seller
Entities was a “distributing corporation” or a
“controlled corporation” as defined in, and in a
transaction intended to be governed by Section 355 of the
Code.
(g)
Except as
disclosed in Section 5.8(g) of the Seller Disclosure Memorandum,
none of the Seller Entities has made any payments, is obligated to
make any payments, or is a party to any contract that could
obligate it to make any payments that could be disallowed as a
deduction under Section 280G or 162(m) of the Code, or which would
be subject to withholding under Section 4999 of the Code.
Seller is not, and has not been, a United States real property
holding corporation within the meaning of Code Section
897(c)(1)(A)(ii). None of the Seller Entities has been or
will be required to include any adjustment in taxable income for
any Tax period (or portion thereof) pursuant to Section 481 of the
Code or any comparable provision under state or foreign Tax Laws as
a result of transactions or events occurring prior to the
Closing. There is no taxable income of Seller that will be
required under applicable tax law to be reported by Buyer,
including the Company, for a taxable period beginning after the
Closing Date which taxable income was realized prior to the Closing
Date. The net operating losses of the Seller Entities
disclosed in Section 5.8(g) of the Seller Disclosure Memorandum are
not subject to any limitation on their use under the provisions of
Sections 382 or 269 of the Code or any other provisions of the Code
or the Treasury Regulations dealing with the utilization of net
operating losses other than any such limitations as may arise as a
result of the consummation of the transactions contemplated by this
Agreement.
(h)
Each of the
Seller Entities is in compliance with, and its records contain all
information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local
Tax Laws, and such records identify with specificity all accounts
subject to backup withholding under Section 3406 of the
Code.
(i)
No Seller Entity
is subject to any private letter ruling of the IRS or comparable
rulings of any Taxing Authority.
(j)
No property owned
by any Seller Entity is (i) property required to be treated as
being owned by another Person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately prior to the enactment of the Tax Reform Act of
1986, (ii) “tax-exempt use property” within the meaning
of Section 168(h)(1) of the Code or (iii) “tax-exempt bond
financed property” within the meaning of Section 168(g) of
the Code, (iv) “limited use property” within the
meaning of Rev. Proc. 76-30, (v) subject to Section 168(g)(1)(A) of
the Code or (vi) subject to any provision of state, local or
foreign Law comparable to any of the provisions listed
above.
(k)
No Seller Entity
has any “corporate acquisition indebtedness” within the
meaning of Section 279 of the Code.
10
(l)
Seller has
disclosed on its federal income Tax Returns all positions taken
therein that are reasonably believed to give rise to substantial
understatement of federal income tax within the meaning of Section
6662 of the Code.
(m)
No Seller Entity
has participated in any reportable transaction, as defined in
Treasury Regulation Section 1.6011-4(b)(1), or a transaction
substantially similar to a reportable transaction.
(n)
Seller has
provided Buyer with complete copies of (i) all federal, state,
local and foreign income or franchise Tax Returns of the Seller
Entities relating to the taxable periods since 2000 and (ii) any
audit report issued within the last four (4) years relating to any
Taxes due from or with respect to the Seller Entities.
(o)
No Seller Entity
nor any other Person on its behalf has (i) filed a consent pursuant
to Section 341(f) of the Code (as in effect prior to the repeal
under the Jobs and Growth Tax Reconciliation Act of 2003) or agreed
to have Section 341(f)(2) of the Code (as in effect prior to the
repeal under the Jobs and Growth Tax Reconciliation Act of 2003)
apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by any Seller
Entities, (ii) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any similar provision of
Law with respect to the Seller Entities, or (iii) granted to any
Person any power of attorney that is currently in force with
respect to any Tax matter.
(p)
No Seller Entity
has, or ever had, a permanent establishment in any country other
than the United States, or has engaged in a trade or business in
any country other than the United States that subjected it to tax
in such country.
For purposes of this Section 5.8,
any reference to the Seller or any Seller Entity shall be deemed to
include any Person which merged with or was liquidated into or
otherwise combined with the Seller or a Seller Entity.
5.9 Allowance for Possible Loan
Losses; Loan and Investment Portfolio, etc.
(a)
The
Seller’s allowance for possible loan, lease, securities or
credit losses (the “ Allowance ”) shown on the
balance sheets of Seller included in the most recent Seller
Financial Statements dated prior to the date of this Agreement was,
and the Allowance shown on the balance sheets of Seller included in
the Seller Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for all known or reasonably
anticipated losses relating to or inherent in the loan, lease and
securities portfolios (including accrued interest receivables,
letters of credit and commitments to make loans or extend credit),
by the Seller Entities as of the dates thereof. The Seller
Financial Statements fairly present the fair market values of all
loans, leases, securities, tangible and intangible assets and
liabilities, and any impairments thereof.
(b)
As of the date
hereof, all loans, discounts and leases (in which any Seller Entity
is lessor) reflected on Seller’s Financial Statements were,
and with respect to the consolidated balance sheets delivered as of
the dates subsequent to the execution of this Agreement will be as
of the dates thereof, (a) at the time and under the circumstances
in which made, made for good, valuable and adequate consideration
in the ordinary course of business and are the legal and binding
obligations of the obligors thereof, (b) evidenced by genuine
notes, agreements or other evidences of indebtedness and (c) to the
extent secured, have been secured, to the Knowledge of Seller, by
valid liens and security interests which have been perfected.
Accurate lists of all loans, discounts and financing leases as of
November 30, 2004 and on a monthly basis thereafter, and of the
investment portfolios of each Seller Entity as of such date, have
been and will be delivered to Buyer concurrently with the Seller
Disclosure Memorandum. Except as specifically set forth in
Section 5.9(b) of the Seller Disclosure Memorandum, neither Seller
nor the Bank is a party to any written or oral loan agreement, note
or borrowing arrangement, including any loan
11
guaranty, that was, as of
the most recent month-end (i) delinquent by more than 30 days in
the payment of principal or interest, (ii) to Seller’s
Knowledge, otherwise in material default for more than 30 days,
(iii) classified as “substandard,”
“doubtful,” “loss,” “other assets
especially mentioned” or any comparable classification by
Seller or by any applicable Regulatory Authority or Reserve, (iv)
an obligation of any director, executive officer or 10% shareholder
of any Seller Entity who is subject to Regulation O of the Federal
Reserve Board (12 C.F.R. Part 215), or any person, corporation or
enterprise controlling, controlled by or under common control with
any of the foregoing, or (v) in violation of any Law.
5.10
Assets .
(a)
Except as
disclosed in Section 5.10 of the Seller Disclosure Memorandum or as
disclosed or reserved against in the Seller Financial Statements
delivered prior to the date of this Agreement, the Seller Entities
have good and marketable title, free and clear of all Liens, to all
of their respective Assets. All tangible properties used in
the businesses of the Seller Entities are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Seller’s past
practices.
(b)
All Assets which
are material to Seller’s business, held under leases or
subleases by any of the Seller Entities, are held under valid
Contracts enforceable in accordance with their respective terms,
and each such Contract is in full force and effect.
(c)
The Seller
Entities currently maintain 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 Seller
Entities has received notice from any insurance carrier that
(i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium
costs with respect to such policies of insurance will be
substantially increased, or (iii) that similar coverage will be
denied or limited or not extended or renewed with respect to any
Seller Entity, any act or occurrence, or that any Asset, officer,
director, employee or agent of any Seller Entity 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
Seller Entity under such policies. Seller 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
Seller Entities include all Assets required to operate the business
of the Seller Entities as presently conducted.
5.11
Intellectual Proper
ty.
Each Seller Entity owns or has a
license to use all of the Intellectual Property used by such Seller
Entity in the course of its business, including sufficient rights
in each copy possessed by each Seller Entity. Each Seller
Entity 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 Seller Entity in connection with such Seller
Entity’s business operations, and such Seller Entity has the
right to convey by sale or license any Intellectual Property so
conveyed. No Seller Entity is in Default under any of its
Intellectual Property licenses. No proceedings have been
instituted, or are pending or to the Knowledge of Seller
threatened, which challenge the rights of any Seller Entity with
respect to Intellectual Property used, sold or licensed by such
Seller Entity in the course of its business, nor has any person
claimed or alleged any rights to such Intellectual Property.
The conduct of the business of the Seller Entities does not
infringe any Intellectual Property of any other person.
Except as disclosed in Section 5.11 of the Seller Disclosure
Memorandum, no Seller Entity is obligated to pay any recurring
royalties to any Person with respect to any such Intellectual
Property. Except as disclosed in Section 5.11 of the Seller
Disclosure Memorandum, Seller has Contracts with each of its
directors, officers, or employees which require such officer,
director or employee to assign any interest in any Intellectual
Property to a Seller Entity and to keep confidential any
12
trade secrets, proprietary data, customer
information, or other business information of a Seller Entity, and
to Seller’s Knowledge, no such officer, director or employee
is party to any Contract with any Person other than a Seller Entity
which requires such officer, director or employee to assign any
interest in any Intellectual Property to any Person other than a
Seller Entity or to keep confidential any trade secrets,
proprietary data, customer information, or other business
information of any Person other than a Seller Entity. To
Seller’s Knowledge, no officer, director or employee of any
Seller Entity 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 Seller
Entity.
5.12
Environmental Mat ters.
(a)
Seller has
delivered, or caused to be delivered to Buyer, or provided Buyer
access to, true and complete copies of, all environmental site
assessments, test results, analytical data, boring logs, and other
environmental reports and studies held by any Seller Entity
relating to its Participating Facilities and Operating
Facilities. To Seller’s Knowledge, there are no
material violations of Environmental Laws or properties that secure
loans made by Seller or Bank.
(b)
To Seller’s
Knowledge, each Seller Entity, its Participation Facilities, and
its Operating Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably
likely to have, individually or in the aggregate, a Seller Material
Adverse Effect.
(c)
There is no
Litigation pending or to Seller’s Knowledge, threatened
before any Governmental Authority or other forum in which any
Seller Entity or any of its Operating Properties or Participation
Facilities (or Seller in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with or Liability
under any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any
Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site
currently or formerly owned, leased, or operated by any Seller
Entity or any of its Operating Properties or Participation
Facilities.
(d)
During the period
of (i) any Seller Entity’s ownership or operation of any
of their respective current properties, (ii) any Seller
Entity’s participation in the management of any Participation
Facility, or (iii) any Seller Entity’s holding of a
security interest in any Operating Property, there have been no
releases, discharges, spillages, or disposals of Hazardous Material
in, on, under, adjacent to, or affecting (or potentially affecting)
such properties. Prior to the period of (i) any Seller
Entity’s ownership or operation of any of their respective
current properties, (ii) any Seller Entity’s
participation in the management of any Participation Facility, or
(iii) any Seller Entity’s holding of a security interest
in any Operating Property, to Seller’s Knowledge, there were
no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, or affecting any such property,
Participation Facility or Operating Property,
5.13
Compliance with La
ws.
(a)
Seller is a bank
holding company duly registered and in good standing as such with
the Federal Reserve and the Commissioner. Seller Bank is a
member in good standing of the Federal Reserve System and the
FDIC.
(b)
Compliance with
Permits, Laws and Orders.
(i) Each of the Seller
Entities has in effect all Permits and has made all filings,
applications, and registrations with Governmental 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.
13
(ii) None of the Seller
Entities is in Default under any Laws or Orders applicable to its
business or employees conducting its business.
(iii) None of the Seller Entities
has received any notification or communication from any
Governmental Authority, (A) asserting that Seller or any of
its Subsidiaries is in Default under any of the Permits, Laws or
Orders which such Governmental Authority enforces,
(B) threatening to revoke any Permits, or (C) requiring
Seller or any of its Subsidiaries (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.
(iv) There (A) is no unresolved
violation, criticism, or exception by any Governmental Authority
with respect to any report or statement relating to any
examinations or inspections of Seller or any of its Subsidiaries,
(B) and no notices or correspondence received by Seller with
respect to formal or informal inquiries by, or disagreements or
disputes with, any Governmental Authority with respect to
Seller’s or any of Seller’s Subsidiaries’
business, operations, policies or procedures since January 1,
2001, and (C) is not any pending or, to its Knowledge, threatened,
nor has any Governmental Authority indicated an intention to
conduct any, investigation or review of it or any of its
Subsidiaries.
(v) None of the Seller Entities nor
any of its directors, officers, employees or Representatives acting
on its behalf has offered, paid, or agreed to pay any Person,
including any Government 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, as amended,
or (4) making any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(vi) Each Seller Entity has complied
with all requirements of Law under the Bank Secrecy Act and the USA
Patriot Act, and each Seller Entity has timely filed all reports of
suspicious activity, including those required under 12 C.F.R.
§ 21.11.
5.14
Labor
Relati ons.
(a)
No Seller Entity
is the subject of any Litigation asserting that it or any other
Seller Entity has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state
Law) or other violation of state or federal labor Law or seeking to
compel it or any other Seller Entity to bargain with any labor
organization or other employee representative as to wages or
conditions of employment, nor is any Seller Entity party to any
collective bargaining agreement or subject to any bargaining order,
injunction or other Order relating to Seller’s relationship
or dealings with its employees, any labor organization or any other
employee representative. There is no strike, slowdown,
lockout or other job action or labor dispute involving any Seller
Entity pending or threatened and there has been no such actions or
disputes in the past five years. To Seller’s Knowledge,
there has not been any attempt by any Seller Entity employees or
any labor organization or other employee representative to organize
or certify a collective bargaining unit or to engage in any other
union organization activity with respect to the workforce of any
Seller Entity. Except as disclosed in Section 5.14 of the
Seller Disclosure Memorandum, employment of each employee and the
engagement of each independent contractor of each Seller Entity is
terminable at will by the relevant Seller Entity without (i) any
penalty, liability or severance obligation incurred by any Seller
Entity, (ii) and in all cases without prior consent by any
Governmental Authority. No Seller Entity will owe any amounts
to any of its employees or independent contractors as of the
Closing Date, including any amounts incurred for any wages,
bonuses, vacation pay, sick leave, contract notice periods, change
of control payments or severance obligations except as disclosed in
Section 5.14 of the Seller Disclosure Memorandum.
14
(b)
All of the
employees employed in the United States are either United States
citizens or are legally entitled to work in the United States under
the Immigration Reform and Control Act of 1986, as amended, other
United States immigration Laws and the Laws related to the
employment of non-United States citizens applicable in the state in
which the employees are employed .
(c)
No Seller Entity
has effectuated (i) a “plant closing” (as defined in
the Worker Adjustment and Retraining Notification Act (the “
WARN Act “)) affecting any site of employment or one
or more facilities or operating units within any site of employment
or facility of any Seller Entity; or (ii) a “mass
layoff” (as defined in the WARN Act) affecting any site of
employment or facility of any Seller Entity; and no Seller Entity
has been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application
of any similar state or local Law. None of any Seller
Entity’s employees has suffered an “employment
loss” (as defined in the WARN Act) since six months prior to
the Closing Date.
(d)
Section 5.14 of
the Seller Disclosure Memorandum contains a list of all independent
contractors of each Seller Entity (separately listed by Seller
Entity) and each such Person meets the standard for an independent
contractor under all Laws (including Treasury Regulations under the
Code and federal and state labor and employment Laws) and no such
Person is an employee of any Seller Entity under any applicable
Law.
5.15
Employee Benefit Pl
ans
(a)
Seller has
disclosed in Section 5.15 of the Seller Disclosure Memorandum, and
has delivered to Buyer prior to the execution of this Agreement,
(i) copies of each Employee Benefit Plan currently adopted,
maintained by, sponsored in whole or in part by, or contributed to
by any Seller Entity or ERISA Affiliate thereof for the benefit of
employees, former employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries or under
which employees, retirees, former employees, dependents, spouses,
directors, independent contractors, or other beneficiaries are
eligible to participate (collectively, the “ Seller
Benefit Plans ” ) and (ii) a list of each Employee
Benefit Plan that is not identified in (i) above (e.g., former
Employee Benefit Plans) but for which any Seller Entity or ERISA
Affiliate has or reasonably could have any obligation or
Liability. Any of the Seller Benefit Plans which is an
“employee pension benefit plan,” as that term is
defined in ERISA Section 3(2), is referred to herein as a “
Seller ERISA Plan .” Each Seller ERISA Plan
which is also a “defined benefit plan” (as defined in
Code Section 414(j)) is referred to herein as a “ Seller
Pension Plan ,” and is identified as such in Section 5.15
of the Seller Disclosure Memorandum.
(b)
Seller has
delivered to Buyer prior to the execution of this Agreement (i) all
trust agreements or other funding arrangements for all Employee
Benefit Plans, (ii) all determination letters, rulings, opinion
letters, information letters or advisory opinions issued by the
United States Internal Revenue Service (“ IRS ”
), the United States Department of Labor (“ DOL
”) or the Pension Benefit Guaranty Corporation during this
calendar year or any of the preceding three calendar years, (iii)
any filing or documentation (whether or not filed with the IRS)
where corrective action was taken in connection with the IRS EPCRS
program set forth in Revenue Procedure 2001-17 (or its predecessor
or successor rulings), (iv) annual reports or returns, audited or
unaudited financial statements, actuarial reports and valuations
prepared for any Employee Benefit Plan for the current plan year
and the three preceding plan years, and (v) the most recent summary
plan descriptions and any material modifications
thereto.
(c)
Each Seller
Benefit Plan is in compliance with the terms of such Seller Benefit
Plan, in compliance with the applicable requirements of the Code,
in material compliance with the applicable requirements of ERISA,
and in compliance with any other applicable Laws. Each Seller
ERISA Plan which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the
IRS that is still in effect and applies to the Seller ERISA Plan as
amended and as administered or, within the time permitted under
Code Section 401(b), has timely applied for a favorable
15
determination letter which
when issued will apply retroactively to the Seller ERISA Plan as
amended and as administered. Seller is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. Seller has not received any
communication (written or unwritten) from any government agency
questioning or challenging the compliance of any Seller Benefit
Plan with applicable Laws. No Seller Benefit Plan is
currently being audited by any Governmental agency for compliance
with applicable Laws or has been audited with a determination by
Authorities among Governmental Authority that the Employee Benefit
Plan failed to comply with applicable Laws.
(d)
There has been no
oral or written representation or communication with respect to any
aspect of the Employee Benefit Plans made to employees of the
Seller which is not in accordance with the written or otherwise
preexisting terms and provisions of such plans. Neither
Seller nor any administrator or fiduciary of any Seller Benefit
Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner, which could
subject Seller or Buyer to any direct or indirect Liability (by
indemnity or otherwise) for breach of any fiduciary, co-fiduciary
or other duty under ERISA. There are no unresolved claims or
disputes under the terms of, or in connection with, the Seller
Benefit Plans other than claims for benefits which are payable in
the ordinary course of business and no action, proceeding,
prosecution, inquiry, hearing or investigation has been commenced
with respect to any Seller Benefit Plan.
(e)
All Seller
Benefit Plan documents and annual reports or returns, audited or
unaudited financial statements, actuarial valuations, summary
annual reports, and summary plan descriptions issued with respect
to the Seller Benefit Plans are correct and complete in all
material respects, have been timely filed with the IRS or the DOL,
and distributed to participants of the Seller Benefit Plans (as
required by Law), and there have been no changes in the information
set forth therein.
(f)
To the
Seller’s Knowledge, no “ party in interest
” (as defined in ERISA Section 3(14)) or “
disqualified person ” (as defined in Code Section
4975(e)(2)) of any Seller Benefit Plan has engaged in any nonexempt
“ prohibited transaction ” (described in Code
Section 4975(c) or ERISA Section 406).
(g)
Seller does not
have, and never has had, a Seller Pension Plan. All
contributions with respect to an Employee Benefit Plan of Seller,
or any of its ERISA Affiliates that is subject to Code Section 412
or ERISA Section 302 have or will be timely made and, with respect
to any such Employee Benefit Plan, there is no Lien nor is there
expected to be a Lien under Code Section 412(n) or ERISA Section
302(f) or Tax under Code Section 4971. Neither Seller nor any
of its ERISA Affiliates is subject to or can reasonably be expected
to become subject to a Lien under Code Section 401(a)(29).
All premiums required to be paid under ERISA Section 4006 have been
timely paid by Seller and by its ERISA Affiliates.
(h)
No Liability
under Title IV of ERISA has been or is expected to be incurred by
Seller or its ERISA Affiliates and no event has occurred that could
reasonably result in Liability under Title IV of ERISA being
incurred by Seller or its ERISA Affiliates with respect to any
ongoing, frozen, or terminated single-employer plan of Seller or
the single-employer plan of any ERISA Affiliate. There has
been no “ reportable event ,” within the meaning
of ERISA Section 4043 for which the 30-day reporting requirement
has not been waived by any ongoing, frozen, or terminated single
employer plan of Seller or of an ERISA Affiliate.
(i)
Except as
disclosed in Section 5.15 of the Seller Disclosure Memorandum, no
Seller Entity has any Liability for retiree health and life
benefits under any of the Seller Benefit Plans and there are no
restrictions on the rights of such Seller Entity to amend or
terminate any such retiree health or benefit Plan without incurring
any Liability thereunder except to the extent required under Part 6
of Title I of ERISA or Code Section 4980B. No Tax under Code
Sections 4980B or 5000 has been incurred with respect to any Seller
Benefit Plan and no circumstance exists which could give rise to
such Taxes.
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(j)
Except as
disclosed in Section 5.15 of the Seller Disclosure Memorandum,
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
(i) result in any payment (including severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any
director or any employee of any Seller Entity from any Seller
Entity under any Seller Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any Seller
Benefit Plan, or (iii) result in any acceleration of the time
of payment or vesting of any such benefit, or any benefit under any
life insurance owned by any Seller Entity or the rights of any
Seller Entity in, to or under any insurance on the life of
any current or former officer, director or employee of any Seller
Entity, or change any rights or obligations of any Seller Entity
with respect to such insurance.
(k)
The actuarial
present values of all accrued deferred compensation entitlements
(including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and
former employees of any Seller Entity and their respective
beneficiaries, other than entitlements accrued pursuant to funded
retirement plans subject to the provisions of Code Section 412 or
ERISA Section 302, have been fully reflected on the Seller
Financial Statements to the extent required by and in accordance
with GAAP.
(l)
All individuals
who render services to any Seller Entity and who are authorized to
participate in a Seller Benefit Plan pursuant to the terms of such
Seller Benefit Plan are in fact eligible to and authorized to
participate in such Seller Benefit Plan. All individuals
participating in (or eligible to participate in) any Seller Benefit
Plan are common-law employees of a Seller Entity.
(m)
On or after
September 26, 1980, neither the Seller nor any of its ERISA
Affiliates has had an “obligation to contribute” (as
defined in ERISA Section 4212) to a “multiemployer
plan” (as defined in ERISA Sections 4001(a)(3) and
3(37)(A)).
(n)
There are no
payments or changes in terms due to any insured person as a result
of this Agreement, the Merger or the transactions contemplated
herein, under any bank-owned, corporate-owned split dollar life
insurance, other life insurance, or similar arrangement or
Contract, and the Successor Corporation shall, upon and after the
Effective Time, succeed to and have all the rights in, to and under
such life insurance Contracts as Seller presently holds. Each
Seller Entity will, upon the execution and delivery of this
Agreement, and will continue to have, notwithstanding this
Agreement or the consummation of the transaction contemplated
hereby, all ownership rights and interest in all corporate or
bank-owned life insurance.
5.16
Material Contrac ts.
(a)
Except as
disclosed in Section 5.16 of the Seller Disclosure Memorandum or
otherwise reflected in the Seller Financial Statements, none of the
Seller Entities, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives
benefits under, (i) any employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $25,000,
(ii) any Contract relating to the borrowing of money by any
Seller Entity or the guarantee by any Seller Entity of any such
obligation (other than Contracts evidencing deposit liabilities,
purchases of federal funds repurchase agreements, fully-secured by
the United States government and government agency
securities, and Federal Home Loan Bank advances of depository
institution Subsidiaries incurred in the ordinary course of
Seller’s business, trade payables and Contracts relating to
borrowings or guarantees made in the ordinary course of
Seller’s business), (iii) any Contract which prohibits
or restricts any Seller Entity or any personnel of a Seller Entity
from engaging in any business activities in any geographic area,
line of business or otherwise in competition with any other Person,
(iv) any Contract involving Intellectual Property (other
than
17
Contracts entered into in
the ordinary course with customers and “shrink-wrap”
software licenses), (v) any Contract relating to the provision
of data processing, network communication, or other technical
services to or by any Seller Entity, (vi) any Contract
relating to the purchase or sale of any goods or services (other
than Contracts entered into in the ordinary course of business and
involving payments under any individual Contract or series of
contracts not in excess of $25,000), (vii) any exchange-traded
or over-the-counter swap, forward, future, option, cap, floor, or
collar financial Contract, or any other interest rate or foreign
currency protection Contract or any Contract that is a combination
thereof not included on its balance sheet, and (viii) any
other Contract that would be required to be filed as an exhibit to
a Form 10-KSB filed by Seller as of the date of this Agreement
pursuant to the reporting requirements of the Exchange Act
(together with all Contracts referred to in Sections 5.11 and
5.15(a), the “ Seller Contracts ” ).
(b)
With respect to
each Seller Contract and except as disclosed in Section 5.16(b) of
the Seller Disclosure Memorandum: (i) the Contract is in
full force and effect; (ii) no Seller Entity is in Default
thereunder; (iii) no Seller Entity has repudiated or waived
any material provision of any such Contract; (iv) no other
party to any such Contract is, to Seller’s Knowledge, in
Default in an
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