EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
By And Between
SCBT FINANCIAL CORPORATION
(Buyer)
AND
NEW COMMERCE BANCORP
(Seller)
Dated as of
DECEMBER 16, 2004
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TABLE OF CONTENTS
Page
----
ARTICLE 1 TRANSACTIONS AND TERMS OF
MERGER...................................1
1.1
MERGER...........................................................1
1.2 TIME
AND PLACE OF CLOSING........................................1
1.3
EFFECTIVE
TIME...................................................1
1.4
RESTRUCTURE OF
TRANSACTION.......................................2
ARTICLE 2 TERMS OF
MERGER....................................................2
2.1
CHARTER..........................................................2
2.2
BYLAWS...........................................................2
2.3
DIRECTORS AND
OFFICERS...........................................2
ARTICLE 3 MANNER OF CONVERTING
SHARES........................................2
3.1
EFFECT ON SELLER COMMON
STOCK....................................2
3.2
BUYER COMMON
STOCK...............................................3
3.3
SELLER
OPTIONS...................................................3
3.4
SELLER
WARRANTS..................................................3
3.5
DISSENTING
SHAREHOLDERS..........................................4
ARTICLE 4 PAYMENT OF
SHARES..................................................4
4.1
PAYMENT
PROCEDURES...............................................4
4.2
RIGHTS OF FORMER SELLER
SHAREHOLDERS.............................5
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF
SELLER AND BANK..................5
5.1
ORGANIZATION, STANDING, AND
POWER................................5
5.2
AUTHORITY OF SELLER; NO BREACH BY
AGREEMENT......................6
5.3
CAPITAL
STOCK....................................................6
5.4
SELLER
SUBSIDIARIES..............................................7
5.5
EXCHANGE ACT FILINGS; FINANCIAL
STATEMENTS.......................7
5.6
ABSENCE OF UNDISCLOSED
LIABILITIES...............................8
5.7
ABSENCE OF CERTAIN CHANGES OR
EVENTS.............................9
5.8 TAX
MATTERS......................................................9
5.9
ALLOWANCE FOR POSSIBLE LOAN LOSSES; LOAN AND INVESTMENT
PORTFOLIO,
ETC.................................................11
5.10
ASSETS..........................................................12
5.11
INTELLECTUAL
PROPERTY...........................................12
5.12
ENVIRONMENTAL
MATTERS...........................................13
5.13 COMPLIANCE
WITH LAWS............................................13
5.14 LABOR
RELATIONS.................................................14
5.15 EMPLOYEE
BENEFIT PLANS..........................................15
5.16 MATERIAL
CONTRACTS..............................................17
5.17 PRIVACY OF
CUSTOMER INFORMATION.................................18
5.18 LEGAL
PROCEEDINGS...............................................18
5.19
REPORTS.........................................................18
5.20 BOOKS AND
RECORDS...............................................19
5.21 LOANS TO
EXECUTIVE OFFICERS AND DIRECTORS.......................19
5.22 REGULATORY
MATTERS..............................................19
5.23 STATE
TAKEOVER LAWS.............................................19
5.24
SHAREHOLDERS' VOTING
AGREEMENTS.................................19
5.25 BROKERS
AND FINDERS; OPINION OF FINANCIAL ADVISOR...............19
5.26 BOARD
RECOMMENDATION............................................20
5.27 STATEMENTS
TRUE AND CORRECT.....................................20
5.28 DELIVERY
OF SELLER DISCLOSURE MEMORANDUM........................20
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ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF
BUYER...........................20
6.1
ORGANIZATION, STANDING, AND
POWER...............................20
6.2
AUTHORITY; NO BREACH BY
AGREEMENT...............................21
6.3
EXCHANGE ACT FILINGS; FINANCIAL
STATEMENTS......................21
6.4
REPORTS.........................................................22
6.5
BROKERS AND
FINDERS.............................................22
6.6
CERTAIN
ACTIONS.................................................22
6.7
AVAILABLE
FUNDS.................................................22
6.8
STATEMENTS TRUE AND
CORRECT.....................................22
ARTICLE 7 CONDUCT OF BUSINESS PENDING
CONSUMMATION..........................23
7.1
AFFIRMATIVE COVENANTS OF
SELLER.................................23
7.2
NEGATIVE COVENANTS OF
SELLER....................................24
7.3
ADVERSE CHANGES IN
CONDITION....................................25
7.4
REPORTS.........................................................25
ARTICLE 8 ADDITIONAL
AGREEMENTS.............................................26
8.1
PROXY STATEMENT; SHAREHOLDER
APPROVAL...........................26
8.2
OTHER OFFERS,
ETC...............................................27
8.3
[RESERVED]......................................................28
8.4
CONSENTS OF REGULATORY
AUTHORITIES..............................28
8.5
AGREEMENT AS TO EFFORTS TO
CONSUMMATE...........................28
8.6
INVESTIGATION AND
CONFIDENTIALITY...............................29
8.7
PRESS
RELEASES..................................................29
8.8
CHARTER
PROVISIONS..............................................29
8.9
EMPLOYEE BENEFITS AND
CONTRACTS.................................30
8.10
INDEMNIFICATION.................................................30
ARTICLE 9 CONDITIONS PRECEDENT TO
OBLIGATIONS TO CONSUMMATE.................32
9.1
CONDITIONS TO OBLIGATIONS OF EACH
PARTY.........................32
9.2
CONDITIONS TO OBLIGATIONS OF
BUYER..............................32
9.3 CONDITIONS
TO OBLIGATIONS OF SELLER.............................33
ARTICLE 10
TERMINATION.......................................................34
10.1
TERMINATION.....................................................34
10.2 EFFECT OF
TERMINATION...........................................35
10.3
TERMINATION
FEE.................................................35
10.4
NON-SURVIVAL OF REPRESENTATIONS AND
COVENANTS...................36
ARTICLE 11
MISCELLANEOUS.....................................................36
11.1
DEFINITIONS.....................................................36
11.2
EXPENSES........................................................44
11.3 BROKERS
AND FINDERS.............................................44
11.4 ENTIRE
AGREEMENT................................................44
11.5
AMENDMENTS......................................................45
11.6
WAIVERS.........................................................45
11.7
ASSIGNMENT......................................................45
11.8
NOTICES.........................................................45
11.9 GOVERNING
LAW...................................................46
11.10
COUNTERPARTS....................................................46
11.11 CAPTIONS;
ARTICLES AND SECTIONS.................................46
11.12
INTERPRETATIONS.................................................46
11.13 ENFORCEMENT OF
AGREEMENT........................................47
11.14
SEVERABILITY....................................................47
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LIST OF EXHIBITS
----------------
Exhibit
Description
-------
-----------
A
Form of Support Agreement
B
Form of Employment Agreement
C
Form of Consulting Agreement
D
Form of Director's Agreement
E
Form of Claims Letter
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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 Place 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 Effective 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
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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 Restructure 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.
ARTICLE 2
TERMS OF MERGER
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 Bylaws.
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.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Effect on Seller 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
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immediately prior to the Effective Time (other than shares of Seller Common
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 Stock.
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 Options.
(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 Warrants.
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 of the Per
Share Purchase Price
over the
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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 Shareholders.
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.
ARTICLE 4
PAYMENT OF SHARES
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.
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(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 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
Shareholders.
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.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER AND BANK
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 Buyer for its review and, except
5
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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
<PAGE>
(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 Filings; 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 material
7
<PAGE>
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 business
8
<PAGE>
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 Changes 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 Matters.
(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
<PAGE>
(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
<PAGE>
(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
11
<PAGE>
loan 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 Property.
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 trade secrets, proprietary
data, customer information, or other
12
<PAGE>
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 Matters.
(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 Laws.
(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.
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<PAGE>
(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. ss. 21.11.
5.14 Labor Relations.
(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.
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<PAGE>
(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 Plans
(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
determination
15
<PAGE>
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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<PAGE>
(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 Contracts.
(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
