EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ENTERPRISE BANCSHARES, INC.
AND
NBC CAPITAL CORPORATION
DATED AS OF DECEMBER 11, 2003
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER
(this “Agreement”) is made and entered into as of
December 11, 2003, by and between ENTERPRISE BANCSHARES, INC.
(“Enterprise”), a corporation organized under the laws
of the State of Tennessee, with its principal office located in
Memphis, Tennessee, and NBC CAPITAL CORPORATION
(“NBC”), a corporation organized and existing under the
laws of the State of Mississippi, with its principal office located
in Starkville, Mississippi.
PREAMBLE
The Boards of Directors of
Enterprise and NBC believe that the transactions described herein
are in the best interests of the parties to this Agreement and
their respective stockholders. This Agreement provides for the
merger of Enterprise into NBC (the “Merger”), with the
ultimate result being that Enterprise National Bank will become a
subsidiary of NBC. At the effective time of the merger, each of the
outstanding shares of common stock of Enterprise will be converted
into the right to receive $48.00 in cash, and options to acquire
shares of Enterprise will be converted into options to acquire that
number of shares of common stock of NBC with a value of $48.00,
subject to certain adjustments described herein. The transactions
described in this Agreement are subject to the approvals of the
stockholders of Enterprise and the Board of Governors of the
Federal Reserve System, and the satisfaction of certain other
conditions described in this Agreement.
As a condition and inducement to
NBC’s willingness to enter into this Agreement, nine of
Enterprise’s directors are executing and delivering to NBC an
agreement (a “Support Agreement”), in substantially the
form of Exhibit 1.
Certain terms used in this Agreement
are defined in Section 11.1 of this Agreement.
NOW, THEREFORE, in consideration of
the above and the mutual warranties, representations, covenants and
agreements set forth herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 The Merger. Subject to the terms and
conditions of this Agreement, at the Effective Time, Enterprise
shall be merged with and into NBC in accordance with the provisions
of the Tennessee Business Corporation Act (the “TBCA”)
and the Mississippi Business Corporation Act (the
“MBCA”) (the “Merger”). NBC shall be
the
surviving corporation resulting from the Merger
(the “Surviving Corporation”) and shall continue to be
governed by the laws of the State of Mississippi. 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
Enterprise and NBC.
1.2 Time and Place of Closing. The consummation
of the Merger (the “Closing”) shall take place at the
close of business on the date that the Effective Time occurs, or at
such other time as the parties, acting through their duly
authorized officers, may mutually agree. The place of Closing shall
be at such location as may be mutually agreed upon by the
parties.
1.3 Effective Time. The Merger and the other
transactions contemplated by this Agreement shall become effective
on the date and at the time that articles of merger are filed with
the Secretary of State of the State of Tennessee (the
“Tennessee Articles of Merger”) and articles of merger
are filed with the Secretary of State of the State of Mississippi
(the “Mississippi Articles of Merger”) or at such other
time as is provided in the Tennessee Articles of Merger and the
Mississippi Articles of Merger (the “Effective Time”).
Subject to the terms and conditions hereof, unless otherwise
mutually agreed upon by the duly authorized officers of each party,
the parties shall use their reasonable efforts to cause the
Effective Time to occur on the last business day of the month in
which the last of the conditions set forth in Article 9 hereof is
fulfilled or waived (other than those conditions that by their
nature are to be satisfied at the Closing).
1.4 Execution of Support Agreements.
Simultaneously with the execution of this Agreement and as a
condition hereto, nine directors of Enterprise are executing and
delivering to NBC a Support Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 Articles of Incorporation. The Articles of
Incorporation of NBC in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving
Corporation after the Effective Time until otherwise amended or
repealed.
2.2 Bylaws. The Bylaws of NBC in effect
immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation after the Effective Time until otherwise
amended or repealed.
2.3 Directors and Officers. The officers and
directors of NBC will serve as the officers and directors of the
Surviving Corporation from and after the Effective Time in
accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MERGER CONSIDERATION
3.1 Conversion of Shares. Except for shares as
to which the shareholders of Enterprise perfect their
dissenters’ rights, at the Effective Time, by virtue of the
Merger and without any action on the part of NBC or Enterprise, or
the shareholders of any of the foregoing, each outstanding share of
common stock of Enterprise (“Enterprise Common Stock”)
shall be converted into the right to receive $48.00 in cash from
NBC, without interest (the “Merger Consideration”).
Each outstanding option or right to acquire Enterprise Common Stock
outstanding at the Effective Time will become 100% vested
immediately prior to the Merger on the date of the Merger and will
be converted into an option or right to acquire, for the same
aggregate exercise price of such outstanding option, that number of
shares of common stock of NBC (“NBC Common Stock”)
having a value equal to the Merger Consideration, divided by the
greater of (i) the average closing sale price of NBC Common Stock
on the American Stock Exchange on each of the five trading days
prior to the Effective Time (the “Average Price”) or
(ii) $20.00, and multiplied by the number of shares of Enterprise
Common Stock subject to such outstanding option. To the extent that
the Average Price is less than $20.00, then each outstanding option
to acquire Enterprise Common Stock outstanding at the Effective
Time will also entitle the holder thereof, upon exercise of the
option, to receive a cash payment in the amount of the product of
(a) $20.00, less the Average Price, multiplied by (b) the number of
shares of NBC Common Stock into which their option shall have been
converted.
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3.2 Dissenting Shareholders. Any holder of
shares of Enterprise Common Stock who perfects such holder’s
dissenters’ rights of appraisal in accordance with and as
contemplated by the provisions of Section 48-23-101 et seq of the
TBCA (the “Tennessee Dissenters’ Provisions”)
shall be entitled to receive the value of such shares (the
“Dissenting Shares”) in cash as determined pursuant to
the Tennessee Dissenters’ Provisions; provided, however, that
no such payment shall be made to any dissenting shareholder unless
and until such dissenting shareholder has complied with the
Tennessee Dissenters’ Provisions and surrendered to NBC the
certificate or certificates representing the shares for which
payment is being made. If any holder of Dissenting Shares delivers
a written withdrawal of his or her demand for appraisal or fails to
establish his or her entitlement to appraisal rights pursuant to
the Tennessee Dissenters’ Provisions, such holder or holders
shall forfeit the right of appraisal for such Dissenting Shares and
NBC shall issue and deliver the Merger Consideration to which such
holder of shares of Enterprise Common Stock is entitled under this
Article 3 (without interest) upon compliance by such holder with
the requirements of Section 4.1 hereof.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures.
(a) As soon as reasonably practicable after the
Effective Time, but in no event later than 15 days after the
Effective Time, NBC shall cause SunTrust Bank Atlanta (“the
Exchange Agent”) to mail to the former shareholders of
Enterprise appropriate transmittal materials which shall specify
that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of Enterprise Common
Stock shall pass, only upon proper delivery of such certificates to
the Exchange Agent and include instructions for use in effecting
the surrender of the outstanding certificates of Enterprise Common
Stock. After the Effective Time, each holder of shares of
Enterprise Common Stock (other than shares as to which
dissenters’ rights of appraisal as contemplated by Section
3.2 of this Agreement have been perfected and not withdrawn or
forfeited under the Tennessee Dissenters’ Provisions) issued
and outstanding at the Effective Time promptly upon surrender of
the certificate or certificates representing such shares to the
Exchange Agent, shall receive in exchange therefor the product of
the per share Merger Consideration provided in Section 3.1 of this
Agreement, without interest thereon multiplied by the number of
shares of Enterprise Common Stock represented by the certificates
surrendered by such holder. Until so surrendered, each outstanding
certificate of Enterprise Common Stock shall be deemed for all
purposes to represent the right to receive the Merger
Consideration.
(b) NBC shall not be obligated to deliver the
Merger Consideration to which any former holder of Enterprise
Common Stock is entitled as a result of the Merger until such
holder surrenders such holder’s certificate or certificates
representing the shares of Enterprise Common Stock for exchange as
provided in this Section 4.1 or complies with the requirements of
Section 4.3 hereof. The certificate or certificates of Enterprise
Common Stock so surrendered shall be duly endorsed as the Exchange
Agent may reasonably require. Any other provision of this Agreement
notwithstanding, neither NBC nor the Exchange Agent shall be liable
to a holder of Enterprise Common Stock for any amounts paid or
property properly paid or delivered to a public official pursuant
to any applicable abandoned property law.
4.2 Rights of Former Enterprise Stockholders. At
the Effective Time, the stock transfer books of Enterprise shall be
closed as to holders of Enterprise Common Stock immediately prior
to the Effective Time, and no transfer of Enterprise Common Stock
by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore
representing shares of Enterprise Common Stock (other than shares
as to which dissenters’ rights of appraisal as contemplated
by Section 3.2 of this Agreement have been perfected and not
withdrawn or forfeited under the Tennessee Dissenters’
Provisions) shall from and after the Effective Time represent for
all purposes only the right to receive the Merger
Consideration.
4.3 Lost, Stolen or Destroyed Certificates. In
the event any certificate representing shares of Enterprise Common
Stock shall have been lost, stolen or destroyed, NBC shall pay to
the record holder of such certificate the consideration into which
the shares of Enterprise Common Stock formerly represented by such
certificate have been converted pursuant to Section 3.1, upon the
making of an affidavit of that fact by such record holder;
provided, however, that NBC, as a condition precedent to the
payment of such consideration, will require such holder to deliver
a lost certificate bond or reasonably appropriate
indemnity.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
ENTERPRISE
Enterprise hereby represents and warrants,
except as specifically disclosed in a section of the Enterprise
Disclosure Memorandum corresponding to the relevant section of this
Article 5, to NBC as follows:
5.1 Organization, Standing and
Power.
(a) Enterprise is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Tennessee, and has the corporate power and corporate authority
to carry on its business as now conducted and to own, lease and
operate its Material Assets. Enterprise is duly qualified or
licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Enterprise.
(b) Enterprise is a bank holding company
registered under the BHC Act. Enterprise National Bank is an
“insured depository institution” as defined in the
Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in Enterprise National Bank are
insured by the Bank Insurance Fund to the fullest extent permitted
by Law.
5.2 Authority; No Breach of
Agreement.
(a) Enterprise has the corporate power and
corporate authority necessary to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of
this Agreement, and the consummation of the transactions
contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action (including
valid authorization and adoption of this Agreement by
Enterprise’s duly constituted Board of Directors and
two-thirds of the “Continuing Directors” of Enterprise,
as defined in Enterprise’s charter) in respect thereof on the
part of Enterprise, subject to the approval of this Agreement by
the holders of a majority of the outstanding shares of Enterprise
Common Stock (the “Required Shareholder Approval”).
Subject to receipt of the Required Shareholder Approval, this
Agreement represents a legal, valid and binding obligation of
Enterprise, enforceable against Enterprise in accordance with its
terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or similar Laws affecting the
enforcement of creditors’ rights, including, without
limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers and except for
the limitations imposed by general principles of equity and
commercial reasonableness).
(b) Neither the execution and delivery of this
Agreement by Enterprise, nor the consummation by Enterprise of the
transactions contemplated hereby, nor compliance by Enterprise with
any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of Enterprise’s Charter or Bylaws, or
(ii) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any
Asset of any Enterprise Company under, any Contract or Permit of
any Enterprise Company, where such Default or Lien, or any failure
to obtain such Consent, is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Enterprise, or
(iii) subject to receipt of the requisite Consents referred to in
Section 9.1(b) of this Agreement, violate any Law or Order
applicable to any Enterprise Company or any of their respective
Material Assets, which violation is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Enterprise.
(c) Other than Consents required from Regulatory
Authorities, and other than notices to or filings with (i) the
Internal Revenue Service or the Pension Benefit Guaranty
Corporation or both with respect to any employee benefit plans and
(ii) the filing and recording of the Mississippi Articles of Merger
in accordance with the MBCA and the Tennessee Articles of Merger in
accordance with the TBCA, and other than Consents, filings or
notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on Enterprise, no notice to, filing with, or Consent
of, any public body or authority is necessary for the consummation
by Enterprise of the Merger and the other transactions contemplated
in this Agreement.
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5.3 Capital Stock.
(a) The authorized capital stock of Enterprise
consists, as of the date of this Agreement, of (i) 7,000,000 shares
of Enterprise Common Stock, $1.00 par value per share, of which, as
of the date of this Agreement, 981,495 shares are issued and
outstanding, and (ii) 3,000,000 shares of preferred stock of
Enterprise, $1.00 par value per share, of which no shares are
issued or outstanding and no shares are issuable pursuant to any
outstanding option, warrant or similar instrument. As of the date
of this Agreement, 291,600 shares of Enterprise Common Stock are
issuable pursuant to outstanding awards under Enterprise’s
Stock Plans. All of the issued and outstanding shares of Enterprise
Common Stock are duly and validly issued and outstanding and are
fully paid and nonassessable. None of the outstanding shares of
Enterprise Common Stock has been issued in violation of any
preemptive rights of the current or past shareholders of
Enterprise. The average exercise price of all outstanding stock
options is $27.36.
(b) Except as set forth in Section 5.3(a) of
this Agreement or Section 5.3 of the Disclosure Memorandum, there
are no shares of capital stock or other equity securities of
Enterprise outstanding and there are no outstanding Rights to
acquire shares of the capital stock of Enterprise.
5.4 Enterprise Subsidiaries. Enterprise has
disclosed in Section 5.4 of the Disclosure Memorandum all of the
Enterprise Subsidiaries as of the date of this Agreement.
Enterprise or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each Enterprise Subsidiary.
No equity securities of any Enterprise Subsidiary are or may become
required to be issued (other than to another Enterprise Company) by
reason of any Rights, and there are no Contracts by which any
Enterprise Subsidiary is bound to issue (other than to another
Enterprise Company) additional shares of its capital stock or
Rights or by which any Enterprise Company is or may be bound to
transfer any shares of the capital stock of any Enterprise
Subsidiary (other than to another Enterprise Company). There are no
Contracts relating to the rights of any Enterprise Company to vote
or to dispose of any shares of the capital stock of any Enterprise
Subsidiary. No Enterprise Subsidiary is a party to any contract
requiring the transfer of a substantial part of such Enterprise
Subsidiary’s operating assets. All of the shares of capital
stock of each Enterprise Subsidiary held by an Enterprise Company
are fully paid and, except as expressly provided otherwise under
applicable Law, nonassessable under the applicable corporate or
banking Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the Enterprise Company
free and clear of any Lien. Each Enterprise Subsidiary is a
corporation and is duly organized, validly existing, and (if
applicable) in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power
and corporate authority necessary for it to own, lease, and operate
its Material Assets and to carry on its business as now conducted.
Each Enterprise Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed
is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Enterprise.
5.5 Financial Statements. Enterprise has
disclosed in Section 5.5 of the Disclosure Memorandum, and has
delivered to NBC copies of all Enterprise Financial Statements
prepared for periods ended after December 31, 2000 and prior to the
date of this Agreement and will deliver to NBC copies of all
Enterprise Financial Statements prepared subsequent to the date of
this Agreement. The Enterprise Financial Statements (as of the
dates thereof and for the periods covered thereby) (i) are or, if
dated after the date of this Agreement, will be in accordance with
the books and records of the Enterprise Companies, which are or
will be, as the case may be, complete and correct in all Material
respects and which have been or will have been, as the case may be,
maintained in accordance with past business practices, and (ii)
present or will present, as the case may be, fairly the
consolidated financial position of the Enterprise Companies as of
the dates indicated and the consolidated results of operations and
changes in stockholders’ equity of the Enterprise Companies
for the periods indicated, in accordance with GAAP (subject to any
exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments which were not
or are not expected to be Material in amount or effect).
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5.6 Absence of Undisclosed Liabilities. To the
Knowledge of Enterprise, no Enterprise Company has any Liabilities
that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Enterprise, except
Liabilities which are accrued or reserved against in the
consolidated balance sheets of Enterprise as of June 30, 2003,
included in the Enterprise Financial Statements or reflected in the
notes thereto, Liabilities incurred in the ordinary course of
business subsequent to June 30, 2003, and Liabilities to be
incurred in connection with the transactions contemplated by this
Agreement. No Enterprise Company has incurred or paid any Liability
since June 30, 2003, except for such Liabilities incurred or paid
in the ordinary course of business consistent with past business
practices and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on
Enterprise.
5.7 Absence of Certain Changes or Events. Since
June 30, 2003, except as disclosed in the Enterprise Financial
Statements delivered prior to the date of this Agreement or as
otherwise disclosed in the Disclosure Memorandum, there have been
no events, changes or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on Enterprise.
5.8 Tax Matters.
(a) Since December 31, 1996, all Tax Returns
required to be filed by or on behalf of any of the Enterprise
Companies have been timely filed, or requests for extensions have
been timely filed, granted, and have not expired for periods ended
on or before December 31, 2002, and to Enterprise’s Knowledge
all Tax Returns filed are complete and accurate in all Material
respects. All Tax Returns for periods ending on or before the date
of the most recent fiscal year end immediately preceding the
Effective Time will be timely filed or requests for extensions will
be timely filed. All Taxes shown on filed Tax Returns have been
paid. There is no audit examination, deficiency or refund
Litigation with respect to any Taxes, that is reasonably likely to
result in a determination that would have a Material Adverse Effect
on Enterprise, except to the extent reserved against in the
Enterprise Financial Statements dated prior to the date of this
Agreement as adjusted for operations and transactions in the
ordinary course of business of Enterprise since June 30, 2003. All
Taxes due with respect to completed and settled examinations or
concluded Litigation with respect to Taxes have been
paid.
(b) None of the Enterprise Companies has
executed an extension or waiver of any statute of limitations on
the assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities)
that is currently in effect.
(c) Adequate provision for any Material Taxes
due or to become due for any of the Enterprise Companies for the
period or periods through and including the date of the respective
Enterprise Financial Statements has been made in accordance with
GAAP and is reflected on such Enterprise Financial
Statements.
(d) Each of the Enterprise Companies is in
Material compliance with, and its records contain the information
and documents (including properly completed IRS Forms W-9)
necessary to comply with, in all Material respects, applicable
information reporting and Tax withholding requirements under
federal, state and local Tax Laws, and such records identify with
specificity all accounts subject to backup withholding under
Section 3406 of the Internal Revenue Code.
(e) None of the Enterprise Companies has made
any payments, is obligated to make any payments, or is a party to
any contract, agreement or other arrangement that could obligate it
to make any payments that would be disallowed as a deduction under
Section 162(m) of the Internal Revenue Code.
(f) There are no Material Liens with respect to
Taxes upon any of the Assets of the Enterprise
Companies.
(g) There has not been an ownership change, as
defined in Internal Revenue Code Section 382(g), of the Enterprise
Companies that occurred during or after any Taxable Period in which
the Enterprise Companies incurred a net operating loss that carries
over to any Taxable Period ending after December 31,
2002.
(h) No Enterprise Company has or has had a
permanent establishment in any foreign country, as defined in any
applicable tax treaty or convention between the United States and
such foreign country.
(i) No Enterprise Company has filed any consent
under Section 341(f) of the Internal Revenue Code concerning
collapsible corporations.
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5.9 Assets. The Enterprise Companies have good
and marketable title, free and clear of all Liens, to all of their
respective Assets other than such defects and liens that are not
reasonably likely to have a Material Adverse Effect on Enterprise.
All tangible properties used in the businesses of the Enterprise
Companies are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with
Enterprise’s past practices, except as would not be
reasonably likely to have a Material Adverse Effect on Enterprise.
All Assets that are Material to Enterprise’s business on a
consolidated basis, held under leases or subleases by any of the
Enterprise Companies, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement
of creditors’ rights including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances
and preferential transfers and except for the limitations imposed
by general principles of equity and commercial reasonableness), and
each such Contract is in full force and effect. The Enterprise
Companies currently maintain insurance in amounts, scope and
coverage reasonably necessary for their operations. None of the
Enterprise Companies has received notice from any insurance carrier
that (i) such insurance will be canceled or that coverage
thereunder will be Materially reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be
substantially increased. The Assets of the Enterprise Companies
include all Material Assets required to operate the business of the
Enterprise Companies as presently conducted.
5.10 Environmental
Matters.
(a) Each Enterprise Company, its Participation
Facilities and its Loan Properties are in compliance with all
Environmental Laws, except those instances of non-compliance that
are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Enterprise.
(b) There is no Litigation pending or, to the
Knowledge of Enterprise, threatened before any court, governmental
agency or authority, or other forum in which any Enterprise Company
or any of its Participation Facilities has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a
defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the
release into the environment of any Hazardous Material, whether or
not occurring at, on, under or involving a site owned, leased or
operated by any Enterprise Company or any of its Participation
Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Enterprise.
(c) To the Knowledge of Enterprise, there is no
Litigation pending or threatened before any court, governmental
agency or board, or other forum in which any of its Loan Properties
(or Enterprise in respect of such Loan Property) has been or, with
respect to threatened Litigation, would reasonably be expected to
be named as a defendant or potentially responsible party (i) for
alleged noncompliance with any Environmental Law or (ii) relating
to the release into the environment of any Hazardous Material
occurring at, on, under or involving a Loan Property, except for
such Litigation pending or threatened that is not reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on Enterprise.
(d) To the Knowledge of Enterprise, there is no
reasonable basis for any Litigation of a type described in
subsections (b) or (c), except such as is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on Enterprise.
(e) To the Knowledge of Enterprise, during the
period of (i) any Enterprise Company’s ownership or operation
of any of their respective current properties, (ii) any Enterprise
Company’s participation in the management of any
Participation Facility, or (iii) any Enterprise Company’s
holding of a security interest in a Loan Property, there have been
no releases of Hazardous Material in, on, under or affecting (or
potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Enterprise. Prior to the period of (i)
any Enterprise Company’s ownership or operation of any of
their respective current properties, (ii) any Enterprise
Company’s participation in the management of any
Participation Facility, or (iii) any Enterprise Company’s
holding of a security interest in a Loan Property, to the Knowledge
of Enterprise, there were no releases of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or
Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Enterprise.
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5.11 Compliance with Laws. Each Enterprise
Company has in effect all Permits necessary for it to own, lease or
operate its Material Assets and to carry on its business as now
conducted, except for those Permits the absence of which would not
have a Material Adverse Effect on Enterprise, and to the Knowledge
of Enterprise, there has occurred no Default under any such Permit,
other than Defaults which would not have a Material Adverse Effect
on Enterprise. None of the Enterprise Companies:
(a) is in violation of any Material Laws,
Orders, or Permits applicable to its business or employees
conducting its business, except for violations which are not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Enterprise; or
(b) has received any written notification or
communication from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof
(i) asserting that any Enterprise Company is not in compliance with
any of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, where such noncompliance would have
a Material Adverse Effect on Enterprise, (ii) threatening to revoke
any Permits, the revocation of which would have a Material Adverse
Effect on Enterprise, or (iii) requiring any Enterprise Company (x)
to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment, or memorandum of
understanding, or (y) to adopt any Board resolution or similar
undertaking, which restricts Materially the conduct of its
business, or in any Material manner relates to its capital
adequacy, its credit or reserve policies, its management, or the
payment of dividends.
5.12 Labor Relations. No Enterprise Company is
the subject of any Litigation asserting that it or any other
Enterprise Company has committed an unfair labor practice (within
the meaning of the National Labor Relations Act or comparable state
Law) or seeking to compel it or any other Enterprise Company to
bargain with any labor organization as to wages or conditions of
employment, nor is any Enterprise Company a party to or bound by
any collective bargaining agreement, Contract, or other agreement
or understanding with a labor union or labor organization, nor is
there any strike or other labor dispute involving any Enterprise
Company, pending or, to the Knowledge of Enterprise, threatened, or
to the Knowledge of Enterprise, is there any activity involving any
Enterprise Company’s employees seeking to certify a
collective bargaining unit or engaging in any other organization
activity.
5.13 Employee Benefit
Plans.
(a) Enterprise has disclosed in Section 5.13 of
the Disclosure Memorandum, and has delivered or made available to
NBC prior to the execution of this Agreement correct and complete
copies in each case of, all Enterprise Benefit Plans. For purposes
of this Agreement, “Enterprise Benefit Plans” means all
written pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation,
bonus or other incentive plans, all other Material written employee
programs or agreements, all medical, vision, dental or other
written health plans, all life insurance plans and all other
Material written employee benefit plans or fringe benefit plans,
including written “employee benefit plans” as that term
is defined in Section 3(3) of ERISA, maintained by, sponsored in
whole or in part by, or contributed to by, any Enterprise Company
for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries and under
which employees, retirees, dependents, spouses, directors,
independent contractors or other beneficiaries are eligible to
participate. Any of the Enterprise Benefit Plans which is an
“employee welfare benefit plan,” as that term is
defined in Section 3(l) of ERISA, or an “employee pension
benefit plan,” as that term is defined in Section 3(2) of
ERISA, is referred to herein as an “Enterprise ERISA
Plan.” Any Enterprise ERISA Plan that is also subject to
Section 412 of the Internal Revenue Code or Section 302 of ERISA,
is referred to herein as an “Enterprise Pension Plan.”
Neither Enterprise nor any Enterprise Company has 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)). Each “employee pension
benefit plan,” as defined in Section 3(2) of ERISA,
maintained by any Enterprise Company, that is intended to qualify
under Section 401(a) of the Internal Revenue Code is disclosed as
such in Section 5.13 of the Disclosure Memorandum.
(b) Enterprise has delivered or made available
to NBC prior to the execution of this Agreement correct and
complete copies of the following documents: (i) all trust
agreements or other funding arrangements for such Enterprise
Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Enterprise Benefit Plans or
amendments, the most recent determination letters, and all Material
rulings, Material opinion letters, Material information letters or
Material advisory opinions issued by the Internal
8
Revenue Service, the United States Department of
Labor or the Pension Benefit Guaranty Corporation after December
31, 1999, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports and summary
annual reports prepared for any Enterprise Benefit Plan with
respect to the most recent plan year and (iv) the most recent
summary plan descriptions and any Material modifications
thereto.
(c) All Enterprise Benefit Plans are in
compliance with the applicable terms of ERISA, the Internal Revenue
Code and any other applicable Laws, other than instances of
noncompliance which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Enterprise. Each
Enterprise ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a
favorable determination letter from the Internal Revenue Service,
and, to the knowledge of Enterprise, there are no circumstances
likely to result in revocation of any such favorable determination
letter. Each trust created under any Enterprise ERISA Plan has been
determined to be exempt from Tax under Section 501(a) of the
Internal Revenue Code and Enterprise is not aware of any
circumstance that will or could reasonably result in revocation of
such exemption. With respect to each Enterprise Benefit Plan, no
event has occurred that will or would reasonably give rise to a
loss of any intended Tax consequences under the Internal Revenue
Code or to any Tax under Section 511 of the Internal Revenue Code
that is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on Enterprise. There is no Material
pending or, to the Knowledge of Enterprise, threatened Litigation
relating to any Enterprise ERISA Plan.
(d) No Enterprise Company has engaged in a
transaction with respect to any Enterprise Benefit Plan that,
assuming the Taxable Period of such transaction expired as of the
date of this Agreement, would subject any Enterprise Company to a
Material tax or penalty imposed by either Section 4975 of the
Internal Revenue Code or Section 5022 of ERISA in amounts which are
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Enterprise. Neither Enterprise nor, to
the Knowledge of Enterprise, any administrator or fiduciary of any
Enterprise Benefit Plan (or any agent of any of the foregoing) has
engaged in any transaction, or acted or failed to act in any manner
with respect to any Enterprise Benefit Plan which would subject
Enterprise to any direct or indirect Liability (by indemnity or
otherwise) for breach of any fiduciary, co-fiduciary, or other duty
under ERISA, where such Liability, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect
on Enterprise. No oral or written representation or communication
with respect to any aspect of the Enterprise Benefit Plans has been
made to employees of any Enterprise Company which is not in
conformity with the written or otherwise preexisting terms and
provisions of such plans, where any Liability resulting from such
non-conformity is reasonably likely to have a Material Adverse
Effect on Enterprise.
(e) No Enterprise Pension Plan has any
“unfunded current liability,” as that term is defined
in Section 302(d)(8)(A) of ERISA, and the fair market value of the
Assets of any such plan is equal to or exceeds the actuarial
present value of all accrued benefits under such plans (whether
vested or not), based upon the actuarial assumptions used to
prepare the most recent actuarial reports for such plans and to the
Knowledge of Enterprise, since the date of the most recent
actuarial valuation, no event has occurred which would be
reasonably expected to change any such funded status in a way that
is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Enterprise. Neither any Enterprise
Pension Plan nor any “single-employer plan,” within the
meaning of Section 4001(a)(15) of ERISA, currently maintained by
any Enterprise Company, or the single-employer plan of any entity
which is considered one employer with Enterprise under Section 4001
of ERISA or Section 414 of the Internal Revenue Code or Section 302
of ERISA (whether or not waived) (an “Enterprise ERISA
Affiliate”) has an “accumulated funding
deficiency” within the meaning of Section 412 of the Internal
Revenue Code or Section 302 of ERISA. All required contributions
with respect to any Enterprise Pension Plan or any single-employer
plan of an Enterprise ERISA Affiliate have been timely made and
there is no lien or, to the Knowledge of Enterprise, expected to be
a lien under Internal Revenue Code Section 412(n) or ERISA Section
302(f) or Tax under Internal Revenue Code Section 4971. No
Enterprise Company has provided, or is required to provide,
security to an Enterprise Pension Plan or to any single-employer
plan of an Enterprise ERISA Affiliate pursuant to Section
401(a)(29) of the Internal Revenue Code. All premiums required to
be paid under ERISA Section 4006 have been timely paid by
Enterprise, except to the extent any failure to timely pay would
not have a Material Adverse Effect on Enterprise.
(f) No Liability under Title IV of ERISA has
been or, to the Knowledge of Enterprise, is expected to be incurred
by any Enterprise Company with respect to any defined benefit plan
currently or formerly maintained by any of them or by any
Enterprise ERISA Affiliate that has not been satisfied in full
(other than Liability for Pension Benefit Guaranty Corporation
premiums, which have been paid when due, except for Liabilities
that, individually or in the aggregate, would not have a Material
Adverse Effect on Enterprise).
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(g) No Enterprise Company has any obligations
for retiree health and retiree life benefits under any of the
Enterprise Benefit Plans other than with respect to benefit
coverage mandated by applicable Law.
(h) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will, by themselves, (i) result in any payment (including,
without limitation, severance, golden parachute, or otherwise)
becoming due to any director or any employee of any Enterprise
Company from any Enterprise Company under any Enterprise Benefit
Plan or otherwise, other than by operation of Law, (ii) increase
any benefits otherwise payable under any Enterprise Benefit Plan,
or (iii) result in any acceleration of the time of payment or
vesting of any such benefit.
5.14 Material Contracts. Except as set forth in
Section 5.14 of the Disclosure Memorandum, none of the Enterprise
Companies, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives
benefits under, (i) any employment, severance, termination,
consulting or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (ii) any
Contract relating to the borrowing of money by any Enterprise
Company or the guarantee by any Enterprise Company of any such
obligation (other than Contracts evidencing deposit liabilities,
purchases of federal funds, fully-secured repurchase agreements and
Federal Home Loan Bank advances of depository institution
Subsidiaries, trade payables and Contracts relating to borrowings
or guarantees made in the ordinary course of business), and (iii)
any other Contract or amendment thereto that would be required to
be filed as an exhibit to a Form 10-K filed by Enterprise with the
United States Securities and Exchange Commission as of the date of
this Agreement if Enterprise were required to file a Form 10-K with
the Securities and Exchange Commission (together with all Contracts
referred to in Sections 5.9 and 5.13(a) of this Agreement, the
“Enterprise Contracts”). With respect to each
Enterprise Contract: (i) the Contract is in full force and effect;
(ii) no Enterprise Company is in Default thereunder, other than
Defaults which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Enterprise; (iii) no
Enterprise Company has repudiated or waived any Material provision
of any such Contract; and (iv) no other party to any such Contract
is, to the Knowledge of Enterprise, in Default in any respect,
other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Enterprise, or, to the Knowledge of Enterprise, has repudiated or
waived any Material provision thereunder. All of the indebtedness
of any Enterprise Company for money borrowed is prepayable at any
time by such Enterprise Company, without penalty or
premium.
5.15 Legal Proceedings.
(a) There is no Litigation instituted or
pending, or, to the Knowledge of Enterprise, threatened against any
Enterprise Company, or against any Asset, interest, or right of any
of them, that, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Enterprise, nor are there
any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any Enterprise
Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Enterprise.
(b) Section 5.15 of the Disclosure Memorandum
includes a summary report of all Litigation as of the date of this
Agreement to which any Enterprise Company is a party and which
names an Enterprise Company as a defendant or
cross-defendant.
5.16 Reports. Since December 31, 1998, or the
date of organization if later, each Enterprise Company has timely
filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to
file with any Regulatory Authorities, except failures to file which
are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Enterprise.
5.17 Statements True and Correct. None of the
information supplied or to be supplied by any Enterprise Company or
any Affiliate thereof regarding Enterprise or such Affiliate for
inclusion in the Proxy Statement (including any supplement or
amendment thereto) to be mailed to Enterprise’s shareholders
in connection with the Shareholders’ Meeting will, when first
mailed to the shareholders of Enterprise, contain any misstatement
of Material fact, or omit to state any Material fact required to be
stated thereunder or necessary to make the
10
statements therein, in light of the
circumstances under which they were made, not misleading, or omit
to state any Material fact required to be stated thereunder or
necessary to correct any Material statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders’ Meeting. All documents that any Enterprise
Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all Material respects
with the provisions of applicable Law.
5.18 Regulatory Matters. No Enterprise Company
or any Affiliate thereof has taken or agreed to take any action,
and Enterprise has no Knowledge of any fact or circumstance that is
reasonably likely to Materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of
this Agreement. To the Knowledge of Enterprise, there exists no
fact, circumstance, or reason why the requisite Consents referred
to in Section 9.1(b) of this Agreement cannot be received in a
timely manner.
5.19 Intellectual Property. All of the
registered Intellectual Property rights of Enterprise and the
Enterprise Subsidiaries are in full force and effect. All
Intellectual Property licenses constitute legal, valid and binding
obligations of the respective parties thereto, and there have not
been, and, to the Knowledge of Enterprise, there currently are not,
any Defaults thereunder by Enterprise or an Enterprise Subsidiary.
Enterprise or an Enterprise Subsidiary owns or is the valid
licensee of all such Intellectual Property free an
