EXHIBIT 2.1

AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER

BY AND AMONG

PEOPLE’S COMMUNITY CAPITAL
CORPORATION

PEOPLE’S COMMUNITY BANK
OF SOUTH CAROLINA

AND

FIRST CITIZENS BANK
AND TRUST COMPANY, INC.

OCTOBER 18, 2004

TABLE OF CONTENTS

ARTICLE I.  THE MERGER

1.01			Nature of Transaction; Plan of Merger				2
1.02			Effect of Merger; Surviving Corporation				2
1.03			Assets and Liabilities of PCCC and PCB				2
1.04			Conversion and Exchange of Stock				2
			(a)  Conversion of PCCC Stock				2
			(b)   Cancellation of PCB Stock				3
			(c)   Exchange and Payment Procedures; Surrender of Certificates				3
			(d)   Antidilutive Adjustments				3
			(e)   Dissenters				3
			(f)   Lost Certificates				3
1.05			Articles of Incorporation, Bylaws and Management				3
1.06			Closing; Effective Time				3

ARTICLE II. REPRESENTATIONS AND WARRANTIES OF PCCC AND PCB

2.01			Organization; Standing; Power				4
2.02			Capital Stock and Securities				4
2.03			Principal Shareholders				5
2.04			Subsidiaries				5
2.05			Convertible Securities, Options, Etc.				5
2.06			Authorization and Validity of Agreement				5
2.07			Validity of Transactions; Absence of Required Consents or Waivers				6
2.08			PCCC Books and Records				6
2.09			PCCC Reports				6
2.10			PCCC Financial Statements				6
2.11			PCCC Tax Returns and Other Tax Matters				7
2.12			Absence of Material Adverse Changes or Certain Other Events				7
2.13			Absence of Undisclosed Liabilities				8
2.14			Compliance with Existing Obligations				8
2.15			Litigation and Compliance with Law				8
2.16			Real Properties				9
2.17			Loans, Accounts, Notes and Other Receivables				9
2.18			Securities Portfolio and Investments				10
2.19			Personal Property and Other Assets				10
2.20			Patents and Trademarks				10
2.21			Environmental Matters				11
2.22			Absence of Brokerage or Finders Commissions				12
2.23			Material Contracts				12
2.24			Employment Matters; Employee Relations				13
2.25			Employment Agreements; Employee Benefit Plans				13
2.26			Insurance				15
2.27			Insurance of Deposits				15
2.28			Indemnification Obligations				16
2.29			Obstacles to Regulatory Approval				16
2.30			Disclosure				16

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF FCB

3.01			Organization; Standing; Power				16
3.02			Authorization and Validity of Agreement				16
3.03			Validity of Transactions; Absence of Required Consents or Waivers				17
3.04			Financing				17
3.05			Obstacles to Regulatory Approval				17
3.06			Disclosure				17

ARTICLE IV. COVENANTS OF PCCC AND PCB

4.01			Affirmative Covenants of PCCC and PCB				17
			(a)     PCCC Shareholders' Meeting; Proxy Statement; Recommendation				17
			(b)     Conduct of Business Prior to Effective Time				18
			(c)     Periodic Financial and Other Information				19
			(d)     Notice of Certain Changes or Events				20
			(e)     Accruals for Loan Loss Reserve, Expenses and Other Accounting Matters				20
			(f)     Loan Charge-Offs				21
			(g)    Consents to Assignment of Agreements				21
			(h)    Access				21
			(i)     Pricing of Deposits and Loans				22
			(j)     Further Action; Instruments of Transfer				22
4.02			Negative Covenants of PCCC and PCB				22
			(a)     Amendments to Articles of Incorporation or Bylaws				22
			(b)     Change in Capitalization				22
			(c)     Sale or Issuance of Stock or Other Securities				22
			(d)     Purchase or Redemption of Shares				22
			(e)     Options, Warrants and Rights				22
			(f)      Dividends and Distributions				22
			(g)     Employment, Benefit or Retirement Agreements or Plans				22
			(h)     Increase in Compensation; Bonuses				23
			(i)      Accounting Practices				23
			(j)      Acquisitions; Additional Branch Offices				23
			(k)     Changes in Business Practices				23
			(l)      Exclusive Merger Agreement				23
			(m)    Acquisition or Disposition of Assets				24
			(n)     Debt; Liabilities				24
			(o)     Liens; Encumbrances				24
			(p)     Waiver of Rights				25
			(q)     Other Contracts				25
			(r)      Deposit Liabilities				25

ARTICLE V.  COVENANTS OF FCB

5.01			Employees; Employee Benefits				25
			(a)     Employment of PCB Employees				25
			(b)    Employee Benefits				25
5.02			Further Action; Instruments of Transfer				26

ARTICLE VI.  ADDITIONAL MUTUAL AGREEMENTS

6.01			Regulatory Approvals				26
6.02			Information for Proxy Statement and Applications for Regulatory Approvals				26
6.03			Announcements; Confidential Information				26

6.04			Real Property Matters				28
6.05			Directors’ and Officers’ Liability Insurance				29
6.06			Final Tax Return				29
6.07			Expenses				29
6.08			Appointment to FCB Board of Directors				30
6.09			Employment and Consulting Agreements				30
			(a)    Consulting Agreements				30
			(b)    Employment Agreements				30
6.10			Treatment of Section 401(k) Plan				30
6.11			PCCC Option Terminations and Releases				30
6.12			Credit Files and Documentation				31
6.13			Correction of Credit Documentation and Compliance Deficiencies				31

ARTICLE VII.  CONDITIONS PRECEDENT TO MERGER

7.01			Conditions to all Parties' Obligations				32
			(a)     Approval by Regulatory Authorities; Disadvantageous Conditions				32
			(b)     Adverse Proceedings, Injunction, Etc.				32
			(c)     Approval by Boards of Directors and Shareholders				32
			(d)     Fairness Opinion				32
			(e)     Consulting Agreement				32
			(f)      Employment Agreements				33
			(g)     No Termination or Abandonment				32
			(h)     Articles of Merger; Other Actions				32
7.02			Additional Conditions to PCCC's and PCB's Obligations				32
			(a)     Compliance with Laws				33
			(b)     FCB's Representations and Warranties and Performance of
			Agreements; Officer' Certificate				33
			(c)     Legal Opinion of FCB's Counsel				33
			(d)     Other Documents and Information				33
			(e)     Acceptance by PCCC's Counsel				34
7.03			Additional Conditions to FCB's Obligations				34
			(a)    Material Adverse Change				34
			(b)    Compliance with Laws				34
			(c)    CCC's and PCB's Representations and Warranties and Performance
			of Agreements; Officers' Certificate				34
			(d)    Directors' Resignations				34
			(e)    PCCC Option Terminations and Releases				34
			(f)    Consents to Assignments				34
			(g)    Legal Opinion of PCCC's Counsel				34
			(h)    Other Documents and Information				34
			(i)    Acceptance by FCB's Counsel				35

ARTICLE VIII. TERMINATION; BREACH; REMEDIES

8.01			Mutual Termination				35
8.02			Unilateral Termination				35
			(a)     Termination by FCB				35
			(b)     Termination by the PCCC				36
			(c)     Survival of Certain Covenants Following Termination				38

 

8.03			Termination Fees				38

8.04			Breach; Remedies				39
			(a)     Breach by PCCC or PCB				39
			(b)     Breach by FCB				39
			(c)     Willful and Intentional Breach				39

ARTICLE IX.  INDEMNIFICATION

9.01			Indemnification Following Termination of Agreement				40
			(a)     By PCCC or PCB				40
			(b)     By FCB				40
			(c)     Procedure for Claiming Indemnification				41
9.02			Indemnification of PCCC's and PCB's Directors and Officers				41

ARTICLE X.  MISCELLANEOUS PROVISIONS

10.01			Survival of Representations, Warranties, Indemnification and Other Agreements				42
			(a)     Representations, Warranties and Other Agreements				42
			(b)     Indemnification				42
10.02			Waiver				42
10.03			Amendment				43
10.04			Notices				43
10.05			Further Assurance				43
10.06			Headings and Captions				43
10.07			Gender and Number				43
10.08			Entire Agreement				43
10.09			Severability of Provisions				43
10.10			Assignment				44
10.11			Counterparts				44
10.12			Governing Law				44
10.13			Previously Disclosed Information				44
10.14			Best Knowledge				44
10.15			Inspection				44

 

SIGNATURES				45

 

EXHIBIT A - Plan of Merger				A-1

AGREEMENT AND PLAN OF REORGANIZATION AND MERGER

BY AND AMONG
PEOPLE’S COMMUNITY CAPITAL CORPORATION,
PEOPLE’S COMMUNITY BANK OF SOUTH CAROLINA
AND
FIRST CITIZENS BANK AND TRUST COMPANY, INC.

         THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (the “Agreement”) is entered into as of the 18th day of October 2004, by and between FIRST CITIZENS BANK AND TRUST COMPANY, INC. (“FCB”), PEOPLE’S COMMUNITY CAPITAL CORPORATION (“PCCC”), and PEOPLE’S COMMUNITY BANK OF SOUTH CAROLINA (“PCB”).

         WHEREAS , FCB is a South Carolina bank with its principal office and place of business located in Columbia, South Carolina, and is a wholly-owned bank subsidiary of First Citizens Bancorporation, Inc. (“Bancorp”), a South Carolina business corporation which also has its principal office and place of business in Columbia, South Carolina; and,

         WHEREAS , PCCC is a South Carolina business corporation with its principal office and place of business located in Aiken, South Carolina, and by virtue of its being the owner of all the issued and outstanding shares of common stock of PCB is a bank holding company registered as such with the Board of Governors of the Federal Reserve System; and,

         WHEREAS , PCB is a South Carolina bank with its principal office and place of business located in Aiken, South Carolina, and is the wholly-owned subsidiary of PCCC and the owner of all the issued and outstanding shares of common stock of People’s Financial Services, Inc. (“PFS”), a South Carolina business corporation which also has its principal office and place of business in Aiken, South Carolina; and,

         WHEREAS , FCB, PCCC and PCB have agreed that it is in their mutual best interests and in the best interests of their respective shareholders for PCCC and PCB to be merged with and into FCB in the manner and upon the terms and conditions contained in this Agreement and the Plan of Merger attached as an exhibit hereto; and,

         WHEREAS , to effectuate the foregoing, FCB, PCCC and PCB desire to adopt this Agreement and Plan of Reorganization; and,

         WHEREAS , FCB’s Board of Directors has approved this Agreement, and Bancorp has approved this Agreement in its capacity as FCB’s sole shareholder; and,

         WHEREAS , PCB Board of Directors has approved this Agreement, and PCCC’s Board of Directors has approved this Agreement on behalf of PCCC as a party hereto in its own right and in it’s capacity as the sole shareholder of PCB, and PCCC’s Board of Directors will recommend to PCCC’s shareholders that they approve this Agreement and the transactions described herein.

         NOW, THEREFORE , in consideration of the premises, the mutual benefits to be derived from this Agreement, and the representations, warranties, conditions, covenants and promises herein contained, and subject to the terms and conditions hereof, FCB, PCCC and PCB hereby adopt and make this Agreement and mutually agree as provided below.

ARTICLE I
THE MERGER

         1.01.         Nature of Transaction; Plan of Merger .  Subject to the provisions of this Agreement, at the “Effective Time” (as defined in Paragraph 1.06 below), PCCC and PCB each simultaneously will be merged into and with FCB (the “Merger”) as provided in the plan of merger (the “Plan of Merger”) attached as Exhibit A to this Agreement.

         1.02.         Effect of Merger; Surviving Corporation .  At the Effective Time, and by reason of the Merger, the separate corporate existences of PCCC and PCB shall cease while the corporate existence of FCB as the surviving corporation in the Merger shall continue with all of its purposes, objects, rights, privileges, powers and franchises, all of which shall be unaffected and unimpaired by the Merger. Following the Merger, FCB shall continue to operate as a South Carolina bank and will conduct its business at the then legally established branch and main offices of FCB and PCB. The duration of the corporate existence of FCB, as the surviving corporation, shall be perpetual and unlimited.

         1.03.         Assets and Liabilities of PCCC and PCB .  At the Effective Time, and by reason of the Merger, and in accordance with applicable law, all of the property, assets and rights of every kind and character of PCCC and PCB (including without limitation all real, personal or mixed property, all debts due on whatever account, all other choses in action and every other interest of or belonging to or due to PCCC or PCB, whether tangible or intangible) shall be transferred to and vest in FCB, and FCB shall succeed to all the rights, privileges, immunities, powers, purposes and franchises of a public or private nature of PCCC and PCB (including all trust and other fiduciary properties, powers and rights), all without any conveyance, assignment or further act or deed; and FCB shall become responsible for all of the liabilities, duties and obligations of every kind, nature and description of PCCC and PCB (including duties as trustee or fiduciary) as of the Effective Time. By virtue of the Merger, PCB’s interest in and ownership of the outstanding shares of $5.00 par value common stock of PFS (“PFS Stock”) shall be transferred to and vest in FCB, and PFS shall become a wholly-owned subsidiary of FCB.

         1.04.         Conversion and Exchange of Stock .

                          (a)          Conversion of PCCC Stock .  Except as otherwise provided in this Agreement, at the Effective Time all rights of PCCC’s shareholders with respect to all outstanding shares of PCCC’s $0.01 par value common stock (“PCCC Stock”) shall cease to exist and, as consideration for and to effect the Merger, each such outstanding share (not to exceed an aggregate of the 1,179,237 shares outstanding on the date of this Agreement and up to 210,603 shares for which options to purchase PCCC Stock have been issued under PCCC’s 1998 Stock Incentive Plan and could be exercised before the Closing) shall be converted, without any action by PCCC, FCB or any PCCC shareholder, into the right to receive cash in the amount of $30.00, all in the manner and subject to the limitations described in this Agreement.

                         At the Effective Time, and without any action by FCB, PCCC or any PCCC shareholder, PCCC’s stock transfer books shall be closed and there shall be no further transfers of PCCC Stock on its stock transfer books or the registration of any transfer of a certificate evidencing PCCC Stock (a “PCCC Certificate”) by any holder thereof, and the holders of PCCC Certificates shall cease to be, and shall have no further rights as, shareholders of PCCC other than as provided in this Agreement. Following the Effective Time, PCCC Certificates shall evidence only the right of the registered holders thereof to receive the consideration into which their PCCC Stock was converted at the Effective Time as provided in this Paragraph 1.04(a), or, in the case of PCCC Stock held by shareholders who properly shall have exercised “Dissenters Rights” (as defined in Paragraph 1.04(e)), cash as provided in Chapter 13 of the South Carolina Business Corporation Act of 1988.

 

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                          (b)         Cancellation of PCB Stock . At the Effective Time, all outstanding shares of PCB’s $5.00 par value common stock (“PCB Stock”) shall be cancelled, and no cash or other consideration shall be issued in exchange for or with respect to those shares.

                          (c)         Exchange and Payment Procedures; Surrender of Certificates . As promptly as practicable, but not more than five business days, following the Effective Time, FCB shall send or cause to be sent to each former PCCC shareholder of record immediately prior to the Effective Time written instructions and transmittal materials (a “Transmittal Letter”) for use in surrendering PCCC Certificates to FCB or to an exchange agent appointed by FCB. Upon the proper surrender and delivery to FCB or its agent (in accordance with its instructions, and accompanied by a properly completed Transmittal Letter) by a former shareholder of PCCC of his or her PCCC Certificate(s), and in exchange therefor, FCB shall as soon as practicable issue and deliver to the shareholder the consideration into which the shareholder’s PCCC Stock has been converted.

                                         Subject to Paragraph 1.04(f), no cash shall be issued or delivered to any former PCCC shareholder unless and until such shareholder shall have properly surrendered to FCB or its agent the PCCC Certificate(s) formerly representing his or her shares of PCCC Stock, together with a properly completed Transmittal Letter. Further, FCB shall have no obligation to pay interest for any period after the Effective Time on the cash to which any former PCCC shareholders become entitled as a result of the Merger.

                          (d)         Antidilutive Adjustments . If, prior to the Effective Time, PCCC shall declare any dividend payable in shares of PCCC Stock or shall subdivide, split, reclassify or combine the presently outstanding shares of PCCC Stock, then an appropriate and proportionate adjustment shall be made in the amount of cash into which each share of PCCC Stock will be converted at the Effective Time pursuant to this Agreement.

                          (e)         Dissenters .  Any shareholder of PCCC who properly exercises the right of dissent and appraisal with respect to the Merger as provided in Chapter 13 of the South Carolina Business Corporation Act of 1988 (“Dissenter’s Rights”) shall be entitled to receive payment of the fair value of his or her shares of PCCC Stock in the manner and pursuant to the procedures provided therein. Shares of PCCC Stock held by persons who exercise Dissenter’s Rights shall not be converted as described in Paragraph 1.04(a). However, if any shareholder of PCCC who exercises Dissenter’s Rights shall fail to perfect those rights, or effectively shall waive or lose such rights, then each of his or her shares of PCCC Stock, at FCB’s sole option, shall be deemed to have been converted into the right to receive cash as of the Effective Time as provided in Paragraph 1.04(a) hereof.

                          (f)         Lost Certificates .   Following the Effective Time, shareholders of PCCC whose PCCC Certificates have been lost, destroyed, stolen or otherwise are missing shall be entitled to receive the consideration into to which their PCCC Stock was converted in accordance with and upon compliance with reasonable conditions imposed by FCB, including without limitation a requirement that those shareholders provide lost instruments indemnities or surety bonds in form, substance and amounts satisfactory to FCB.

         1.05.         Articles of Incorporation, Bylaws and Management .  The Articles of Incorporation and Bylaws of FCB in effect at the Effective Time shall be the Articles of Incorporation and Bylaws of FCB as the surviving corporation in the Merger. The directors and officers of FCB in office at the Effective Time shall continue to hold such offices until removed as provided by law or until the election or appointment of their respective successors.

         1.06.         Closing; Effective Time .  The consummation and closing of the Merger and other transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of FCB in Columbia, South Carolina, or at such other place as FCB shall designate, on a date mutually agreeable to

 

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FCB and PCCC (the “Closing Date”) after the expiration of any and all required waiting periods following the effective date of required approvals of the Merger by governmental or regulatory authorities (but in no event more than 15 business days following the satisfaction of all conditions to consummation of the Merger as described in Article VII of this Agreement). At the Closing, FCB, PCCC and PCB shall take such actions (including without limitation the delivery of certain closing documents and the execution of Articles of Merger under South Carolina law) as are required in this Agreement and as otherwise shall be required by law to consummate the Merger and cause it to become effective.

        Subject to the terms and conditions set forth in this Agreement, the Merger shall become effective on the date and at the time (the “Effective Time”) specified in Articles of Merger executed by FCB and filed by it with the South Carolina Secretary of State in accordance with applicable law; provided, however, that the Effective Time shall in no event be more than ten days following the Closing Date.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PCCC AND PCB

        Except as otherwise specifically described in this Agreement or as “Previously Disclosed to FCB” (as defined in Paragraph 10.13), PCCC and PCB hereby make the following representations and warranties to FCB.

         2.01.         Organization; Standing; Power .   PCCC is duly organized and incorporated, validly existing and in good standing as a business corporation under the laws of the State of South Carolina. PCB is duly organized, validly existing and in good standing as a bank under the laws of the State of South Carolina. PCB is the parent company of People’s Financial Services, Inc. (“PFS”), which is duly organized and incorporated, validly existing and in good standing as a business corporation under the laws of the State of South Carolina. PCCC, PCB and PFS each (i)  has all requisite power and authority (corporate and other) to own, lease and operate its properties and to carry on its business as it now is being conducted; (ii)  is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned, leased or operated by it therein, or in which the transaction of its business, makes such qualification necessary, except where failure so to qualify would not have a “PCCC Material Adverse Effect” (as defined below); and (iii)  is not transacting business or operating any properties owned or leased by it in violation of any provision of federal, state or local law or any rule or regulation promulgated thereunder, except where such violation would not result in a PCCC Material Adverse Effect. For purposes of this Agreement, the term “PCCC Material Adverse Effect” means a material adverse effect on PCCC, PCB and PFS considered as one entity, on PCCC’s consolidated financial condition or results of operations, on PCCC’s or PCB’s business prospects, businesses, investments, loan portfolio or operations, or on the ability of PCCC or PCB to consummate the transactions described herein or to carry on PCB’s business as presently conducted, or on FCB’s ability to conduct PCB’s business following the Merger.

         2.02.         Capital Stock and Securities .  PCCC’s authorized capital stock consists of 10,000,000 shares of common stock, $0.01 par value per share, of which 1,179,237 shares are issued and outstanding and constitute PCCC’s only outstanding equity or debt securities.

                         PCB’s authorized capital stock consists of 10,000,000 shares of common stock, par value $5.00, of which 600,000 shares are issued and outstanding (“PCB Stock”). All of the PCB Stock is held, beneficially and of record, by PCCC, and those shares constitute PCB’s only outstanding equity or debt securities.

                         PFS’s authorized capital stock consists of five shares of common stock, par value $5.00, of which one share is issued and outstanding (“PFS Stock”). All of the PFS Stock is held, beneficially and of record, by PCB, and those shares constitute PFS’s only outstanding equity or debt securities.

 

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                         Each outstanding share of PCCC Stock, PCB Stock and PFS Stock (i)  has been duly authorized and is validly issued and outstanding, and is fully paid and nonassessable, and (ii)  has not been issued in violation of the preemptive rights of any shareholder. The PCCC Stock is registered with the Securities Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “1934 Act”), and PCCC is subject to the registration and reporting requirements of the 1934 Act. The PCB Stock and PFS Stock is not registered under, and PCB and PFS are not subject to the registration and reporting requirements of, the 1934 Act.

         2.03.         Principal Shareholders .   Except as “Previously Disclosed to FCB” (as defined in Section 10.13 of this Agreement), to the “Best Knowledge of PCCC” (as defined in Section 10.14 of this Agreement), no person or entity beneficially owns, directly or indirectly, more than 5% of the outstanding shares of PCCC Stock.

         2.04.         Subsidiaries .   With the exception of PCB, PCCC has no subsidiaries, direct or indirect; and, except for equity securities included in its investment portfolio and Previously Disclosed to FCB, PCCC does not own any stock or other equity interest in any other corporation, service corporation, joint venture, partnership or other entity.

                         With the exception of PFS, PCB has no subsidiaries, direct or indirect, and, except for equity securities included in its investment portfolio and Previously Disclosed to FCB, PCB does not own any stock or other equity interest in any other corporation, service corporation, joint venture, partnership or other entity.

                         PFS has no subsidiaries, direct or indirect; and PFS does not own any stock or other equity interest in any other corporation, service corporation, joint venture, partnership or other entity.

         2.05.         Convertible Securities, Options, Etc .  Except as Previously Disclosed to FCB, neither PCCC, PCB nor PFS has any outstanding (i)  securities or other obligations (including debentures or other debt instruments) which are convertible into shares of PCCC Stock, PCB Stock or PFS Stock, or any other securities of PCCC, PCB or PFS, (ii)  options, warrants, rights, calls or other commitments of any nature which entitle any person to receive or acquire any shares of PCCC Stock, PCB Stock or PFS Stock or any other securities of PCCC, PCB or PFS, or (iii)  plan, agreement or other arrangement pursuant to which shares of PCCC Stock, PCB Stock or PFS Stock or any other securities of PCCC, PCB or PFS, or options, warrants, rights, calls or other commitments of any nature pertaining to any securities of PCCC, PCB or PFS, have been or may be issued.

         2.06.         Authorization and Validity of Agreement .   This Agreement has been duly and validly approved by PCCC’s and PCB’s respective Boards of Directors. Subject only to approval of this Agreement by the shareholders of PCCC in the manner required by law and required approvals of federal, state or local governmental, regulatory, or judicial authorities having jurisdiction over PCCC, PCB, PFS or FCB, or any of their business operations, properties or assets, or the transactions described herein (collectively, the “Regulatory Authorities”) (as contemplated by Paragraph 6.01), (i)  PCCC and PCB each has the corporate power and authority to execute and deliver this Agreement and to perform its obligations and agreements and carry out the transactions described in this Agreement, (ii)  all corporate proceedings and approvals required to authorize PCCC and PCB to enter into this Agreement and to perform its obligations and agreements and carry out the transactions described herein have been duly and properly completed or obtained, and (iii)  this Agreement constitutes the valid and binding agreement of each of PCCC and PCB enforceable in accordance with its terms (except to the extent enforceability may be limited by (A)  applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect which affect creditors’ rights generally, (B)  legal and equitable limitations on the availability of injunctive relief, specific performance and other equitable remedies, and (C)  general principles of equity and applicable laws or court decisions limiting the enforceability of indemnification provisions).

 

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         2.07.         Validity of Transactions; Absence of Required Consents or Waivers .   Subject to approval of this Agreement by the shareholders of PCCC in the manner required by law and receipt of required approvals of Regulatory Authorities, neither the execution and delivery of this Agreement, nor the consummation of the transactions described herein, nor compliance by PCCC or PCB with any of its obligations or agreements contained herein, nor any action or inaction by PCCC or PCB required herein, will: (i)  conflict with or result in a breach of the terms and conditions of, or constitute a default or violation under any provision of, the Articles of Incorporation or Bylaws of PCCC or PCB or any material contract, agreement, lease, mortgage, note, bond, indenture, license, obligation or understanding (oral or written) to which either of them is bound or by which either of them or its business, capital stock or any of its properties or assets may be affected; (ii)  result in the creation or imposition of any material lien, claim, interest, charge, restriction or encumbrance upon any of the properties or assets of PCCC or PCB; (iii)  violate any applicable federal or state statute, law, rule or regulation, or any judgment, order, writ, injunction or decree of any court, administrative or regulatory agency or governmental body, which violation reasonably could be expected to have a PCCC Material Adverse Effect; or (iv)  result in the acceleration of any material obligation or indebtedness of PCCC or PCB.

                         No further consents, approvals or waivers are required to be obtained from any person or entity in connection with PCCC’s or PCB’s execution and delivery of this Agreement, or the performance of their obligations or agreements or the consummation of the transactions described herein, except for required approvals of PCCC’s shareholders and of Regulatory Authorities.

         2.08.         PCCC Books and Records . PCCC’s, PCB’s and PFS’s respective books of account and business records have been maintained in all material respects in compliance with all applicable legal, regulatory and accounting requirements, and such books and records are complete and reflect accurately in all material respects their respective items of income and expense and all of their respective assets, liabilities and stockholders’ equity. The minute books of PCCC, PCB and PFS are complete and accurately reflect in all material respects all corporate actions which their respective shareholders and boards of directors, and all committees thereof, have taken during the time periods covered by such minute books, and all such minute books have been or will be made available to FCB and its representatives.

         2.09.         PCCC Reports .   To the Best Knowledge of PCCC, since December 31, 1998, PCCC, PCB and PFS each has filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that it or they were required to file with (i) the South Carolina Board of Financial Institutions (the “South Carolina Board”), (ii)  the Federal Deposit Insurance Corporation (the “FDIC”), (iii)  the Federal Reserve Board and the Federal Reserve Bank of Richmond (collectively, the “FRB”), (iv)  the SEC, or (v) any other Regulatory Authorities. Each such report, registration and statement filed by PCCC, PCB or PFS with the South Carolina Board, the FDIC, the FRB, the SEC, or any other Regulatory Authorities are collectively referred to in this Agreement as the “PCCC Reports.” To the Best Knowledge of PCCC, each PCCC Report complied in all material respects with all the statutes, rules and regulations enforced or promulgated by the Regulatory Authorities with which they were filed and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Neither PCCC, PCB nor PFS has been notified that any such PCCC Report was deficient in any material respect as to form or content.

         2.10.        PCCC Financial Statements .   PCCC and PCB have Previously Disclosed to FCB a copy of PCCC’s audited consolidated statements of financial condition as of December 31, 2003 and 2002, and its audited consolidated statements of income, shareholders’ equity and cash flows for the three years ended December 31, 2003, 2002 and 2001, together with notes thereto (collectively, the “PCCC Audited Financial Statements”), and its unaudited consolidated statements of financial condition as of June 20, 2004, and unaudited consolidated statements of income and cash flows for the three-months ended June 30, 2004 and 2003, together with notes thereto (collectively, the “PCCC Interim Financial Statements”). Following the date of this Agreement, PCCC and PCB promptly will deliver to FCB all

 

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other annual or interim financial statements prepared by or for PCCC. The PCCC Audited Financial Statements and the PCCC Interim Financial Statements (i) were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applied on a consistent basis throughout the periods indicated, (ii) are in accordance with PCCC’s and PCB’s books and records, and (iii) present fairly PCCC’s consolidated financial condition, assets and liabilities, results of operations, changes in shareholders’ equity and changes in cash flows as of the dates indicated and for the periods specified therein; provided, however, that, to the extent permitted by GAAP and other applicable regulations, the PCCC Interim Financial Statements are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack footnotes. The PCCC Audited Financial Statements have been audited by Elliott Davis, LLC, which serves as PCCC’s independent registered public accounting firm.

         2.11.        PCCC Tax Returns and Other Tax Matters .  (i)  PCCC, PCB and PFS each has timely filed or caused to be filed all federal, state and local income tax returns and reports which are required by law to have been filed, and, to the Best Knowledge of PCCC, all such returns and reports were true, correct and complete and contained all material information required to be contained therein; (ii)  all federal, state and local income, profits, franchise, sales, use, occupation, property, excise, withholding, employment and other taxes (including interest and penalties), charges and assessments which have become due from or been assessed or levied against PCCC, PCB, PFS or their respective properties have been fully paid or, if not yet due, a reserve or accrual, which is adequate in all material respects for the payment of all such taxes to be paid and the obligation for such unpaid taxes, is reflected on the PCCC Interim Financial Statements; (iii)  the income, profits, franchise, sales, use, occupation, property, excise, withholding, employment and other tax returns and reports of PCCC, PCB and PFS have not been subjected to audit by the Internal Revenue Service (the “IRS”) or the South Carolina Department of Revenue (the “SCDOR”) in the last seven years and neither PCCC, PCB nor PFS has received any indication of the pendency of any audit or examination in connection with any such tax return or report and, to the Best Knowledge of PCCC, no such return or report is subject to adjustment; (iv) neither PCCC, PCB nor PFS is currently involved in any tax or other dispute with the IRS, the SCDOR or any other taxing authority, and (v) neither PCCC, PCB nor PFS has waived or extended the statute of limitations (or been asked to execute a waiver or extend a statute of limitations) with respect to any tax year, the audit of any such tax return or report, or the assessment or collection of any tax.

         2.12.        Absence of Material Adverse Changes or Certain Other Events .

                          (a)         Since December 31, 2003, PCCC, PCB and PFS each has conducted its business only in the ordinary course; and, there has occurred no “PCCC Material Adverse Change,” and there have occurred no events or developments, and there currently exist no conditions or circumstances, which, individually or in the aggregate, and with the lapse of time or otherwise, reasonably could be expected to cause, create or result in a PCCC Material Adverse Change.” For purposes of this Agreement, the term “PCCC Material Adverse Change” means a material adverse change in or affecting PCCC, PCB and PFS considered as one entity, in PCCC’s consolidated financial condition or results of operations, in PCCC’s or PCB’s business prospects, businesses, investments, loan portfolio or operations, or in the ability of PCCC or PCB to consummate the transactions described herein or to carry on PCB’s business as presently conducted, or in FCB’s ability to conduct PCB’s business following the Merger.

                          (b)         Since December 31, 2003, and except as described in Paragraph 2.13 below, neither PCCC, PCB nor PFS has incurred any material liability, engaged in any material transaction, entered into any material agreement, increased the salaries, compensation or general benefits payable or provided to its employees (with the exception of routine increases in the salaries of certain employees effected by PCCC and PCB at such times and in such amounts as is consistent with their past practices and their salary administration and review policies and procedures in effect prior to December 31, 2003), suffered any material loss, destruction or damage to any of their properties or assets, or made a material acquisition or disposition of any assets or entered into any material contract or lease.

 

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         2.13.        Absence of Undisclosed Liabilities .   Neither PCCC, PCB nor PFS has any material liabilities or obligations, whether known or unknown, matured or unmatured, accrued, absolute, contingent or otherwise, whether due or to become due (including without limitation tax liabilities or unfunded liabilities under employee benefit plans or arrangements), other than (i)  those reflected in the PCCC Audited Financial Statements, (ii) increases in deposit accounts in the ordinary course of PCB’s business since December 31, 2003, or (iii)  unfunded commitments to make, issue or extend loans, lines of credit, letters of credit or other extensions of credit (together, “Loans”) in amounts which, either individually or in the aggregate, do not exceed the lesser of amounts which are consistent with PCB’s lending practices prior to the date of this Agreement or the maximum amounts permitted by applicable banking regulations.

         2.14.        Compliance with Existing Obligations .   PCCC, PCB and PFS each has performed in all material respects all obligations required to be performed by it under, and it is not in default in any material respect under, or in violation in any material respect of, the terms and conditions of, its Articles of Incorporation, Bylaws and/or any material contract, agreement, lease, mortgage, note, bond, indenture, license, obligation, understanding or other undertaking (whether oral or written) to which it is bound or by which its business, operations, capital stock, properties or assets may be affected.

         2.15.        Litigation and Compliance with Law .

                          (a)         There are no actions, suits, arbitrations, controversies or other proceedings or investigations (or, to the Best Knowledge of PCCC, any facts or circumstances which reasonably could be expected to result in such), including without limitation any such action by any Regulatory Authority, which currently exist or are ongoing, pending or, to the Best Knowledge of PCCC, are threatened, contemplated or probable of assertion, against, relating to or otherwise affecting PCCC, PCB or PFS or any of their respective properties, assets or employees.

                          (b)         PCCC, PCB and PFS each has all licenses, permits, orders, authorizations or approvals (“Permits”) of all federal, state, local or foreign governmental or regulatory agencies that are material to or necessary for the conduct of its business or to own, lease and operate its properties, and all such Permits are in full force and effect, except where the failure to obtain or maintain a Permit would not have a PCCC Material Adverse Effect; no violations have occurred with respect to any such Permits; and no proceeding is pending or, to the Best Knowledge of PCCC, threatened or probable of assertion, to suspend, cancel, revoke or limit any Permit.

                          (c)         Neither PCCC, PCB nor PFS is subject to any supervisory agreement, enforcement order, writ, injunction, capital directive, supervisory directive, memorandum of understanding or other similar agreement, order, directive, memorandum or consent of, with or issued by any Regulatory Authority (including without limitation the South Carolina Board, the FDIC, or the FRB) relating to its financial condition, directors or officers, employees, operations, capital, regulatory compliance or any other matter; there are no judgments, orders, stipulations, injunctions, decrees or awards against either PCCC, PCB or PFS which limit, restrict, regulate, enjoin or prohibit in any material respect any of its or their present or past business or practice; and neither PCCC, PCB nor PFS has been advised, nor has any reason to believe, that any Regulatory Authority or any court is contemplating, threatening or requesting the issuance of any such agreement, order, writ, injunction, directive, memorandum, judgment, stipulation, decree or award.

                          (d)         To the Best Knowledge of PCCC, neither PCCC, PCB nor PFS is in violation or default in any material respect under, and each of them has complied in all material respects with, all laws, statutes, ordinances, rules, regulations, orders, writs, injunctions or decrees of any Regulatory Authority (including without limitation all provisions of South Carolina law relating to usury, the Consumer Credit Protection Act, and all other federal and state laws and regulations applicable to extensions of credit by PCB). No person or authority has asserted a claim, and, to the Best Knowledge of

 

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PCCC, there is no basis for any claim by any person or authority, for compensation, reimbursement, damages or other penalties or relief for any violations described in this subparagraph (d).

         2.16.        Real Properties .   PCCC has Previously Disclosed to FCB a listing of all real property owned or leased by PCCC, PCB or PFS, including PCB’s banking facilities and all other real estate or foreclosed properties, including improvements thereon (collectively, the “Real Property”). With respect to each parcel of Real Property owned by PCCC, PCB or PFS, it has good and marketable fee simple title to that Real Property and owns the same free and clear of all mortgages, liens, leases, encumbrances, title defects and exceptions to title other than (i)  the lien of current taxes not yet due and payable, and (ii)  such imperfections of title and restrictions, covenants and easements (including utility easements) which do not materially and adversely affect the economic value or marketability of that Real Property or materially detract from, interfere with or restrict the present or future use of that Real Property for the purposes for which it currently is used.

                         The Real Property complies in all material respects with all applicable federal, state and local laws, regulations, ordinances or orders of any governmental or regulatory authority, including those relating to zoning, building and use permits. The parcels of Real Property upon which PCB’s banking or other offices are situated, or which are used by PCB in conjunction with its banking or other offices or for other purposes, may, under applicable zoning ordinances, be used for the purposes for which they currently are used as a matter of right rather than as a conditional or nonconforming use.

                         With respect to each parcel of Real Property that currently is used by PCB as a banking office, all improvements and fixtures included in or on that Real Property are in good condition and repair, ordinary wear and tear excepted. There does not exist any condition which materially and adversely affects the economic value or marketability of that Real Property or materially detracts from, interferes with or restricts PCB’s present use (or FCB’s use after the Merger) of that Real Property or those improvements and fixtures for the purposes for which they currently are used.

                         PCB occupies its offices located at 6650 Rivers Avenue in Charleston, South Carolina, pursuant to an oral month-to-month sublease arrangement. Neither PCCC, PCB nor PFS is a party to any lease agreement pertaining to real property, whether as lessee or lessor.

        2.17.       Loans, Accounts, Notes and Other Receivables .

                          (a)         All Loans, accounts, notes and other receivables reflected as assets on PCCC’s and PCB’s books and records (i)  have resulted from bona fide business transactions in the ordinary course of their respective operations, (ii)  in all material respects were made in accordance with their respective standard practices and procedures, and (iii)  are owned by them, respectively, free and clear of all liens, encumbrances, assignments, participation or repurchase agreements or other exceptions to title or to the ownership or collection rights of any other person or entity.

                          (b)         All records of PCCC and PCB regarding all outstanding Loans, accounts, notes and other receivables, and all other real estate owned, are accurate in all material respects, and, to the Best Knowledge of PCCC, each Loan which PCCC’s or PCB’s Loan documentation indicates is secured by any real or personal property or property rights (“Loan Collateral”) is secured by valid, perfected and enforceable liens on all such Loan Collateral having the priority described in PCCC’s and PCB’s records of such Loan.

                          (c)         To the Best Knowledge of PCCC, each Loan reflected as an asset on PCCC’s or PCB’s books, and each guaranty therefor, is the legal, valid and binding obligation of the obligor or guarantor thereon, and no defense, offset or counterclaim has been asserted with respect to any such Loan or guaranty.

 

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                          (d)         PCCC has Previously Disclosed to FCB a written listing of (i) each Loan or other asset of PCCC or PCB which, as of September 30, 2004, was classified by the South Carolina Board, the FDIC, the FRB, or by PCCC or PCB themselves, as “Loss,” “Doubtful,” “Substandard” or “Special Mention” (or otherwise by words of similar import), or which PCCC or PCB otherwise has designated as a special asset, a “potential problem Loan,” or for special handling, or placed on any “watch list” because of concerns regarding the ultimate collectibility or deteriorating condition of such asset or any obligor or Loan Collateral therefor, (ii) each Loan of PCCC or PCB which, as of September 30, 2004, was past due more than 30 days as to the payment of principal and/or interest, and (iii) each Loan as to which any obligor thereon (including the borrower or any guarantor) was in default (other than as a result of nonpayment of principal or interest), was the subject of a proceeding in bankruptcy, or has indicated any inability or intention not to repay such Loan in accordance with its terms.

                          (e)         To the Best Knowledge of PCCC, each of the Loans of PCCC or PCB (with the exception of those Loans Previously Disclosed to FCB pursuant to Paragraph 2.17(d) above) is collectible in the ordinary course of PCCC’s and PCB’s business in an amount which is not less than the amount at which it is carried on PCB’s books and records.

                          (f)         PCCC’s and PCB’s reserve for possible Loan losses (the “Loan Loss Reserve”) has been established in conformity with GAAP, sound banking practices and all applicable requirements, rules and policies of the South Carolina Board and the FDIC and, in the best judgment of management and the Boards of Directors of PCCC and PCB, is reasonable in view of the size and character of PCCC’s and PCB’s Loan portfolio, current economic conditions and other relevant factors, and is adequate to provide for losses relating to or the risk of loss inherent in PCCC’s and PCB’s Loan portfolio.

         2.18.         Securities Portfolio and Investments .   PCCC has Previously Disclosed to FCB a listing of all securities owned, of record or beneficially, by PCCC or PCB as of September 30, 2004. All securities owned, of record or beneficially, by PCCC or PCB are held free and clear of all mortgages, liens, pledges, encumbrances or any other restriction or rights of any other person or entity, whether contractual or statutory (with the exception of customary pledges or sales of securities by PCB in the ordinary course of its business to in connection with “repurchase agreements” entered into by it with its customers or to secure public funds deposits), which would materially impair the ability of PCCC or PCB to dispose freely of any such security and/or otherwise to realize the benefits of ownership thereof at any time. There are no voting trusts or other agreements or undertakings to which either PCCC or PCB is a party with respect to the voting of any such securities. With respect to all “repurchase agreements” under which PCCC or PCB has “purchased” securities under agreement to resell, PCCC or PCB has a valid, perfected first lien or security interest in the government securities or other collateral securing the repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt owed to it which is secured by such collateral.

                         Since December 31, 2003, there has been no material deterioration or adverse change in the quality, or any material decrease in the value, of PCCC’s or PCB’s securities portfolio as a whole.

         2.19.         Personal Property and Other Assets .   All banking equipment, data processing equipment, vehicles, and other personal property used by PCCC, PCB or PFS and material to the operation of its business are owned by them free and clear of all liens, encumbrances, leases, title defects or exceptions to title. To the Best Knowledge of PCCC, all of PCCC’s, PCB’s and PFS’s personal property material to its business is in good operating condition and repair, ordinary wear and tear excepted.

         2.20.         Patents and Trademarks .   To the Best Knowledge of PCCC, PCCC, PCB and PFS each owns, possesses or has the right to use any and all patents, licenses, trademarks, trade names, copyrights, trade secrets and proprietary and other confidential information necessary to conduct its business as now conducted; and neither PCCC, PCB nor PFS has violated, and neither of them currently is in conflict

 

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with, any patent, license, trademark, trade name, copyright or proprietary right of any other person or entity.

         2.21.         Environmental Matters .

                          (a)         As used in this Agreement, “Environmental Laws” shall mean:

(i)

all federal, state and local statutes, regulations and ordinances,

(ii)

all common law, and

(iii)

all orders decrees, and similar provisions having the force or effect of law and to which PCCC, PCB or PFS is subject,

which, in the case of any of the above, concern or relate to pollution or protection of the environment, standards of conduct and bases of obligations or liability relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, reporting, testing, processing, discharge, release, threatened release, control, or clean-up of any “Hazardous Substances” (as defined below), or public or worker health and safety, or to wetlands protection, drainage or stormwater management, noise, odor or indoor air pollution.

                         “Hazardous Substance” shall mean any materials, substances, wastes, chemical substances, or mixtures presently listed, defined, designated, or classified as hazardous, toxic, or dangerous, or otherwise regulated, under any Environmental Laws, whether by type or quantity, including without limitation pesticides, pollutants, contaminants, toxic chemicals, oil, or other petroleum products or byproducts, asbestos or materials containing (or presumed to contain) asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, lead, radon, methyl tertiary butyl ether, or radioactive material.

                          (b)         PCCC has Previously Disclosed to FCB, and provided FCB with copies of, all written reports, correspondence, notices or other information or materials in PCCC’s, PCB’s or PFS’s possession pertaining to environmental surveys or assessments of the Real Property and any improvements thereon, the presence of any Hazardous Substance on any of the Real Property, or any violation or alleged violation of Environmental Laws on, affecting or otherwise involving the Real Property or involving PCCC, PCB or PFS.

                          (c)         To the Best Knowledge of PCCC, there has been no presence, use, production, generation, handling, transportation, treatment, storage, disposal, emission, discharge, release, or threatened release of any Hazardous Substances by any person on, from or relating to the Real Property which constitutes a violation of any Environmental Laws, or any removal, clean-up or remediation of any Hazardous Substances from, on or relating to the Real Property.

                          (d)         Neither PCCC, PCB nor PFS has violated any Environmental Laws relating to any of the Real Property and, to the Best Knowledge of PCCC, there has been no violation of any Environmental Laws relating to any of the Real Property by any other person or entity for whose liability or obligation with respect to any particular matter or violation for which PCCC, PCB or PFS is or may be responsible or liable.

                          (e)         Neither PCCC, PCB nor PFS is subject to any claims, demands, causes of action, suits, proceedings, losses, damages, penalties, liabilities, obligations, costs or expenses of any kind and nature which arise out of, under or in connection with, or which result from or are based upon the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, reporting, testing, processing, emission, discharge, release, threatened release, control, removal,

 

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clean-up or remediation of any Hazardous Substances on, from or relating to the Real Property or by any person or entity.

                          (f)         To the Best Knowledge of PCCC, no facts, events or conditions relating to the Real Property, or the operations of PCCC, PCB or PFS at any of their office locations, will prevent, hinder or limit continued compliance with Environmental Laws or give rise to any investigatory, emergency removal, remedial or corrective actions, obligations or liabilities (whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to Environmental Laws.

                          (g)         To the Best Knowledge of PCCC, (i) there has been no violation of any Environmental Laws with respect to any Loan Collateral by any person or entity for whose liability or obligation with respect to any particular matter or violation for which PCCC or PCB is or may be responsible or liable, (ii)  neither PCCC nor PCB is subject to any claims, demands, causes of action, suits, proceedings, losses, damages, penalties, liabilities, obligations, costs or expenses of any kind and nature which arise out of, under or in connection with, or which result from or are based upon, the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, reporting, testing, processing, emission, discharge, release, threatened release, control, removal, clean-up or remediation of any Hazardous Substances on, from or relating to any Loan Collateral, by any person or entity, (iii)  there are no facts, events or conditions relating to any Loan Collateral that will give rise to any investigatory, emergency removal, remedial or corrective actions, obligations or liabilities pursuant to Environmental Laws; and (iv)  there is no Hazardous Substance on, from, under, at or relating to any Loan Collateral in an amount, volume, or concentration sufficient to invoke or require regulation under any Environmental Laws.

         2.22.         Absence of Brokerage or Finders Commissions . Except for PCCC’s proposed engagement of The Carson Medlin Company to provide PCCC’s Board of Directors an opinion as to the fairness, from a financial point of view, of the terms of the Merger to PCCC’s shareholders, which engagement shall be on such terms (including fees to be paid to that firm by PCCC) as have been Previously Disclosed to FCB, (i) all negotiations relative to this Agreement and the transactions described herein have been carried on by PCCC directly (or through its legal counsel) with FCB, and no person or firm has been retained by or has acted on behalf of, pursuant to any agreement, arrangement or understanding with, or under the authority of PCCC or PCB or either of their respective Boards of Directors, as a broker, finder or agent or has performed similar functions or otherwise is or may be entitled to receive or claim a brokerage fee or other commission in connection with or as a result of the transactions described herein; and (ii)  neither PCCC nor PCB has agreed, and neither has any obligation, to pay any brokerage fee or other commission, fee or other compensation to any person or entity in connection with or as a result of the transactions described herein.

         2.23.         Material Contracts .   Other than a benefit plan or employment agreement Previously Disclosed to FCB pursuant to Paragraph 2.25, neither PCCC, PCB nor PFS is a party to or bound by any agreement (i)  involving money or other property in an amount or with a value in excess of $50,000, (ii)  which is not to be performed in full prior to December 31, 2004, (iii)  which calls for the provision of goods or services to PCCC, PCB or PFS and cannot be terminated without material penalty upon written notice to the other party thereto, (iv)  which otherwise is material to PCCC, PCB and PFS considered as one enterprise and was not entered into in the ordinary course of business, (v)  which involves hedging, options or any similar trading activity, or interest rate exchanges or swaps, (vi)  which commits PCB to make, issue or extend any Loan other than commitments in the ordinary course of PCB’s business for Loans which do not exceed that amount typically dealt with in the normal course of its business, (vii)  which involves the sale of any assets of PCCC, PCB or PFS which are used in and material to the operation of its business, (viii) which involves any purchase or sale of real property, or which involves the purchase or sale of any other assets in the amount of more than $25,000 in the case of any single transaction or $75,000 in the case of all such transactions, (ix) which involves the purchase, sale, issuance, redemption or transfer of any capital stock or other securities of PCCC, PCB or PFS, or (x)  with any director, officer or principal shareholder of PCCC, PCB or PFS (including without limitation any

 

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consulting agreement, but not including any agreements relating to Loans or other banking services which were made in the ordinary course of PCCC’s, PCB’s or PFS’s business and on substantially the same terms and conditions as were prevailing at that time for similar agreements with unrelated persons).

                         Neither PCCC, PCB nor PFS is in default in any material respect, and there has not occurred any event which with the lapse of time or giving of notice or both would constitute such a default, under any contract, lease, insurance policy, commitment or arrangement to which it is a party or by which it or its property is or may be bound or affected or under which it or its property receives benefits, where the consequences of such default would have a PCCC Material Adverse Effect.

         2.24.         Employment Matters; Employee Relations .  PCCC has Previously Disclosed to FCB a listing of the names, years of credited service and current base salary or wage rates of all of PCCC’s, PCB’s and PFS’s employees as of September 30, 2004. PCCC, PCB and PFS each (i)  has in all material respects paid in full to or accrued on behalf of all its respective directors, officers and employees all wages, salaries, commissions, bonuses, fees and other direct compensation for all labor or services performed by them, and all vacation pay, sick pay, severance pay, overtime pay and other amounts for which it is obligated under applicable law or its existing agreements, benefit plans, policies or practices, (provided, however, that no accrual has been made for bonuses that may be granted pursuant to PCB’s Management Incentive Plan for 2004, and notwithstanding anything to the contrary contained in this Agreement, FCB acknowledges that the administration of bonuses pursuant to the PCB Management Incentive Plan for 2004 will be based on PCB’s financial performance exclusive of any fees or expenses incurred in connection with this Agreement, or any compensation paid in connection with employment, consulting or other similar agreements entered into in connection with this Agreement), and (ii)  is in compliance with all applicable federal, state and local laws, statutes, rules and regulations with regard to employment and employment practices, terms and conditions, wages and hours and other compensation matters. To the Best Knowledge of PCCC, no person has asserted that either PCCC, PCB or PFS is liable in any amount for any arrearage in wages or employment taxes or for any penalties for failure to comply with any of the foregoing.

                         There is no action, suit or proceeding by any person pending or, to the Best Knowledge of PCCC, threatened, against PCCC, PCB or PFS (or any of its employees), involving employment discrimination, sexual harassment, wrongful discharge or similar claims.

                         Neither PCCC, PCB nor PFS is a party to or bound by any collective bargaining agreement with any of its employees, any labor union or any other collective bargaining unit or organization. There is no pending or threatened labor dispute, work stoppage or strike involving PCCC, PCB or PFS and any of their employees, or any pending or threatened proceeding in which it is asserted that PCCC, PCB or PFS has committed an unfair labor practice; and to the Best Knowledge of PCCC, there is no activity involving it or any of its employees seeking to certify a collective bargaining unit or engaging in any other labor organization activity.

         2.25.          Employment Agreements; Employee Benefit Plans .

                          (a)         PCCC has Previously Disclosed to FCB a true and complete list of all (i) bonus, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option plans maintained or provided by PCCC, PCB or PFS or under which it has any obligation to any person (including PCB’s Management Incentive Plan for 2004; (ii) employment and severance contracts to which PCCC, PCB or PFS is a party or under which it has any obligation to any person; (iii) all medical, dental, health, and life insurance plans maintained or provided by PCCC, PCB or PFS or under which it has any obligation to any person; (iv) all vacation, sickness and other leave plans maintained or provided by PCCC, PCB or PFS, (v) all disability and death benefit plans maintained or provided by PCCC, PCB or PFS; and (vi) all other employee benefit plans, contracts, or arrangements to which either PCCC, PCB or PFS is a party or which is maintained or contributed to by either of them for the benefit of any of its respective current or former employees or directors or any of their beneficiaries (collectively, the “Plans”). True and complete copies of all Plans, including, but not limited to, any trust instruments and/or insurance contracts, if any, forming a part thereof or applicable to the administration of any such Plans or the assets thereof, and all amendments thereto, previously have been supplied to FCB.

 

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                         Except as Previously Disclosed to FCB, neither PCCC, PCB nor PFS maintains, sponsors, contributes to or otherwise participates in any “Employee Benefit Plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), any “Multi-employer Plan” within the meaning of Section 3(37) of ERISA, or any “Multiple Employer Welfare Arrangement” within the meaning of Section 3(40) of ERISA. Any Plan which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA and which is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”) has received or applied for a favorable determination letter from the IRS to the effect that they are so qualified, and neither PCCC nor PCB is aware of any circumstances reasonably likely to result in the revocation or denial of any such favorable determination letter. All reports and returns with respect to the Plans (and any Plans previously maintained by PCCC, PCB or PFS) required to be filed with any governmental department, agency, service or other authority, including without limitation Internal Revenue Service Form 5500 (Annual Report), have been properly and timely filed.

                          (b)         All “Employee Benefit Plans” maintained by or otherwise covering employees or former employees of PCCC, PCB or PCB, to the extent subject to ERISA, currently are, and at all times have been, in compliance with all material provisions and requirements of ERISA. There is no pending or threatened litigation relating to any Plan or any employee benefit plan, contract or arrangement previously maintained by PCCC, PCB or PCB. Neither PCCC, PCB nor PFS has engaged in a transaction with respect to any Plan that could subject either of them to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA.

                          (c)         PCCC has Previously Disclosed to FCB a true, correct and complete copy (including copies of all amendments thereto) of each retirement Plan maintained by either PCCC, PCB or PFS which is intended to be a plan qualified under Section 401(a) of the Code (collectively, the “Retirement Plans”), together with true, correct and complete copies of the summary plan descriptions relating to the Retirement Plans, the most recent determination letters received from the IRS regarding the Retirement Plans, and the most recent Annual Reports (Form 5500 series) and related schedules, if any, for the Retirement Plans.

                         The Retirement Plans are qualified under the provisions of Section 401(a) of the Code, the trusts under the Retirement Plans are exempt trusts under Section 501(a) of the Code, and determination letters have been issued or applied for with respect to each such qualification and exemption, including determination letters covering the current terms and provisions of the Retirement Plans. The Retirement Plans have been, or not later than the date such amendments are required to have been adopted will have been, amended to comply with applicable law. There are no issues relating to said qualification or exemption of the Retirement Plans currently pending before the IRS, the United States Department of Labor, the Pension Benefit Guaranty Corporation or any court. The Retirement Plans and the administration thereof meet (and have met since the establishment of the Retirement Plans) in all material respects all of the applicable requirements of ERISA, the Code and all other provisions, laws, rules and regulations applicable to the Retirement Plans and do not violate (and since the establishment of the Retirement Plans have not violated) in any material respect any of the applicable provisions of the Retirement Plans, ERISA, the Code and such other laws, rules and regulations. Without limiting the generality of the foregoing, all reports and returns with respect to the Retirement Plans required to be filed with any governmental department, agency, service or other authority have been properly and timely filed. There are no issues or disputes with respect to the Retirement Plans or the administration thereof currently existing between PCCC, PCB or PFS, or any trustee or other fiduciary thereunder, and any governmental agency, any current or former employee of PCCC, PCB or PFS or beneficiary of any such employee, or any other person or entity. No “reportable event” within the meaning of Section 4043 of ERISA has occurred at any time with respect to the Retirement Plans.

                          (d)         No liability under subtitle C or D of Title IV of ERISA has been or is expected to be incurred by PCCC, PCB or PFS with respect to the Retirement Plans or with respect to any other ongoing, frozen or terminated defined benefit pension plan currently or formerly maintained by PCCC,

 

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PCB or PFS. Neither PCCC, PCB nor PFS presently contributes to a “Multiemployer Plan” and neither of them has contributed to such a plan since December 31, 1998. All contributions required to be made pursuant to the terms of each of the Plans (including without limitation the Retirement Plans and any other “pension plan” as defined in Section 3(2) of ERISA maintained by PCCC, PCB or PFS) have been timely made. Neither the Retirement Plans nor any other “pension plan” maintained by PCCC, PCB or PFS have an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither PCCC, PCB nor PFS has provided, and neither of them is required to provide, security to any “pension plan” or to any “Single Employer Plan” pursuant to Section 401(a)(29) of the Code. Under the Retirement Plans and any other “pension plan” maintained by PCCC, PCB or PFS as of the last day of the most recent Plan year ended prior to the date hereof, the actuarially determined present value of all “benefit liabilities,” within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the Plan’s most recent actuarial valuation), did not exceed the then current value of the assets of such Plan, and there has been no material change in the financial condition of any such Plan since the last day of the most recent Plan year.

                          (e)         Except as provided in the terms of the Retirement Plans themselves, there are no restrictions on the rights of PCCC, PCB or PFS to amend or terminate any Retirement Plan without incurring any liability thereunder. Neither the execution and delivery of this Agreement nor the consummation of the transactions described herein will, except as otherwise specifically provided in this Agreement, (i)  result in any payment to any person (including without limitation any severance compensation or payment, unemployment compensation, “golden parachute” or “change in control” payment, or otherwise) becoming due under any Plan or agreement to any director, officer, employee or consultant, (ii)  increase any benefits otherwise payable under any Plan or agreement, or (iii)  result in any acceleration of the time of payment or vesting of any such benefit.

         2.26.         Insurance .   PCCC has Previously Disclosed to FCB a listing of each blanket bond, liability insurance, property and casualty, workers’ compensation and employer liability, life, or other insurance policy in effect on September 30, 2004, and in which PCCC, PCB or PFS was an insured party or beneficiary (the “Policies”). The Policies provide coverage in such amounts and against such liabilities, casualties, losses or risks as is customary or reasonable for entities engaged in the businesses of PCCC, PCB and PFS or as is required by applicable law or regulation; and, in the reasonable opinion of management of PCCC and PCB, the insurance coverage provided under the Policies is reasonable and adequate in all respects for PCCC, PCB and PFS. Each of the Policies is in full force and effect and is valid and enforceable in accordance with its terms, and is underwritten by an insurer of recognized financial responsibility qualified to issue those policies; and PCCC, PCB and PFS each has complied in all material respects with requirements (including the giving of required notices) under each such Policy in order to preserve all rights thereunder with respect to all matters. Neither PCCC, PCB nor PFS is in default under the provisions of, has received notice of cancellation or nonrenewal of or any premium increase on, or has failed to pay any premium on, any Policy, and to the Best Knowledge of PCCC, there has not been any material inaccuracy in any application for any Policy. There are no pending claims with respect to any Policy, and, to the Best Knowledge of PCCC, there currently are no conditions, and there has occurred no event, that is reasonably likely to form the basis for any such claim.

         2.27.         Insurance of Deposits .   All deposits of PCB are insured by the Bank Insurance Fund of the FDIC to the maximum extent permitted by law, all deposit insurance premiums due from PCB to the FDIC have been paid in full in a timely fashion, and to the Best Knowledge of PCCC, no proceedings have been commenced or are contemplated by the FDIC or otherwise to terminate such insurance.

         2.28.         Indemnification Obligations . Except to the extent provided by their respective certificates of incorporation or bylaws in effect on the date of this Agreement, or as otherwise required by Chapter 8 of the South Carolina Business Corporation Act of 1988, neither PCCC, PCB nor PFS has any obligation to indemnify or hold harmless any of its current or former directors, officers or employees, or any other person, against or from any costs or expenses (including reasonable attorneys’ fees), judgments,

 

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fines, amounts paid in settlement, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative.

         2.29.         Obstacles to Regulatory Approval . To the Best Knowledge of PCCC, there exists no fact or condition (including without limitation PCB’s record of compliance with the Community Reinvestment Act) that may reasonably be expected to prevent or materially impede or delay PCCC, PCB, PFS or FCB from obtaining the regulatory approvals required in order to consummate the transactions described in this Agreement; and if any such fact or condition becomes known to PCCC or PCB, it shall promptly (and in any event within three days after obtaining such Knowledge) give notice of such fact or condition to FCB in the manner provided herein.

         2.30.         Disclosure .   To the Best Knowledge of PCCC, no written statement, certificate, schedule, list or other written information furnished by or on behalf of PCCC, PCB or PFS to FCB or its employees or agents in connection with this Agreement and the transactions described herein, when considered as a whole, contains or has contained any untrue statement of a material fact or omits or has omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FCB

        Except as otherwise specifically described in this Agreement or as “Previously Disclosed to PCCC” (as defined in Paragraph 10.13), FCB hereby makes the following representations and warranties to PCCC and PCB.

         3.01.         Organization; Standing; Power .   FCB and Bancorp, each (i)  is duly organized and incorporated, validly existing and in good standing under the laws of South Carolina, (ii)  has all requisite power and authority (corporate and other) to own its respective properties and conduct its respective business as it now is being conducted, and (iii)  is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it therein, or in which the transaction of its respective business, makes such qualification necessary, except where failure so to qualify would not have an “FCB Material Adverse Effect.” For purposes of this Agreement, the term “FCB Material Adverse Effect” means a material adverse effect on FCB and Bancorp considered as one entity, on Bancorp’s consolidated financial condition or results of operations, on Bancorp’s or FCB’s business prospects, or on the ability of FCB to consummate the transactions described herein or to carry on its business as presently conducted, or on FCB’s ability to conduct PCB’s business following the Merger.

         3.02.         Authorization and Validity of Agreement. This Agreement has been duly and validly approved by FCB’s Board of Directors and by Bancorp in its capacity as FCB’s sole shareholder. Subject only to receipt of required approvals of Regulatory Authorities (as contemplated by Paragraph 6.01), (i)  FCB has the corporate power and authority to execute and deliver this Agreement and to perform its obligations and agreements and carry out the transactions described herein, (ii)  all corporate proceedings required to be taken to authorize FCB to enter into this Agreement and to perform its obligations and agreements and carry out the transactions described herein have been duly and properly taken, and (iii)  this Agreement constitutes the valid and binding agreement of FCB enforceable in accordance with its terms (except to the extent enforceability may be limited by (A)  applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect which affect creditors’ rights generally, (B)  legal and equitable limitations on the availability of injunctive relief, specific performance and other equitable remedies, and (C)  general principles of equity and applicable laws or court decisions limiting the enforceability of indemnification provisions).

 

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         3.03.         Validity of Transactions; Absence of Required Consents or Waivers .   Subject to receipt of required approvals of Regulatory Authorities, and except where the same would not have a FCB Material Adverse Effect, neither the execution and delivery of this Agreement, nor the consummation of the transactions described herein, nor compliance by FCB with any of its obligations or agreements contained herein, will: (i)  conflict with or result in a breach of the terms and conditions of, or constitute a default or violation under any provision of, FCB’s Articles of Incorporation or Bylaws, or any material contract, agreement, lease, mortgage, note, bond, indenture, license, or obligation or understanding (oral or written) to which FCB or Bancorp is bound or by which either of them, or their respective businesses, capital stock or any of their respective properties or assets may be affected; (ii)  result in the creation or imposition of any material lien, claim, interest, charge, restriction or encumbrance upon any of FCB’s or Bancorp’s properties or assets; (iii)  violate any applicable federal or state statute, law, rule or regulation, or any order, writ, injunction or decree of any court, administrative or regulatory agency or governmental body, which violation reasonably could be expected to have an FCB Material Adverse Effect; or (iv)  result in the acceleration of any material obligation or indebtedness of FCB or Bancorp.

                         No further consents, approvals or waivers are required to be obtained from any person or entity in connection with FCB’s execution and delivery of this Agreement, or the performance of its obligations or agreements or the consummation of the transactions described herein, except for required approvals of Regulatory Authorities as described in Paragraph 6.01.

         3.04.         Financing . FCB