Exhibit 2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into effective the 22nd
day
of August, 2005, by and among HIGHLANDS
BANKSHARES, INC., a West Virginia bank
holding company ("Buyer"), the individuals
executing below (collectively,
"Sellers"), joined in by THE NATIONAL BANK
OF DAVIS, a national banking
association ("Bank").
RECITALS:
WHEREAS, Sellers have
evidenced a desire to
sell shares of common
stock of the Bank (the "Shares"); and
WHEREAS, Buyer and Sellers have reached agreement with respect
to
the purchase of all of each of Sellers'
Shares by Buyer; and
WHEREAS, the parties wish to enter into this Agreement with
respect
to the same.
NOW, THEREFORE, in consideration of the mutual promises and
understandings hereinafter contained, and
for other good and valuable
consideration, the receipt and sufficiency
of which are hereby acknowledged,
the parties do hereby agree as follows:
ARTICLE I
SALE OF SHARES
1.1 Purchase of Shares. At the Closing, each of Sellers shall
transfer all of the Shares owned by each
Seller to Buyer, free and clear of any
and all liens and encumbrances.
1.2 Purchase Price. Buyer will pay to each of Sellers the sum of
Ten
Thousand Four Hundred Dollars ($10,400) per
Share (the "Purchase Price"). The
Purchase Price shall be payable in cash at
the Closing.
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1.3 Deposit of Shares. On execution of this Agreement, each
Seller
shall deposit with the Bank the certificate
or certificates representing the
Shares, along with the Stock Power in
substantially the form of Exhibit A and
substitute Form W-9 in substantially the
form of Exhibit B. The Bank shall hold
such certificates for delivery to Buyer at
the Closing on receipt of a check
from Buyer representing the Purchase Price
and the satisfaction of all
conditions to Closing.
ARTICLE II
CLOSING
2.1 Time and Place of Closing. The Closing shall take place at
the
offices of the Bank, William Avenue, Davis,
West Virginia, at such time on such
date as the parties shall agree, and shall
be within thirty days of approvals of
this Agreement (including any statutory
waiting periods) referred to in Section
9.1(b), (c), (d) and (e), whichever is
later.
2.2 Closing
Matters. The following
actions shall occur at the
Closing:
a.
Certificates
Representing the
Shares. The Bank shall
deliver to Buyer certificates representing
the Shares, duly endorsed to Buyer or
accompanied with duly exercised stock
powers in the Buyer's favor and substitute
Forms W-9 in substantially the forms as the
attached Exhibits A and B,
respectively.
b. Other Documents. The parties shall deliver certificates,
instruments, and documents customarily
delivered in connection with transactions
of the type contemplated herein.
2.3 Expenses. Sellers and Buyer shall each pay their own costs
and
expenses incurred in connection with the
transactions contemplated by this
Agreement. Sellers shall be responsible for
any income or transfer taxes
relating to the sale of the Shares.
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ARTICLE III
NON-SOLICITATION
3.1 Non-Solicitation. Through the Closing, Sellers will not
negotiate or enter into an agreement with
any other party with respect to the
sale or transfer of the Shares. Each of
Sellers represents and warrants that
there are no existing agreements,
arrangements, understandings or letters of
intent to which he or she is bound with
respect to the sale of the Shares of the
Bank.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of Sellers makes the following representations and
warranties:
4.1 Seller Ownership of Shares and
Authority.
Seller owns all
of his or her Shares as the legal owner
thereof, with good and marketable title
free and clear of any mortgage, pledge,
lien, charge, security interest, adverse
claims, demands and encumbrance whatsoever.
There are no stock transfer
restrictions affecting the transfer of the
Shares to Buyer. Seller has the power
and authority to enter into, to perform his
obligations under, and to consummate
the transactions and other acts
contemplated by, this Agreement. This Agreement
constitutes the valid and binding
obligation of Seller, enforceable in
accordance with its terms except as such
enforceability may be limited by (i)
applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of
general application affecting enforcement
of creditors' rights generally; (ii)
laws relating to the availability of
specific performance, injunctive relief or
other equitable remedies; and (iii)
applicable law limiting indemnification
provisions. Neither the execution and
delivery of this Agreement, nor the
compliance with and fulfillment of its
terms and provisions will violate,
conflict with or constitute a breach of or
default under the provisions
<PAGE> 4
of any agreement or other instrument which
binds Seller, or result in the
imposition of any lien, charge or
encumbrance on any of the assets of the Bank
or the Shares, or require any affirmative
action of any creditor of Seller.
4.2 Survival. The representations and warranties contained in
Section 4.1 above shall survive the
Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Buyer Ownership of Shares and Authority. Subject to the
receipt
of all appropriate regulatory authorities
as provided in the West Virginia
Banking Act ("WVBA") and the rules and
regulations of the Federal Deposit
Insurance Corporation ("FDIC"), Office of
the Comptroller of the Currency
("OCC") and the Board of Governors of the
Federal Reserve ("FRB"), Buyer has the
power and authority to enter into, to
perform his obligations under, and to
consummate the transactions and other acts
contemplated by, this Agreement. This
Agreement constitutes the valid and binding
obligation of Buyer, enforceable in
accordance with its terms except as such
enforceability may be limited by (i)
applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of
general application affecting enforcement
of creditors' rights generally; (ii)
laws relating to the availability of
specific performance, injunctive relief or
other equitable remedies; and (iii)
applicable law limiting indemnification
provisions.
5.2 Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
West Virginia and has the corporate power
to own all of its properties and
assets and to carry on its business as it
is now being conducted.
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5.3 Authorization of Agreement. The Board of Directors of Buyer
has
authorized the execution of this Agreement
as set forth herein. Subject to
approval by all appropriate regulatory
authorities, each has the corporate power
to execute and deliver this Agreement, and
has taken all action required by law,
its Articles of Incorporation, its Bylaws
or otherwise to authorize such
execution and delivery, the consummation of
the transactions contemplated
hereby, and upon its execution and delivery
(and assuming due execution and
delivery by the other parties hereto) this
Agreement is a valid and binding
agreement of each enforceable in accordance
with its terms.
5.4 No Violation of Other Instruments. Subject to the receipt of
the
authorizations set forth in Section 5.1,
the execution and delivery of this
Agreement do not, and the consummation of
the Merger will not, (i) violate any
provision of the Articles of Incorporation
or Bylaws of Buyer, (ii) violate any
provision of, or result in the acceleration
of any obligation under or in the
termination, if applicable, of, any
mortgage, deed of trust, note, lien, lease,
franchise, license, permit, agreement,
instrument, order, arbitration award,
judgment or decree to which Buyer is a
party or by which it is bound except for
such as would not have a material adverse
effect on the financial condition,
business, properties, or results of
operations of Buyer or the transactions
contemplated hereby, (iii) violate or
conflict with any other material
restriction of any kind or character to
which Buyer is subject, or (iv) enable
any person to enjoin the transactions
contemplated hereby. After approval of
this Agreement by appropriate regulatory
authorities, including but not limited
to the FRB, the West Virginia Board of
Banking and Financial Institutions, and
the FDIC, Buyer will have taken all action
required by law and its Articles of
Incorporation and Bylaws necessary to
authorize the execution and delivery of
this Agreement and to authorize the
consummation of the transactions
contemplated hereby.
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5.5 Regulatory Approvals. Prior to the Closing, Buyer separately
and
jointly with the Bank, shall use its
reasonable best efforts in good faith to
take or cause to be taken as promptly as
practicable all such steps as shall be
necessary to obtain: (i) the prior approval
of the Merger by the FRB under the
Bank Holding Company Act of 1956, as
amended, the FDIC, and the West Virginia
Board of Banking and Financial
Institutions, and (ii) all other consents and
approvals of governmental agencies as are
required by law or otherwise, and
shall do any and all things deemed by Buyer
to be necessary or appropriate in
order to cause the purchase of shares to be
consummated on the terms provided
herein.
5.6 No Actions, Etc. There are no actions, proceedings or
investigations pending or, to the knowledge
of the executive officers or
directors of Buyer, threatened or
contemplated against or relating to Buyer,
which, individually or in the aggregate,
could materially and adversely affect
the ability of either to consummate the
transactions contemplated hereby, and
such officers and directors do not know of
any basis for any action or
proceeding. Buyer is not transacting
business in violation of any applicable law
or regulation which could materially
adversely affect the ability of either to
consummate the transactions contemplated
hereby.
5.7 Good Faith. Buyer shall use reasonable best efforts in good
faith to take or cause to be taken all
action required under this Agreement on
its part to be taken as promptly as
practicable so as to permit the consummation
of this Agreement at the earliest
practicable date and cooperate fully with the
other parties to that end.
<PAGE> 7
5.8 Knowledge as to Conditions. As of the date hereof, Buyer
does
not know of any reason relating to Buyer
why the approvals, consents and waivers
of governmental authorities referred to in
Sections 9.1(b) and 9.1(c) should not
be obtained in a timely manner; nor is
Buyer aware of any conditions or
provisions of any actions, reports or
examinations or similar regulatory reports
or findings which is anticipated to delay
or precludes either from entering into
the Agreement or obtaining prompt
regulatory approval of all applications to be
filed in connection with the transactions
contemplated by this Agreement,
including but not limited to compliance
with applicable Community Reinvestment
Acts.
5.9 Press Release. Buyer will consult with the Bank as to the
form
and substance of any press release or other
public disclosure concerning matters
related thereto, and, except as required by
law or within good faith, shall not
issue such release or disclosure without
the consent of the Bank.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES AND AGREEMENTS OF THE BANK
Except as set forth in the disclosure schedule to be delivered
by
the Bank to Buyer on or before fifteen days
after the date of this Agreement
(the "Disclosure Schedule"), the Bank
represents and warrants to and covenants
with the Buyer that:
<PAGE> 8
6.1 Organization and Qualification of the Bank; Subsidiaries.
The
Bank is duly organized, validly existing
and in good standing as a national
banking association under the laws of the
United States and has the corporate
power to own all of its properties and
assets and to carry on its business as it
is now being conducted. The Bank is
qualified to do business in each
jurisdiction in which such qualification is
required. The issued and outstanding
shares of stock of the Bank are all duly
authorized, validly issued, fully paid
and non-assessable. The Bank has no direct
or indirect subsidiaries, and does
not own 5% or more of the shares of stock
of any other corporation.
6.2 Authorization of Agreement. The Board of Directors of the
Bank
has authorized the execution of this
Agreement as set forth herein, and subject
to the approval by all appropriate
regulatory authorities as provided in the
National Banking Act and the rules and
regulations of the FDIC, the OCC and the
FRB, the Bank is has the corporate power
and is duly authorized to carry out the
transactions contemplated by this
Agreement, and upon its execution and delivery
(and assuming due execution and delivery by
the parties), this Agreement is a
valid and binding agreement of the Bank
enforceable in accordance with its
terms.
6.3 No Violation of Other Instruments. Subject to the receipt of
the
authorizations set forth in Section 6.2,
the execution and delivery of this
Agreement do not, and the consummation of
the transactions contemplated by this
Agreement will not: (i) violate any
provisions of the Bank's Articles of
Incorporation or Bylaws, (ii) violate any
provision of, or result in the
acceleration of any obligation under or in
the termination, if applicable, of
any mortgage, deed of trust, note, lien,
lease, franchise, license, permit,
agreement, instrument, order, arbitration
award, judgment or decree to which the
Bank is a party or by which it is bound
except for such as would not have a
material adverse effect on the financial
condition, business,
<PAGE> 9
properties, or results of operations of the
Bank, taken as a whole, or the
transactions contemplated thereby, (iii)
violate or conflict with any other
material restriction of any kind or
character by which the Bank is bound, or
(iv) enable any person to enjoin the
transactions contemplated hereby. The Bank
has taken all action required by law, the
Articles of Association of the Bank,
its Bylaws or otherwise, to authorize the
execution and delivery of this
Agreement and to authorize the consummation
of the transactions contemplated
hereby.
6.4 Financial Statements. The balance sheets of the Bank as of
December 31, 2004, 2003, and 2002, and its
statements of income and cash flows
for each of the twelve-month periods ended
on such dates, heretofore delivered
to Buyer, were prepared in accordance with
generally accepted accounting
principles ("GAAP") consistently applied,
and those financial statements, as
well as the unaudited balance sheet as of
June 30, 2005, and the statement of
income and cash flows for the six-month
period ended June 30, 2005, both of
which have been delivered to Buyer, fairly
present its financial condition and
results of operations as of such date and
for such period, subject to normal
year-end audit adjustments and without
footnotes required by GAAP.
6.5 No Material Adverse Change. There has been no material
adverse
change, or development involving a
reasonably foreseeable prospective material
adverse change, in or affecting the
financial condition, businesses, properties,
results of operations or prospects of the
Bank, taken as a whole, since December
31, 2004.
<PAGE> 10
6.6
Reports. The Bank has filed all documents and reports required
by the OCC or any other regulatory agency
with authority over the Bank or its
operations, and such reports did not
contain, as of the date thereof, an untrue
statement of a material fact or omit to
state a material fact necessary to make
the statements therein, in light of the
circumstances under which such
statements were made, not misleading.
6.7 No Actions, Etc. To the knowledge of the executive officers
and/or directors of the Bank, there are no
actions, suits, claims, proceedings
or investigations pending or threatened or
contemplated against or relating to
the Bank of any of its properties which,
individually or in the aggregate, could
materially and adversely affect the
financial condition, businesses, properties
or results of operations of the Bank, taken
as a whole, or the ability of the
Bank to consummate the transactions
contemplated hereby, and such officers and
directors do not know of any basis for any
such action or proceeding. To the
knowledge of the executive officers and/or
directors of the Bank, the Bank is
not transacting business in violation of
any applicable law or regulation which
could materially adversely affect the
financial condition, businesses,
properties or results of operations of the
Bank, taken as a whole, or the
ability of the parties to consummate the
transactions contemplated hereby.
6.8 Capitalization. The authorized capital stock of the Bank
consists of 500 shares of common stock, par
value of $100 per share, all of
which shares are issued and outstanding as
of the date hereof, and are duly
authorized, validly issued, fully paid and
non-assessable, and have not been
issued in violation of preemptive rights.
There are no options, warrants, calls,
reservations for issuance or commitments of
any kind relating to, or securities
convertible into, the common stock of the
Bank.
<PAGE> 11
6.9 Copies of All Contracts, Leases, Etc. The Bank has furnished
or
made available or will promptly furnish or
make available to Buyer true and
complete copies of all material contracts,
leases and other agreements to which
the Bank is a party or by which it is
bound, and has listed on the Disclosure
Schedule and will furnish to Buyer true and
complete copies of all employment,
pension, retirement, stock option, employee
stock option, profit sharing,
deferred compensation, consultant, bonus,
group insurance or similar plans with
respect to any of the directors, officers
or other employees of the Bank.
6.10 Undisclosed Liabilities. Except as previously disclosed to
the
Buyer, the Bank has no material liabilities
other than those liabilities
disclosed on or provided for in the balance
sheet as of December 31, 2004, and
liabilities incurred since such date in the
ordinary course of business
consistent with past practices.
6.11 Title to Properties. The Bank has good and marketable title
to
all its property and assets set forth in
its balance sheets as of December 31,
2004, except property and assets sold or
otherwise disposed of since December
31, 2004, in the ordinary course of
business, subject to no liens, mortgages,
pledges, encumbrances or charges of any
kind except liens reflected on said
balance sheet and except liens for taxes
and assessments not delinquent, pledges
to secure deposits and such other liens and
encumbrances and imperfections of
title as do not materially affect the value
of such property as reflected on
said balance sheet and which do not
interfere with or impair its present or
continued use, and all of their material
leases are in full force and effect,
and the Bank is not in default in any
material respect thereunder.
<PAGE> 12
6.12 Absence of Regulatory Actions. Except as disclosed to
Buyer,
the Bank is not a party to any cease and
desist order, written agreement or
memorandum of understanding with, or a
party to any commitment letter or similar
undertaking to, or is subject to any order
or directive by, or is a recipient of
any extraordinary supervisory letter from,
federal governmental authorities
charged with the supervision or regulation
of its operations of, nor has it been
advised by any such governmental authority
that it is contemplating issuing or
requesting (or is considering the
appropriateness of issuing or requesting) any
such order, directive, written agreement,
memorandum of understanding,
extraordinary supervisory letter,
commitment letter, board resolutions or
similar undertaking.
6.13 Employee
Benefits.
(a) For purposes of this Agreement, the following definitions
shall apply:
(1) "Employee Pension Benefit Plan" has the meaning as
set forth in ERISA ss. 3(2).
(2) "Employee Welfare Benefit Plan" has the meaning set
forth in ERISA ss. 3(1).
(3) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(4) "Multiemployer Plan" shall mean a plan described in
ss. 3(37) and/or ss. 4001(a)(3) of
ERISA.
(5) "Bank Retirement Plan" shall mean any retirement
plan adopted by the Bank.
(6) "Bank Employee" means an employee of the Bank.
<PAGE> 13
(7) "Employee Benefit Plan(s)" means any one or more of
the following in which a Bank Employee is a
participant in or benefits from as a
result of his employment (whether current
or past): (a) Employee Pension Benefit
Plan, (b) Employee Welfare Benefit Plan, or
(c) any other deferred compensation
plan, bonus plan, incentive, disability or
group insurance plan, stock option
plan, employee stock purchase plan,
vacation plan, severance plan, sick leave
plan or policy, holiday plan or policy,
maternity leave or policy, or any other
benefit plan, program, agreement (including
employment and severance
agreements), arrangements or commitments of
any kind, whether or not subject to
the requirements of ERISA.
(8) "Code" means the Internal Revenue Code of 1986, as
amended.
(9) "Control Group" shall mean a controlled group of
corporations within the meaning of ss.
414(b) of the Internal Revenue Code and
entitles under common control within the
meaning of ss. 414(c) of the Internal
Revenue Code.
(b) Neither currently nor at any time during the preceding
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