Exhibit 2
AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
BY AND BETWEEN
YADKIN VALLEY BANK AND TRUST COMPANY
AND
MAIN STREET BANKSHARES, INC.
AND
PIEDMONT BANK
MARCH 28, 2002
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND BETWEEN
YADKIN VALLEY BANK AND TRUST COMPANY,
MAIN STREET BANKSHARES, INC.
AND PIEDMONT BANK
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (the "Agreement") is
entered into as of the 28th day of March 2002, by and between YADKIN VALLEY BANK
AND TRUST COMPANY ("Yadkin"), MAIN STREET BANKSHARES, INC. ("Main Street") and
PIEDMONT BANK ("Piedmont").
WHEREAS, Yadkin is a North Carolina banking corporation with its principal
office and place of business located in Elkin, North Carolina; and,
WHEREAS, Main Street is a North Carolina business corporation with its
principal office and place of business located in Statesville, North Carolina,
and by virtue of its being the owner of all the issued and outstanding shares of
common stock of Piedmont is a bank holding company registered as such with the
Board of Governors of the Federal Reserve System; and,
WHEREAS, Piedmont is a North Carolina banking corporation with its
principal office and place of business located in Statesville, North Carolina;
and,
WHEREAS, Yadkin, Piedmont and Main Street have agreed that it is in their
mutual best interests and in the best interests of their respective shareholders
for Main Street and Piedmont to be merged with and into Yadkin in the manner and
upon the terms and conditions contained in this Agreement; and,
WHEREAS, to effectuate the foregoing, Yadkin, Piedmont and Main Street
desire to adopt this Agreement as a plan of reorganization in accordance with
the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended; and,
WHEREAS, Yadkin's Board of Directors has approved this Agreement and will
recommend to Yadkin's shareholders that they approve this Agreement and the
transactions described herein; and,
WHEREAS, Piedmont's and Main Street's respective Boards of Directors have
each approved this Agreement and Main Street's Board of Directors, by virtue of
the fact that it is the sole shareholder of Piedmont, desires to approve this
Agreement as sole shareholder by authorizing the execution hereof, and Main
Street's Board of Directors will recommend to Main Street'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, Yadkin, Piedmont and Main Street hereby adopt and make this Agreement
and mutually agree as follows:
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ARTICLE I
THE MERGER
1.01. NAMES OF MERGING CORPORATIONS. The names of the corporations
proposed to be merged are Yadkin Valley Bank and Trust Company ("Yadkin") and
Main Street BankShares, Inc. ("Main Street").
1.02. NATURE OF TRANSACTION; PLAN OF MERGER. Subject to the provisions of
this Agreement, at the "Effective Time" (as defined in Paragraph 1.09 below),
Main Street will be merged into and with Yadkin (the "Merger") as provided in
the plan of merger attached as Exhibit A to this Agreement (the "Plan of
Merger").
1.03. EFFECT OF MERGER; SURVIVING CORPORATION. At the Effective Time, and
by reason of the Merger, the separate corporate existence of Main Street shall
cease while the corporate existence of Yadkin 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, Yadkin shall continue to operate as a North
Carolina banking corporation and will conduct its business at the then legally
established branch and main offices of Yadkin, and shall conduct business under
the name "Yadkin Valley Bank and Trust Company."
1.04. ASSETS AND LIABILITIES OF MAIN STREET. 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 Main Street
(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 Main Street, whether tangible or intangible) shall be
transferred to and vest in Yadkin, and Yadkin shall succeed to all the rights,
privileges, immunities, powers, purposes and franchises of a public or private
nature of Main Street (including all trust and other fiduciary properties,
powers and rights), all without any conveyance, assignment or further act or
deed; and, Yadkin shall become responsible for all of the liabilities, duties
and obligations of every kind, nature and description of Main Street (including
duties as trustee or fiduciary) as of the Effective Time. By virtue of the
Merger, Main Street's interest in and ownership of the outstanding shares of
$5.00 par value common stock of its wholly-owned subsidiary, Piedmont Bank
("Piedmont"), shall be transferred to and vest in Yadkin, and Piedmont shall
become a wholly-owned subsidiary of Yadkin, whereupon, Piedmont will immediately
be merged into and with Yadkin as provided in Paragraph 1.06 hereof.
1.05. CONVERSION AND EXCHANGE OF STOCK.
(a) CONVERSION OF MAIN STREET COMMON STOCK. Except as otherwise
provided in this Agreement, at the Effective Time all rights of Main Street's
shareholders with respect to all outstanding shares of "Main Street Common
Stock" (as such term is defined in Paragraph 2.02(a) hereof) shall cease to
exist and, as consideration for and to effect the Merger, each such outstanding
share shall be converted, without any action by Yadkin, Main Street or any Main
Street shareholder, into the right to receive either (i) cash in the amount of
$18.50; or (ii) 1.68 shares of "Yadkin Common Stock" (as such term is defined in
Paragraph 3.02 hereof)
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As further described in Paragraph 1.05(b), and subject to the
limitations described herein, each Main Street shareholder will have the right
to elect the form of consideration into which his or her Main Street Common
Stock is converted and may elect to receive a combination of the above forms of
consideration by having a portion of his or her shares converted into one form
of consideration and the remaining shares converted into a different form of
consideration.
(b) ELECTION OF FORM OF CONSIDERATION. Subject to the limitations
described in this Agreement, each Main Street shareholder shall have the right
to elect the form of consideration into which his or her shares of Main Street
Common Stock will be converted. Each shareholder's election must be made in
writing in a form prescribed by Yadkin (an "Election of Consideration"), which
must be signed by the shareholder and delivered to Yadkin within 15 days
following the approval of this Agreement by Main Street's shareholders.
Shareholders of Main Street who do not return an Election of Consideration, or
whose Elections of Consideration are received by Yadkin after the time
prescribed, will be deemed to have elected to receive cash. The Election of
Consideration shall be forwarded to all shareholders of Main Street with the
notice of meeting utilized to call the Main Street Shareholders' Meeting (as
such term is defined in Paragraph 4.01(a) hereof).
(c) REQUIRED RATIO OF CONSIDERATION; ALLOCATIONS OF CONSIDERATION.
Notwithstanding the right of Main Street's shareholders to elect the form of
consideration into which their shares of Main Street Common Stock are converted,
the consideration issued or delivered for all Main Street's outstanding shares
in connection with the Merger (including consideration delivered to Main
Street's shareholders who exercise their "Dissenters' Rights") must consist of
shares of Yadkin Common Stock and cash, such that 70% of the outstanding shares
of Main Street Common Stock are converted into shares of Yadkin Common Stock at
the exchange rate of 1.68 and such that 30% of the outstanding shares of Main
Street Common Stock are converted into cash at the rate of $18.50 per share. In
the event that the elections of consideration by Main Street's shareholders call
for an aggregate number of shares of Yadkin Common Stock, or an aggregate amount
of cash (including cash issued to shareholders who exercise "Dissenters Rights"
as defined hereinafter), which is more or less than the percentage specified by
this Paragraph 1.05(c), then the number of shares or amount of cash shall be
reduced and an additional amount of cash, or additional shares of Yadkin Common
Stock, as the case may be, necessary to satisfy the above requirement shall be
allocated pro rata among part or all of Main Street's shareholders. Any such
allocations shall be made in such manner as Yadkin, in its sole discretion,
shall consider to be reasonable and appropriate, and pro rations may be made
among shareholders based on the relative amounts of their Main Street Common
Stock as to which they have made elections that are directly related to the
particular allocation being made. Yadkin's decision regarding any such
allocation shall be final and binding on Main Street's shareholders and all
parties to this Agreement.
(d) EXCHANGE AND PAYMENT PROCEDURES; SURRENDER OF CERTIFICATES. As
promptly as practicable, but not more than five (5) business days following the
Effective Time, Yadkin shall send or cause to be sent to each former Main Street
shareholder of record immediately prior to the Effective Time written
instructions and transmittal materials (a "Transmittal Letter") for use in
surrendering certificates evidencing Main Street Common Stock
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(each a "Main Street Certificate") to Yadkin or to an exchange agent appointed
by Yadkin. Upon the proper surrender and delivery to Yadkin or its agent (in
accordance with its instructions, and accompanied by a properly completed
Transmittal Letter) by a former shareholder of Main Street of his or her Main
Street Certificate(s), and in exchange therefor, Yadkin shall as soon as
practicable issue and deliver to the shareholder (i) a certificate evidencing
the Yadkin Common Stock into which the shareholder's Main Street Common Stock
has been converted, and, if elected by the shareholder or if any pro ration
requires, (ii) an amount of cash to which such shareholder is entitled in
exchange for his Main Street Common Stock.
(e) At the Effective Time, and without any action by Yadkin, Main
Street, Piedmont or any Main Street shareholder, Main Street's stock transfer
books shall be closed and there shall be no further transfers of Main Street
Common Stock on its stock transfer books or the registration of any transfer of
a Main Street Certificate by any holder thereof, and the holders of Main Street
Certificates shall cease to be, and shall have no further rights as,
stockholders of Main Street other than as provided in this Agreement. Following
the Effective Time, Main Street Certificates shall evidence only the right of
the registered holder thereof to receive the consideration into which his or her
Main Street Common Stock was converted at the Effective Time or, in the case of
Main Street Common Stock held by shareholders who properly shall have exercised
"Dissenters Rights" (as defined in Paragraph 1.05(h)), cash as provided in
Article 13 of the North Carolina Business Corporation Act.
(f) Subject to Paragraph 1.05(i), no certificate evidencing Yadkin
Common Stock shall be issued or delivered to any former Main Street shareholder
unless and until such shareholder shall have properly surrendered to Yadkin or
its agent the Main Street Certificate(s) formerly representing his or her shares
of Main Street Common Stock, together with a properly completed Transmittal
Letter. Further, until a former Main Street shareholder's Main Street
Certificates are so surrendered and certificates for the Yadkin Common Stock
into which his or her Main Street Common Stock was converted at the Effective
Time actually are issued to him or her, no dividend or other distribution
payable by Yadkin with respect to that Yadkin Common Stock as of any date
subsequent to the Effective Time shall be paid or delivered to the former Main
Street shareholder. However, upon the proper surrender of the shareholder's Main
Street Certificate, Yadkin shall pay to the shareholder the amount of any such
dividends or other distributions which have accrued but remain unpaid with
respect to that Yadkin Common Stock.
(g) ANTIDILUTIVE ADJUSTMENTS. If, prior to the Effective Time, Main
Street or Yadkin shall declare any dividend payable in shares of Main Street
Common Stock or Yadkin Common Stock or shall subdivide, split, reclassify or
combine the presently outstanding shares of Main Street Common Stock or Yadkin
Common Stock, then an appropriate and proportionate adjustment shall be made in
the number of shares of Yadkin Common Stock to be issued in exchange for each of
the shares of Main Street Common Stock.
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(h) DISSENTERS. Any shareholder of Main Street who properly
exercises the right of dissent and appraisal with respect to the Merger as
provided in Section 55-13-02 of the North Carolina General Statutes
("Dissenter's Rights") shall be entitled to receive payment of the fair value of
his or her shares of Main Street Common Stock in the manner and pursuant to the
procedures provided therein. Shares of Main Street Common Stock held by persons
who exercise Dissenter's Rights shall not be converted as described in Paragraph
1.05(a). However, if any shareholder of Main Street 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 Main Street Common Stock, at
Yadkin's sole option, shall be deemed to have been converted into the right to
receive Yadkin Common Stock as of the Effective Time as provided in Paragraph
1.05(a) hereof.
(i) LOST CERTIFICATES. Shareholders of Main Street whose Main Street
Certificates have been lost, destroyed, stolen or otherwise are missing shall be
entitled to receive the certificates evidencing Yadkin Common Stock to which
they are entitled in accordance with and upon compliance with reasonable
conditions imposed by Yadkin, including without limitation, a requirement that
those shareholders provide lost instruments indemnities or surety bonds in form,
substance and amounts satisfactory to Yadkin.
1.06. BANK MERGER. As soon as practicable following the Effective Time,
Piedmont will be merged into and with Yadkin (the "Bank Merger") as provided in
the plan of merger attached as Exhibit B to this Agreement (the "Plan of Bank
Merger").
1.07. EFFECT OF BANK MERGER; SURVIVING CORPORATION. At the Effective Time,
and by reason of the Bank Merger, the separate corporate existence of Piedmont
shall cease while the corporate existence of Yadkin as the surviving corporation
in the Bank Merger shall continue with all of its purposes, objects, rights,
privileges, powers and franchises, all of which shall be unaffected and
unimpaired by the Bank Merger. Following the Bank Merger, Yadkin shall continue
to operate as a North Carolina banking corporation and will conduct its business
at the then legally established branch and main offices of Yadkin and Piedmont,
and shall conduct business under the name "Yadkin Valley Bank and Trust Company"
except in: (i) Huntersville, Mecklenburg County, North Carolina; (ii) Xxxxxxxxx,
Mecklenburg County, North Carolina; (iii) Iredell County, North Carolina; and
(iv) Piedmont's relevant market area, where Yadkin shall conduct business under
the name "Piedmont Bank." The duration of the corporate existence of Yadkin, as
the surviving corporation, shall be perpetual and unlimited.
1.08 ARTICLES OF INCORPORATION, BYLAWS AND MANAGEMENT. The Articles of
Incorporation and Bylaws of Yadkin in effect at the Effective Time shall be the
Articles of Incorporation and Bylaws of Yadkin as the surviving corporation in
each of the Merger and the Bank Merger. The directors of Main Street and
Piedmont listed on Exhibit C, attached hereto and hereby incorporated by
reference, who remain in office at the Effective Time shall be appointed to the
Board of Directors of Yadkin, to hold such office until removed as provided by
law or until the election or appointment of their respective successors. The
President and Chief Executive Officer of Main Street as of the date of this
Agreement, provided he remains in office at the Effective Time, shall be named
President and Chief Executive Officer of Yadkin to hold such office until
removed as provided by law or until the election or appointment of his
successor. Except for the President and Chief Executive Officer of Yadkin who
shall resign such
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positions at the Effective Time, the directors and officers of Yadkin 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.
1.09. CLOSING; EFFECTIVE TIME. The closing of the Merger, the Bank Merger,
and other transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Yadkin, in Elkin, North Carolina, or at such other place
as Yadkin shall designate, on a date mutually agreeable to Yadkin and Main
Street (the "Closing Date") after the expiration of any and all required waiting
periods following the effective date of required approvals of the Merger and the
Bank Merger by governmental or regulatory authorities (but in no event more than
sixty (60) days following the expiration of all such required waiting periods).
At the Closing, Yadkin, Main Street and Piedmont shall take such actions
(including without limitation the delivery of certain closing documents and the
execution of Articles of Merger under North Carolina law) as are required by
this Agreement and as otherwise shall be required by law to consummate the
Merger and the Bank Merger and cause each 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 the Articles of Merger, executed by Yadkin, and filed by it with
the North Carolina Secretary of State in accordance with applicable law;
provided, however, that the Effective Time shall in no event be more than ten
(10) days following the Closing Date. The Bank Merger shall become effective on
the date and at the time specified in the Articles of Bank Merger containing the
appropriate certificate of approval of the North Carolina Commissioner of Banks,
executed by Yadkin and filed by it with the North Carolina Secretary of State in
accordance with applicable law, provided, however, that Yadkin shall use its
best efforts to cause the Bank Merger to become effective as soon as practicable
following the Effective Time.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
MAIN STREET AND PIEDMONT
Except as otherwise specifically described in this Agreement or as
"Previously Disclosed" (as such term is defined in Paragraph 10.13 hereof) by
Main Street and Piedmont to Yadkin, Main Street and Piedmont hereby make the
following representations and warranties to Yadkin:
2.01. ORGANIZATION; STANDING; POWER. Main Street and Piedmont each (i) is
duly organized and incorporated, validly existing and in good standing as a
corporation under the laws of the State of North Carolina; (ii) 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; (iii)
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 material adverse effect on
Main Street and Piedmont considered as one enterprise; and (iv) is not
transacting business or operating any properties owned or leased by it in
violation of
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any provision of federal, state or local law or any rule or regulation
promulgated thereunder, except where such violation would not have a material
adverse effect on Main Street and Piedmont considered as one enterprise.
2.02. CAPITAL STOCK.
(a) At the Effective Time, Main Street's authorized capital stock
will consist of 1,000,000 shares of preferred stock, no par value and 5,000,000
shares of common stock, no par value, one vote per share (the "Main Street
Common Stock") of which no more than 1,414,128 shares, plus such number of
additional shares, if any, as shall have been issued by Main Street after the
date of this Agreement as provided in Paragraph 4.02(b) hereof, will be issued
and outstanding and constitute Main Street's only outstanding securities.
Each outstanding share of the Main Street Common 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 Main Street Common Stock has been registered with
the Securities and Exchange Commission (the "SEC") under the Securities Exchange
Act of 1934, as amended (the "1934 Act") and Main Street is subject to the
registration and reporting requirements of the 1934 Act.
(b) Piedmont's authorized capital stock consists of 5,000,000 shares
of common stock, $5.00 par value, one vote per share (the "Piedmont Common
Stock") and 1,000,000 shares of preferred stock, no par value (the "Piedmont
Preferred Stock"). At the Effective Time, there will be 1,365,890 shares of the
Piedmont Common Stock issued and outstanding and no shares of Piedmont's
preferred stock outstanding.
Each outstanding share of Piedmont Common Stock (i) has been duly
authorized and is validly issued and outstanding, and is fully paid and
nonassessable (except to the extent provided in Section 53-42 of the North
Carolina General Statutes; and (ii) has not been issued in violation of the
preemptive rights of any shareholder.
2.03. PRINCIPAL SHAREHOLDERS. Main Street owns 100% of the outstanding
Piedmont Common Stock. There are no outstanding shares of Piedmont Preferred
Stock. Except as Previously Disclosed, no person or entity is known to
management of Main Street to beneficially own, directly or indirectly, more than
5% of the outstanding shares of Main Street Common Stock.
2.04. SUBSIDIARIES. Piedmont has no subsidiaries, direct or indirect, and,
except for equity securities included in its investment portfolio at December
31, 2001, does not own any stock or other equity interest in any other
corporation, service corporation, joint venture, partnership or other entity.
Piedmont is the only subsidiary of Main Street.
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2.05. CONVERTIBLE SECURITIES, OPTIONS, ETC. Except as Previously
Disclosed, Main Street does not have any outstanding (i) securities or other
obligations (including debentures or other debt instruments) which are
convertible into shares of Main Street Common Stock or any other securities of
Main Street; (ii) options, warrants, rights, calls or other commitments of any
nature which entitle any person to receive or acquire any shares of Main Street
Common Stock or any other securities of Main Street; or (iii) plans, agreements
or other arrangements pursuant to which shares of Main Street Common Stock or
any other securities of Main Street, or options, warrants, rights, calls or
other commitments of any nature pertaining to any securities of Main Street,
have been or may be issued.
2.06. AUTHORIZATION AND VALIDITY OF AGREEMENT. This Agreement has been
duly and validly approved by the respective Boards of Directors of Main Street
and Piedmont. Subject only to approval of the shareholders of Main Street in the
manner required by law and receipt of all required approvals of governmental or
regulatory authorities having jurisdiction over Yadkin, Main Street or Piedmont
(collectively, the "Regulatory Authorities") of the transactions described
herein, (i) Main Street and Piedmont 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 Main Street and
Piedmont to enter into this Agreement and to perform their 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 Main Street and Piedmont 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).
2.07. VALIDITY OF TRANSACTIONS; ABSENCE OF REQUIRED CONSENTS OR WAIVERS.
Subject to the 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 Main Street or Piedmont with
any of the obligations or agreements contained herein, nor any action or
inaction by Main Street or Piedmont 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
either Main Street or Piedmont, or any material contract, agreement, lease,
mortgage, note, bond, indenture, license, or obligation or understanding (oral
or written) to which Main Street or Piedmont is bound or by which they or their
business, capital stock or any of their 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 Main
Street or Piedmont; (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
will or may have a material adverse effect on Main Street or Piedmont, their
financial condition, results of operations, prospects, businesses, assets, loan
portfolio, investments, properties or operations, or on Main Street's or
Piedmont's ability to consummate the transactions described herein or to carry
on the business of Main Street or Piedmont as presently conducted; (iv) result
in the
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acceleration of any material obligation or indebtedness of Main Street or
Piedmont; or (v) interfere with or otherwise adversely affect Main Street's or
Piedmont's respective abilities to carry on their respective businesses as
presently conducted.
No consents, approvals or waivers are required to be obtained from
any person or entity in connection with Main Street's or Piedmont'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 Regulatory Authorities and Main Street's shareholders.
2.08. BOOKS AND RECORDS OF MAIN STREET AND PIEDMONT. Main Street's and
Piedmont's books of account and business records have been maintained in all
material respects in compliance with all applicable legal and accounting
requirements, and such books and records are complete and reflect accurately in
all material respects Main Street's and Piedmont's items of income and expense
and all of their assets, liabilities and stockholders' equity. The minute books
of Main Street and Piedmont are complete and accurately reflect in all material
respects all corporate actions which their 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
Yadkin and its representatives.
2.09. REPORTS OF MAIN STREET AND PIEDMONT. To the "Best Knowledge" (as
such term is defined in Paragraph 10.14 hereof) of management of Main Street and
Piedmont, Main Street and Piedmont have filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that were required to be filed with (i) the North Carolina Commissioner
of Banks (the "Commissioner"), (ii) the Federal Deposit Insurance Corporation
(the "FDIC"), (iii) the Securities and Exchange Commission (the "SEC"), and (iv)
any other Regulatory Authorities. All such reports, registrations and statements
filed by Main Street and Piedmont with the Commissioner, the FDIC, the SEC or
any other Regulatory Authorities are collectively referred to in this Agreement
as the "Main Street Reports." To the Best Knowledge of management of Main Street
and Piedmont, the Main Street Reports 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. Main Street and
Piedmont have not been notified that any such Main Street Reports were deficient
in any material respect as to form or content.
2.10. MAIN STREET FINANCIAL STATEMENTS. Main Street and Piedmont have
Previously Disclosed to Yadkin a copy of Piedmont's audited statements of
financial condition as of December 31, 2000 and 2001, and its audited statements
of income, stockholders' equity and cash flows for the years ended December 31,
2000 and 2001, together with notes thereto (collectively, the "Piedmont Audited
Financial Statements"). Following the date of this Agreement, Main Street
promptly will deliver to Yadkin all other annual or interim financial statements
prepared by or for Main Street or Piedmont. The Piedmont Audited Financial
Statements (i) were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated; (ii) are in accordance
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with Piedmont's books and records; and (iii) present fairly Piedmont's financial
condition, assets and liabilities, results of operations, changes in
stockholders' equity and changes in cash flows as of the dates indicated and for
the periods specified therein. The Piedmont Audited Financial Statements have
been audited by Xxxxx Xxxx PLLC, which currently serves as both Main Street's
and Piedmont's independent certified public accountants.
2.11. TAX RETURNS AND OTHER TAX MATTERS. (i) Main Street and Piedmont have
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 management of Main Street and Piedmont, 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 Main
Street and Piedmont or its 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 Piedmont Interim Financial Statements; (iii) the
income, profits, franchise, sales, use, occupation, property, excise,
withholding, employment and other tax returns and reports of Main Street and
Piedmont have not been subjected to audit by the Internal Revenue Service (the
"IRS") or the North Carolina Department Revenue in the last seven (7) years and
Main Street and Piedmont have not 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 management of Main Street and Piedmont, no such return or
report is subject to adjustment; and (iv) Main Street and Piedmont have not
executed any waiver 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, 0000, Xxxx Xxxxxx and Piedmont each has
conducted its business only in the ordinary course, and there has been no
material adverse change, and there has occurred no event or development, and
there currently exists no condition or circumstance, which, with the lapse of
time or otherwise, may or could cause, create or result in a material adverse
change in or affecting the financial condition of Main Street or Piedmont or the
respective results of operations, prospects, business, assets, loan portfolio,
investments, properties or operations of Main Street or Piedmont, as applicable.
(b) Since December 31, 2001, and other than in the ordinary course
of its business, Main Street and Piedmont have not 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, suffered any material loss, destruction or damage to
any of its properties or assets, or made a material acquisition or disposition
of any assets or entered into any material contract or lease.
2.13. ABSENCE OF UNDISCLOSED LIABILITIES. Main Street and Piedmont do not
have any material liabilities or obligations, whether known or unknown, matured
or unmatured, accrued,
10
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 Piedmont
Audited Financial Statements, (ii) increases in deposit accounts in the ordinary
course of business since December 31, 2001, or (iii) loan commitments in the
ordinary course of business since December 31, 2001.
2.14. COMPLIANCE WITH EXISTING OBLIGATIONS. Main Street and Piedmont each
has performed in all material respects all obligations required to be performed
under, and are not in default in any material respect under, or in violation in
any material respect of, the terms and conditions of their respective Articles
of Incorporation, Bylaws, material contracts, agreements, leases, mortgages,
notes, bonds, indentures, licenses, obligations, understandings or other
undertakings (whether oral or written) to which they are bound or by which their
business, operations, capital stock or any property or assets may be affected.
2.15. LITIGATION AND COMPLIANCE WITH LAW.
(a) Except as Previously Disclosed, there are no actions, suits,
arbitrations, controversies or other proceedings or investigations (or, to the
Best Knowledge of management of Main Street and Piedmont, any facts or
circumstances which reasonably could 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 management of Main Street and
Piedmont, are threatened, contemplated or probable of assertion, against,
relating to or otherwise affecting Main Street or Piedmont or any of their
properties, assets or employees.
(b) Main Street and Piedmont have 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 their business or to own, lease and operate their properties; all
such Permits are in full force and effect; no violations have occurred with
respect to any such Permits; and no proceeding is pending or, to the Best
Knowledge of management of Main Street and Piedmont, threatened or probable of
assertion to suspend, cancel, revoke or limit any Permit.
(c) Neither Main Street nor Piedmont is subject to any supervisory
agreement, enforcement order, writ, injunction, capital directive, supervisory
directive, memorandum of understanding, cease and desist order, or other similar
agreement, order, directive, memorandum or consent of, with or issued by any
Regulatory Authority, including without limitation the Commissioner, the FDIC or
the Federal Reserve System (the "FRB"), relating to 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 Main Street or Piedmont which limit, restrict,
regulate, enjoin or prohibit in any material respect any present or past
business or practice of Main Street or Piedmont; and, Main Street and Piedmont
have not been advised and have no 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.
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(d) To the Best Knowledge of management of Main Street and Piedmont,
Main Street and Piedmont are not in violation or default in any material respect
under, and have complied in all material respects with, all laws, statutes,
ordinances, rules, regulations, orders, writs, injunctions or decrees of any
court or federal, state, municipal or other Regulatory Authority having
jurisdiction or authority over it or its business operations, properties or
assets (including without limitation all provisions of North 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 Main Street or
Piedmont). To the Best Knowledge of management of Main Street and Piedmont,
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.
(a) Main Street and Piedmont have Previously Disclosed to Yadkin a
listing of all real property owned by Main Street or Piedmont (including
Piedmont's banking facilities and all other real estate or foreclosed
properties, including improvements thereon, owned by Main Street and/or
Piedmont) (collectively, the "Main Street Real Property"). With respect to each
parcel of the Main Street Real Property, Main Street and Piedmont have good and
marketable fee simple title to the Main Street Real Property and own 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 affect the value
of the Main Street Real Property or which do not and will not materially detract
from, interfere with or restrict the present or future use of the Main Street
Real Property.
(b) The Main Street 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, and the parcels of the Main Street Real
Property upon which Main Street's offices or Piedmont's banking or other offices
are situated, or which are used by Main Street or Piedmont in conjunction with
their 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.
(c) All improvements and fixtures included in or on the Main Street
Real Property are in good condition and repair, ordinary wear and tear excepted,
and there does not exist any condition which in any material respect interferes
with Main Street's or Piedmont's respective use (or will interfere with Yadkin's
use after the Merger and the Bank Merger) or affects the economic value thereof.
(d) Neither Main Street nor Piedmont is party (whether as lessee or
lessor) to any lease or rental agreement with respect to any real property.
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2.17. LOANS, ACCOUNTS, NOTES AND OTHER RECEIVABLES.
(a) All loans, accounts, notes and other receivables reflected as
assets on Main Street's and Piedmont's books and records (i) have resulted from
bona fide business transactions in the ordinary course of operations; (ii) in
all material respects were made in accordance with Main Street's or Piedmont's
standard practices and procedures; and (iii) are owned by Main Street or
Piedmont 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 Main Street or Piedmont regarding all outstanding
loans, accounts, notes and other receivables, and all other real estate owned,
are accurate in all material respects, and, each loan which Piedmont'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 Piedmont's records
of such loan.
(c) To the Best Knowledge of management of Main Street and Piedmont,
each loan reflected as an asset on Main Street's or Piedmont's books, and each
guarantee 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 guarantee.
(d) Main Street and Piedmont have Previously Disclosed to Yadkin (i)
a written listing of each loan, extension of credit or other asset of Main
Street or Piedmont which, as of December 31, 2001, was classified by the
Commissioner or the FDIC or by Main Street or Piedmont as "Loss," "Doubtful,"
"Substandard" or "Special Mention" (or otherwise by words of similar import), or
which Main Street or Piedmont otherwise has designated as a special asset 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 therefore; and (ii) a written listing of each loan or
extension of credit of Main Street or Piedmont which, as of December 31, 2001,
was past due more than 30 days as to the payment of principal or interest, or as
to which any obligor thereon (including the borrower or any guarantor) otherwise
was in default, was the subject of a proceeding in bankruptcy or has indicated
any inability or intention not to repay such loan or extension of credit.
(e) To the Best Knowledge of management of Main Street and Piedmont,
each of the loans and other extensions of credit of Main Street or Piedmont
(with the exception of those loans and extensions of credit specified in the
written listings described in Paragraph 2.17(d) above) is collectible in the
ordinary course of business in an amount which is not less than the amount at
which it is carried on their books and records.
(f) Except as Previously Disclosed, Piedmont'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 Commissioner and the FDIC and, in the best judgment of
management of Piedmont, is reasonable in view of the size and character of
Piedmont's loan portfolio, current economic conditions and other relevant
factors,
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and is adequate to provide for losses relating to or the risk of loss inherent
in Piedmont's loan portfolios and other real estate owned.
2.18. SECURITIES PORTFOLIO AND INVESTMENTS. Main Street and Piedmont have
Previously Disclosed to Yadkin a listing of all securities owned, of record or
beneficially, by Main Street and Piedmont as of December 31, 2001. All
securities owned, of record or beneficially, by Main Street and Piedmont 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 (other than customary pledges in the ordinary course of their business
to secure public funds deposits), which would materially impair the ability of
Main Street or Piedmont to dispose freely of any such security or otherwise to
realize the benefits of ownership thereof at any time. There are no voting
trusts or other agreements or undertakings to which Main Street or Piedmont is a
party with respect to the voting of any such securities. With respect to all
"repurchase agreements" under which Main Street or Piedmont has "purchased"
securities under agreement to resell, Main Street or Piedmont 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 Main Street or Piedmont, as the case may be, which is secured by such
collateral.
Since December 31, 2001, there has been no material deterioration or
adverse change in the quality, or any material decrease in the value, of the
securities portfolio of Main Street or that of Piedmont as a whole.
2.19. PERSONAL PROPERTY AND OTHER ASSETS. All banking equipment, data
processing equipment, vehicles, and other personal property used by Main Street
or Piedmont and material to the operation of the business of either are owned by
Main Street or Piedmont free and clear of all liens, encumbrances, leases, title
defects or exceptions to title. To the Best Knowledge of management of Main
Street and Piedmont, all personal property of Main Street and Piedmont material
to their business is in good operating condition and repair, ordinary wear and
tear excepted.
2.20. PATENTS AND TRADEMARKS. To the Best Knowledge of management of Main
Street and Piedmont, Main Street and Piedmont 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. Main Street and Piedmont have not
violated, and currently are not in conflict 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,
without limitation:
(i) all federal, state and local statutes, regulations,
ordinances, orders, decrees, and similar provisions having the force or effect
of law (including without limitation the
14
Comprehensive Environmental Response, Compensation and Liability Act; the
Superfund Amendment and Reauthorization Act; the Federal Insecticide, Fungicide
and Rodenticide Act; the Hazardous Materials Transportation Act; the Resource
Conservation and Recovery Act; the Clean Water Act; the Clean Air Act; the Toxic
Substances Control Act; the Oil Pollution Act; the Coastal Zone Management Act;
any "Superfund" or "Superlien" law; the North Carolina Oil Pollution and
Hazardous Substances Control Act; the North Carolina Water and Air Resources
Act; and the North Carolina Occupational Safety and Health Act, including any
amendments thereto from time to time); and,
(ii) all common law concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all standards of conduct and bases of obligations
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).
As used in this Agreement, "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, quantity or
concentration, including without limitation pesticides, pollutants,
contaminants, toxic chemicals, oil, or other petroleum products, byproducts or
additives, asbestos or materials containing (or presumed to contain) asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, lead, radon,
methyl tertiary butyl ether ("MTBE") or radioactive material.
(b) Main Street and Piedmont have Previously Disclosed to Yadkin
copies of all written reports, correspondence, notices or other information or
materials, if any, in its possession pertaining to environmental surveys or
assessments of the Main Street Real Property, and any improvements thereon, or
pertaining to any violation or alleged violation of Environmental Laws on,
affecting or otherwise involving the Main Street Real Property or involving Main
Street or Piedmont.
(c) 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 Main Street 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 Main Street Real Property.
(d) Neither Main Street nor Piedmont has violated any Environmental
Laws, and there has been no violation of any Environmental Laws by any other
person or entity for whose liability or obligation with respect to any
particular matter or violation Main Street or Piedmont is or may be responsible
or liable.
(e) Neither Main Street nor Piedmont 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
15
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 the Main Street Real Property or by any person or entity.
(f) No facts, events or conditions relating to the Main Street Real
Property or the operations of Main Street or Piedmont at any of its 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 management of Main Street and Piedmont
(it being understood by Yadkin that, for purposes of this representation,
management of Main Street and Piedmont has not undertaken a review of each of
Main Street's or Piedmont's loan files with respect to all Loan Collateral), (i)
there has been no violation of any Environmental Laws by any person or entity
(including any violation with respect to any Loan Collateral) for whose
liability or obligation with respect to any particular matter or violation Main
Street or Piedmont is or may be responsible or liable; (ii) Main Street and
Piedmont are not 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; and (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.
2.22. ABSENCE OF BROKERAGE OR FINDER'S COMMISSIONS. Except for the
engagement of The Xxxxxx Xxxxxx Company by Main Street (i) 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, Main Street or
Piedmont or 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 Main Street nor Piedmont
has agreed, or has any obligation, to pay any brokerage fee or other commission
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 Yadkin pursuant to Paragraph 2.25 hereof,
neither Main Street nor Piedmont is party to or bound by any agreement (i)
involving money or other property in an amount or with a value in excess of
$25,000; (ii) which is not to be performed in full prior to June 30, 2002; (iii)
which calls for the provision of goods or services to Main Street or Piedmont
and cannot be terminated without material penalty upon written notice to the
other party thereto; (iv) which is material to Main Street or Piedmont and was
not entered into in the ordinary course
16
of business; (v) which involves hedging, options or any similar trading
activity, or interest rate exchanges or swaps; (VI) which commits Main Street or
Piedmont to extend any loan or credit (with the exception of letters of credit,
lines of credit and loan commitments extended in the ordinary course of
Piedmont's business); (VII) which involves the sale of any assets of Main Street
or Piedmont which are used in and material to the operation of their business;
(VIII) which involves any purchase of real property, or which involves the
purchase of any other assets in the amount of $10,000 or more in the case of any
single transaction or $25,000 or more 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 Main Street or Piedmont; or (X) with any
director, officer or principal shareholder of Main Street or Piedmont (including
without limitation any consulting agreement, but not including any agreements
relating to loans or other banking services which were made in the ordinary
course of Piedmont's business and on substantially the same terms and conditions
as were prevailing at that time for similar agreements with unrelated persons).
Neither Main Street nor Piedmont 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 either Main Street
or Piedmont is a party or by which either Main Street or Piedmont or property of
Main Street or Piedmont is or may be bound or affected or under which either
Main Street or Piedmont or property of Main Street or Piedmont receives
benefits, where the consequences of such default would have a material adverse
effect on the financial condition, results of operations, prospects, business,
assets, loan portfolio, investments, properties or operations of Main Street or
Piedmont.
2.24. EMPLOYMENT MATTERS; EMPLOYEE RELATIONS. Main Street and Piedmont
have Previously Disclosed to Yadkin a listing of the names, years of credited
service and current base salary or wage rates of all of their employees as of
December 31, 2001. Main Street and Piedmont (i) each have in all material
respects paid in full to or accrued on behalf of all their respective directors,
officers and employees all wages, salaries, commissions, bonuses, fees and other
direct compensation for all labor or services performed by them to the date of
this Agreement, and all vacation pay, sick pay, severance pay, overtime pay and
other amounts for which it is obligated under applicable law or Main Street's or
Piedmont's existing agreements, benefit plans, policies or practices; and (ii)
are each in compliance with all applicable federal, state and local laws,
statutes, rules and regulations with regard to employment and employment
practices, terms and conditions, and wages and hours and other compensation
matters; and, no person has, to the Best Knowledge of management of Main Street
and Piedmont, asserted that Main Street or Piedmont 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 management of Main Street or Piedmont, threatened, against
Main Street or Piedmont (or any employees of Main Street or Piedmont), involving
employment discrimination, sexual harassment, wrongful discharge or similar
claims.
00
Xxxxxxx Xxxx Xxxxxx nor Piedmont is 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 Main Street or
Piedmont and any of their employees, or any pending or threatened proceeding in
which it is asserted that Main Street or Piedmont has committed an unfair labor
practice; and, to the Best Knowledge of management of Main Street and Piedmont,
there is no activity involving Main Street, Piedmont, or any of their employees
seeking to certify a collective bargaining unit or engaging in any other labor
organization activity.
2.25. EMPLOYMENT AGREEMENTS; EMPLOYEE BENEFIT PLANS.
(a) Main Street and Piedmont have Previously Disclosed to Yadkin a
true and complete list of all bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option plans; all employment and severance
contracts; all medical, dental, health, and life insurance plans; all vacation,
sickness and other leave plans, disability and death benefit plans; and all
other employee benefit plans, contracts, or arrangements maintained or
contributed to by Main Street or Piedmont for the benefit of any employees,
former employees, directors, former directors or any of their beneficiaries
(collectively, the "Main Street Plans"). True and complete copies of all Main
Street Plans, including, but not limited to, any trust instruments or insurance
contracts, if any, forming a part thereof or applicable to the administration of
any such Main Street Plans or the assets thereof, and all amendments thereto,
previously have been supplied to Yadkin. Except as Previously Disclosed, Main
Street and Piedmont do not maintain, sponsor, contribute to or otherwise
participate 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. Each Main Street 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 Main Street nor Piedmont 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 Main Street Plans (and any Main Street Plans previously maintained by Main
Street or Piedmont) 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.
18
(b) All "Employee Benefit Plans" maintained by or otherwise covering
employees or former employees of Main Street or Piedmont, to the extent each is
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 Main Street Plan or any employee benefit
plan, contract or arrangement previously maintained by Main Street or Piedmont.
Neither Main Street nor Piedmont has engaged in a transaction with respect to
any Main Street Plan that could subject Main Street or Piedmont to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA.
(c) Main Street and Piedmont have delivered to Yadkin a true,
correct and complete copy (including copies of all amendments thereto) of each
retirement plan maintained by either which is intended to be a plan qualified
under Section 401(a) of the Code (collectively, the "Main Street Retirement
Plans"), together with true, correct and complete copies of the summary plan
descriptions relating to the Main Street Retirement Plans, the most recent
determination letters received from the IRS regarding the Main Street Retirement
Plans, and the most recent Annual Reports (Form 5500 series) and related
schedules, if any, for the Main Street Retirement Plans.
The Main Street Retirement Plans are qualified under the
provisions of Section 401(a) of the Code, the trusts under the Main Street
Retirement Plans are exempt trusts under Section 501(a) of the Code, and
determination letters have been issued or applied for with respect to the Main
Street Retirement Plans to said effect, including determination letters covering
the current terms and provisions of the Main Street Retirement Plans. There are
no issues relating to said qualification or exemption of the Main Street
Retirement Plans currently pending before the IRS, the United States Department
of Labor, the Pension Benefit Guarantee Corporation or any court. The Main
Street Retirement Plans and the administration thereof meet (and have met since
the establishment of the Main Street Retirement Plans) in all material respects
all of the applicable requirements of ERISA, the Code and all other laws, rules
and regulations applicable to the Main Street Retirement Plans and do not
violate (and since the establishment of the Main Street Retirement Plans have
not violated) in any material respect any of the applicable provisions of 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 Main
Street 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 Main Street Retirement Plans or
the administration thereof currently existing between Main Street, Piedmont, or
any trustee or other fiduciary thereunder, and any governmental agency, any
current or former employee of Piedmont 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 Main Street
Retirement Plans.
(d) No liability under subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by Main Street or Piedmont with respect to the
Main Street Retirement Plans or with respect to any other ongoing, frozen or
terminated defined benefit pension plan currently or formerly maintained by Main
Street or Piedmont. Main Street and Piedmont do not presently contribute to a
"Multi-employer Plan." All contributions required to be made pursuant
19
to the terms of each of the Main Street Plans (including without limitation the
Main Street Retirement Plans and any other "pension plan" (as defined in Section
3(2) of ERISA, provided such plan is intended to qualify under the provisions of
Section 401(a) of the Code) maintained by Main Street or Piedmont have been
timely made. Neither the Main Street Retirement Plans nor any other "pension
plan" maintained by Main Street or Piedmont have an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. Main Street and Piedmont have not provided, and
are not 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 Main Street
Retirement Plans and any other "pension plan" maintained by Main Street or
Piedmont 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 Main Street Retirement
Plans themselves, there are no restrictions on the rights of Main Street or
Piedmont to amend or terminate any Main Street 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. Main Street and Piedmont have Previously Disclosed to
Yadkin a listing of each blanket bond, liability insurance, life insurance or
other insurance policy in effect on December 31, 2001, and in which it was an
insured party or beneficiary (each a "Main Street Policy" and collectively the
"Main Street Policies"). The Main Street 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 Main Street
and Piedmont or as is required by applicable law or regulation; and, in the
reasonable opinion of management of Main Street and Piedmont, the insurance
coverage provided under the Main Street Policies is reasonable and adequate in
all respects for Main Street and Piedmont. Each of the Main Street 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
and which is qualified to issue those policies in North Carolina; and, Main
Street and Piedmont have complied in all material respects with requirements
(including the giving of required notices) under each such Main Street Policy in
order to preserve all rights thereunder with respect to all matters. Main Street
and Piedmont are not in default under the provisions of, have not received
notice of cancellation or nonrenewal of or any premium increase on, and have not
failed to pay any premium on, any Main Street Policy, and, to the Best Knowledge
of management of Main Street and Piedmont, there has not been any inaccuracy in
any application for any Main Street Policy. There are no pending claims with
respect to any Main Street Policy, and, to the Best Knowledge of management of
Xxxx Xxxxxx
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and Piedmont, 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 Piedmont are insured by the
Bank Insurance Fund of the FDIC to the maximum extent permitted by law, all
deposit insurance premiums due from Piedmont to the FDIC have been paid in full
in a timely fashion, and, to the Best Knowledge of management of Piedmont, no
proceedings have been commenced or are contemplated by the FDIC or otherwise to
terminate such insurance.
2.28. OBSTACLES TO REGULATORY APPROVAL. To the Best Knowledge of
management of Main Street and Piedmont, there exists no fact or condition
(including Piedmont's record of compliance with the Community Reinvestment Act)
relating to Main Street or Piedmont that may reasonably be expected to prevent
or materially impede or delay Yadkin, Main Street or Piedmont 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 Main
Street or Piedmont, Main Street or Piedmont shall promptly (and in any event
within three (3) days after obtaining such Knowledge) give notice of such fact
or condition to Yadkin in the manner provided herein.
2.29. DISCLOSURE. To the Best Knowledge of management of Main Street and
Piedmont, no written statement, certificate, schedule, list or other written
information furnished by or on behalf of Main Street or Piedmont to Yadkin 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 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 YADKIN
Except as otherwise specifically provided in this Agreement or as
"Previously Disclosed" (as defined in Paragraph 10.13 hereof) by Yadkin to Main
Street and Piedmont, Yadkin hereby makes the following representations and
warranties to Main Street and Piedmont.
3.01. ORGANIZATION; STANDING; POWER. Yadkin (i) is duly organized and
incorporated, validly existing and in good standing as a banking corporation
under the laws of the State of North Carolina; (ii) 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; (iii) 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 material adverse effect on Yadkin; and
(iv) 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 have a
material adverse effect on Yadkin.
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3.02. CAPITAL STOCK. At the Effective Time, Yadkin's authorized capital
stock will consist of 10,000,000 shares of common stock, $1.00 par value (the
"Yadkin Common Stock"), of which no more than 7,312,418 shares, plus such number
of additional shares, if any, as shall have been issued by Yadkin after the date
of this Agreement as provided in Paragraph 5.02(b) hereof, will be issued and
outstanding and constitute Yadkin's only outstanding securities.
Each outstanding share of Yadkin Common Stock (i) has been duly
authorized and is validly issued and outstanding, and is fully paid and
nonassessable (except to the extent provided in Section 53-42 of the North
Carolina General Statutes); and (ii) has not been issued in violation of the
preemptive rights of any shareholder. The Yadkin Common Stock has been
registered with the FDIC under the 1934 Act and Yadkin is subject to the
registration and reporting requirements of the 1934 Act.
3.03. PRINCIPAL SHAREHOLDERS. Except as Previously Disclosed, no person or
entity is known to management of Yadkin to beneficially own, directly or
indirectly, more than 5% of the outstanding shares of Yadkin Common Stock.
3.04. SUBSIDIARIES. Yadkin has no subsidiaries, direct or indirect, and,
except for equity securities included in its investment portfolio at December
31, 2001, does not own any stock or other equity interest in any other
corporation, service corporation, joint venture, partnership or other entity.
3.05. CONVERTIBLE SECURITIES, OPTIONS, ETC. Except as Previously
Disclosed, Yadkin does not have any outstanding (i) securities or other
obligations (including debentures or other debt instruments) which are
convertible into shares of Yadkin Common Stock or any other securities of
Yadkin; (ii) options, warrants, rights, calls or other commitments of any nature
which entitle any person to receive or acquire any shares of Yadkin Common Stock
or any other securities of Yadkin; or (iii) plan, agreement or other arrangement
pursuant to which shares of Yadkin Common Stock or any other securities of
Yadkin, or options, warrants, rights, calls or other commitments of any nature
pertaining to any securities of Yadkin, have been or may be issued.
3.06. AUTHORIZATION AND VALIDITY OF AGREEMENT. This Agreement has been
duly and validly approved by Yadkin's Board of Directors. Subject only to
approval of this Agreement by the shareholders of Yadkin in the manner required
by law and required approvals of Regulatory Authorities (as defined in Paragraph
2.06 hereof) of the transactions described herein; (i) Yadkin 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
Yadkin 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 Yadkin 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
22
and other equitable remedies; and (C) general principles of equity and
applicable laws or court decisions limiting the enforceability of
indemnification provisions).
3.07. VALIDITY OF TRANSACTIONS; ABSENCE OF REQUIRED CONSENTS OR WAIVERS.
Subject to approval of this Agreement by the shareholders of Yadkin 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 Yadkin with
any of its obligations or agreements contained herein, nor any action or
inaction by Yadkin 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 Yadkin, or any material
contract, agreement, lease, mortgage, note, bond, indenture, license, or
obligation or understanding (oral or written) to which Yadkin is bound or by
which it 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 Yadkin; (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
will or may have a material adverse effect on Yadkin, its financial condition,
results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations, or on Yadkin's ability to consummate the
transactions described herein or to carry on the business of Yadkin as presently
conducted; or (iv) result in the acceleration of any material obligation or
indebtedness of Yadkin.
No consents, approvals or waivers are required to be obtained from
any person or entity in connection with Yadkin'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 Yadkin's shareholders and of Regulatory Authorities.
3.08. YADKIN BOOKS AND RECORDS. Yadkin's books of account and business
records have been maintained in all material respects in compliance with all
applicable legal and accounting requirements, and such books and records are
complete and reflect accurately in all material respects Yadkin's items of
income and expense and all of its assets, liabilities and stockholders' equity.
The minute books of Yadkin are complete and accurately reflect in all material
respects all corporate actions which its shareholders and board 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
Main Street and its representatives.
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3.09. YADKIN REPORTS. To the "Best Knowledge" (as defined in Paragraph
10.14 hereof) of management of Yadkin, Yadkin has filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with (i) the Commissioner,
(ii) the FDIC, or (iii) any other Regulatory Authorities. All such reports,
registrations and statements filed by Yadkin with the Commissioner, the FDIC or
any other Regulatory Authorities are collectively referred to in this Agreement
as the "Yadkin Reports." To the Best Knowledge of management of Yadkin, the
Yadkin Reports 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. Yadkin has not been notified that any such Yadkin Reports
were deficient in any material respect as to form or content.
3.10. YADKIN FINANCIAL STATEMENTS. Yadkin has Previously Disclosed to Main
Street a copy of its audited statements of financial condition as of December
31, 2000 and 2001, and its audited statements of income, stockholders' equity
and cash flows for the years ended December 31, 2000 and 2001, together with
notes thereto (collectively, the "Yadkin Audited Financial Statements").
Following the date of this Agreement, Yadkin promptly will deliver to Main
Street all other annual or interim financial statements prepared by or for
Yadkin. The Yadkin Audited Financial Statements and the Yadkin Interim Financial
Statement (i) were prepared in accordance with GAAP applied on a consistent
basis throughout the periods indicated; (ii) are in accordance with Yadkin's
books and records; and (iii) fairly present Yadkin's financial condition, assets
and liabilities, results of operations, changes in stockholders' equity and
changes in cash flows as of the dates indicated and for the periods specified
therein. The Yadkin Audited Financial Statements for have been audited by
Deloitte & Touche, which currently serves as Yadkin's independent certified
public accountants.
3.11. TAX RETURNS AND OTHER TAX MATTERS. (i) Yadkin 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
management of Yadkin, 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 Yadkin or its 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 Yadkin Interim Financial
Statements; (iii) the income, profits, franchise, sales, use, occupation,
property, excise, withholding, employment and other tax returns and reports of
Yadkin have not been subjected to audit by the IRS or the North Carolina
Department Revenue and Yadkin has not 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 management of Yadkin, no such return or report is
subject to adjustment; and (iv) Yadkin has not executed any waiver 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.
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3.12. ABSENCE OF MATERIAL ADVERSE CHANGES OR CERTAIN OTHER EVENTS.
(a) Since December 31, 2001, Yadkin has conducted its businesses
only in the ordinary course, and there has been no material adverse change, and
there has occurred no event or development, and there currently exists no
condition or circumstance, which, with the lapse of time or otherwise, may or
could cause, create or result in a material adverse change in or affecting the
financial condition of Yadkin or its results of operations, prospects, business,
assets, loan portfolio, investments, properties or operations.
(b) Since December 31, 2001, and other than in the ordinary course
of its business, Yadkin has not 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,
suffered any material loss, destruction or damage to any of its properties or
assets, or made a material acquisition or disposition of any assets or entered
into any material contract or lease.
3.13. ABSENCE OF UNDISCLOSED LIABILITIES. Yadkin does not have 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
Yadkin Financial Statements, (ii) increases in deposit accounts in the ordinary
course of business since December 31, 2001, or (iii) loan commitments in the
ordinary course of business since December 31, 2001.
3.14. COMPLIANCE WITH EXISTING OBLIGATIONS. Yadkin 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,
material contracts, agreements, leases, mortgages, notes, bonds, indentures,
licenses, obligations, understandings or other undertakings (whether oral or
written) to which it is bound or by which its business, operations, capital
stock or any property or asset may be affected.
3.15. LITIGATION AND COMPLIANCE WITH LAW.
(a) There are no actions, suits, arbitrations, controversies or
other proceedings or investigations (or, to the Best Knowledge of management of
Yadkin, any facts or circumstances which reasonably could 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 management
of Yadkin, are threatened, contemplated or probable of assertion, against,
relating to or otherwise affecting Yadkin or any of its properties, assets or
employees.
(b) Yadkin has all Permits (as defined in Paragraph 2.15(b) hereof)
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; all such Permits are in full force and effect; no
violations have occurred with respect to any such Permits;
25
and no proceeding is pending or, to the Best Knowledge of management of Yadkin,
threatened or probable of assertion to suspend, cancel, revoke or limit any
Permit.
(c) Yadkin is not 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 Commissioner or the FDIC) 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 Yadkin which limit, restrict, regulate, enjoin or
prohibit in any material respect any present or past business or practice of
Yadkin; and, Yadkin has not 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 management of Yadkin, Yadkin is not in
violation or default in any material respect under, and it has complied in all
material respects with, all laws, statutes, ordinances, rules, regulations,
orders, writs, injunctions or decrees of any court or federal, state, municipal
or other Regulatory Authority having jurisdiction or authority over it or its
business operations, properties or assets (including without limitation all
provisions of North 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 Yadkin). To the Best Knowledge of management of
Yadkin, 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).
3.16. REAL PROPERTIES.
(a) Yadkin has Previously Disclosed to Main Street a listing of all
real property owned by Yadkin (including Yadkin's banking facilities and all
other real estate or foreclosed properties, including improvements thereon,
owned by Yadkin) (collectively, the "Yadkin Real Property"). With respect to
each parcel of the Yadkin Real Property, Yadkin has good and marketable fee
simple title to the Yadkin 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 affect the value of the Yadkin Real
Property and which do not and will not materially detract from, interfere with
or restrict the present or future use of the Yadkin Real Property.
(b) The Yadkin 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, and the parcels of the Yadkin Real Property upon which
Yadkin's banking or other offices are situated, or which are used by Yadkin 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.
26
(c) All improvements and fixtures included in or on the Yadkin Real
Property are in good condition and repair, ordinary wear and tear excepted, and
there does not exist any condition which in any material respect interferes with
Yadkin's use (or will interfere with Yadkin's use after the Merger) or affects
the economic value thereof.
(d) Yadkin is not a party (whether as lessee or lessor) to any lease
or rental agreement with respect to any real property.
3.17. LOANS, ACCOUNTS, NOTES AND OTHER RECEIVABLES.
(a) All loans, accounts, notes and other receivables reflected as
assets on Yadkin's books and records (i) have resulted from bona fide business
transactions in the ordinary course of Yadkin's operations; (ii) in all material
respects were made in accordance with Yadkin's standard practices and
procedures; and (iii) are owned by Yadkin 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 Yadkin regarding all outstanding loans, accounts,
notes and other receivables, and all other real estate owned, are accurate in
all material respects, and, each loan which Yadkin's loan documentation
indicates is secured by any Loan Collateral (as defined in Paragraph 2.17(b)
hereof) is secured by valid, perfected and enforceable liens on all such Loan
Collateral having the priority described in Yadkin's records of such loan.
(c) To the Best Knowledge of management of Yadkin, each loan
reflected as an asset on Yadkin's books, and each guarantee 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 guarantee.
(d) Yadkin has Previously Disclosed to Main Street (i) a written
listing of each loan, extension of credit or other asset of Yadkin which, as of
December 31, 2001, was classified by the Commissioner or the FDIC or by Yadkin
as "Loss," "Doubtful," "Substandard" or "Special Mention" (or otherwise by words
of similar import), or which Yadkin otherwise has designated as a special asset
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; and (ii) a written listing of each
loan or extension of credit of Yadkin which, as of December 31, 2001, was past
due more than 30 days as to the payment of principal or interest, or as to which
any obligor thereon (including the borrower or any guarantor) otherwise was in
default, was the subject of a proceeding in bankruptcy or has indicated any
inability or intention not to repay such loan or extension of credit.
(e) To the Best Knowledge of management of Yadkin, each of the loans
and other extensions of credit of Yadkin (with the exception of those loans and
extensions of credit specified in the written listings described in Paragraph
3.17(d) above) is collectible in the ordinary course of Yadkin's business in an
amount which is not less than the amount at which it is carried on Yadkin's
books and records.
27
(f) Yadkin's Loan Loss Reserve (as such term is defined in Paragraph
2.17(f) hereof) has been established in conformity with GAAP, sound banking
practices and all applicable requirements, rules and policies of the
Commissioner and the FDIC and, in the best judgment of management of Yadkin, is
reasonable in view of the size and character of Yadkin'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 Yadkin's loan portfolios and
other real estate owned.
3.18. SECURITIES PORTFOLIO AND INVESTMENTS. Yadkin has Previously
Disclosed to Main Street a listing of all securities owned, of record or
beneficially, by Yadkin as of December 31, 2001. All securities owned, of record
or beneficially, by Yadkin 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 (other than customary pledges in the
ordinary course of Yadkin's business to secure public funds deposits), which
would materially impair the ability of Yadkin to dispose freely of any such
security or otherwise to realize the benefits of ownership thereof at any time.
There are no voting trusts or other agreements or undertakings to which Yadkin
is a party with respect to the voting of any such securities. With respect to
all "repurchase agreements" under which Yadkin has "purchased" securities under
agreement to resell, Yadkin 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 Yadkin
which is secured by such collateral.
Since December 31, 2001, there has been no material deterioration or
adverse change in the quality, or any material decrease in the value, of
Yadkin's securities portfolio as a whole.
3.19. PERSONAL PROPERTY AND OTHER ASSETS. All banking equipment, data
processing equipment, vehicles, and other personal property used by Yadkin and
material to the operation of its business are owned by Yadkin free and clear of
all liens, encumbrances, leases, title defects or exceptions to title. To the
Best Knowledge of management of Yadkin, all of Yadkin's personal property
material to its business is in good operating condition and repair, ordinary
wear and tear excepted.
3.20. PATENTS AND TRADEMARKS. To the Best Knowledge of management of
Yadkin, Yadkin 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. Yadkin has not violated, and currently is not in conflict with, any
patent, license, trademark, trade name, copyright or proprietary right of any
other person or entity.
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3.21. ENVIRONMENTAL MATTERS.
(a) Yadkin has Previously Disclosed to Main Street copies of all
written reports, correspondence, notices or other information or materials, if
any, in its possession pertaining to environmental surveys or assessments of the
Yadkin Real Property, and any improvements thereon, or pertaining to any
violation or alleged violation of Environmental Laws (as such term is defined in
Paragraph 2.21(a) hereof) on, affecting or otherwise involving the Yadkin Real
Property or involving Yadkin.
(b) There has been no presence, use, production, generation,
handling, transportation, treatment, storage, disposal, emission, discharge,
release, or threatened release of any Hazardous Substances (as such term is
defined in Paragraph 2.21(a) hereof) by any person on, from or relating to the
Yadkin 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 Yadkin Real Property.
(c) Yadkin has not violated any Environmental Laws, and there has
been no violation of any Environmental Laws by any other person or entity for
whose liability or obligation with respect to any particular matter or violation
Yadkin is or may be responsible or liable.
(d) Yadkin is not 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 the Yadkin Real Property or by any
person or entity.
(e) No facts, events or conditions relating to the Yadkin Real
Property or the operations of Yadkin at any of its 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.
(f) To the Best Knowledge of management of Yadkin (it being
understood by Main Street and Piedmont that, for purposes of this
representation, management of Yadkin has not undertaken a review of each of
Yadkin's loan files with respect to all Loan Collateral), (i) there has been no
violation of any Environmental Laws by any person or entity (including any
violation with respect to any Loan Collateral) for whose liability or obligation
with respect to any particular matter or violation Yadkin is or may be
responsible or liable, (ii) Yadkin is not 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
29
remediation of any Hazardous Substances on, from or relating to any Loan
Collateral, by any person or entity; and (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.
3.22. ABSENCE OF BROKERAGE OR FINDERS COMMISSIONS. Except for the
engagement of Sterne, Agee & Xxxxx, Inc. by Yadkin (i) 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, Yadkin or its
Board 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) Yadkin has not agreed, and has no obligation, to pay
any brokerage fee or other commission to any person or entity in connection with
or as a result of the transactions described herein.
3.23. EMPLOYMENT MATTERS; EMPLOYEE RELATIONS. Yadkin (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
to the date of this Agreement, and all vacation pay, sick pay, severance pay,
overtime pay and other amounts for which it is obligated under applicable law or
Yadkin's existing agreements, benefit plans, policies or practices, 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, and wages and hours and other compensation matters; and, no person
has, to the Best Knowledge of management of Yadkin, asserted that Yadkin 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 management of Yadkin, threatened, against Yadkin (or any
of its employees), involving employment discrimination, sexual harassment,
wrongful discharge or similar claims.
Yadkin is not 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 Yadkin and any of its employees, or
any pending or threatened proceeding in which it is asserted that Yadkin has
committed an unfair labor practice; and, to the Best Knowledge of management of
Yadkin, 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.
3.24. INSURANCE. Yadkin currently maintains a blanket bond and policies of
liability insurance and other insurance (the "Yadkin Policies"), which 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
Yadkin or as is required by applicable law or regulation; and, in the reasonable
opinion of management of Yadkin, the insurance coverage provided under the
Yadkin Policies is reasonable and adequate in all respects for Yadkin. Each of
the Yadkin 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 and which is qualified to issue
30
those policies in North Carolina; and, Yadkin has complied in all material
respects with requirements (including the giving of required notices) under each
of their Yadkin Policies in order to preserve all rights thereunder with respect
to all matters. Yadkin is not in default under the provisions of, has not
received notice of cancellation or nonrenewal of or any premium increase on, and
has not failed to pay any premium on any of the Yadkin Policies, and, to the
Best Knowledge of management of Yadkin, there has not been any inaccuracy in any
application for any of the Yadkin Policies. There are no pending claims with
respect to any of the Yadkin Policies, and, to the Best Knowledge of management
of Yadkin, there currently are no conditions, and there has occurred no event,
that is reasonably likely to form the basis for any such claim.
3.25. INSURANCE OF DEPOSITS. All deposits of Yadkin are insured by the
Bank Insurance Fund of the FDIC to the maximum extent permitted by law, all
deposit insurance premiums due from Yadkin to the FDIC have been paid in full in
a timely fashion, and, to the Best Knowledge of management of Yadkin, no
proceedings have been commenced or are contemplated, by the FDIC or otherwise,
to terminate such insurance.
3.26. OBSTACLES TO REGULATORY APPROVAL. To the Best Knowledge of
management of Yadkin, there exists no fact or condition (including Yadkin's
record of compliance with the Community Reinvestment Act) relating to Yadkin
that may reasonably be expected to prevent or materially impede or delay Main
Street, Piedmont or Yadkin 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 Yadkin, Yadkin shall promptly (and in
any event within three days after obtaining such Knowledge) give notice of such
fact or condition to Main Street in the manner provided herein.
3.27. DISCLOSURE. To the Best Knowledge of management of Yadkin, no
written statement, certificate, schedule, list or other written information
furnished by or on behalf of Yadkin to Main Street or Piedmont 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 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 IV
COVENANTS OF MAIN STREET AND PIEDMONT
4.01. AFFIRMATIVE COVENANTS OF MAIN STREET AND PIEDMONT. Main Street and
Piedmont hereby covenant and agree as follows with Yadkin:
(a) MAIN STREET SHAREHOLDERS' MEETING. Main Street agrees to cause a
meeting of its shareholders (the "Main Street Shareholders' Meeting") to be duly
called and held as soon as practicable after the date of this Agreement for the
purpose of voting by Main Street's shareholders on the approval of the Merger
and the ratification and adoption of this Agreement. In connection with the call
and conduct of, and all other matters relating to the Main Street Shareholders'
Meeting (including the solicitation of proxies), Main Street will comply in all
31
material respects with all provisions of applicable law and regulations and with
its Articles of Incorporation and Bylaws.
Unless, due to a material change in circumstances after the
date hereof, Main Street's Board of Directors reasonably believes in good faith,
based on the written opinion of its legal counsel, that such a recommendation
would violate the directors' duties or obligations as such to Main Street or to
its shareholders, Main Street covenants that its Board of Directors will
recommend to and actively encourage Main Street's shareholders that they vote
their shares of Main Street Common Stock at the Main Street Shareholders Meeting
in favor of ratification and approval of this Agreement, the Merger, and the
Proxy Statement will so indicate and state that Main Street's Board of Directors
considers the Merger to be advisable and in the best interests of Main Street
and its shareholders.
(b) CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME. While the parties
recognize that the operation of Main Street until the Effective Time is the
responsibility of Main Street's Board of Directors and officers and that the
operation of Piedmont until the Effective Time is the responsibility of
Piedmont's Board of Directors and officers, Main Street and Piedmont agree that,
between the date of this Agreement and the Effective Time, and except as
otherwise provided herein or expressly agreed to in writing by Yadkin's
President, Main Street and Piedmont will carry on their business in and only in
the regular and usual course in substantially the same manner as such business
heretofore was conducted, and, to the extent consistent with such business and
within its ability to do so, Main Street and Piedmont each agrees that it will:
(i) preserve intact its present business organization, keep
available its present officers and employees, and preserve its relationships
with customers, depositors, creditors, correspondents, suppliers, and others
having business relationships with it;
(ii) maintain all of its properties and equipment in customary
repair, order and condition, ordinary wear and tear excepted;
(iii) maintain its books of account and records in the usual,
regular and ordinary manner in accordance with sound business practices applied
on a consistent basis;
(iv) comply in all material respects with all laws, rules and
regulations applicable to it, its properties, assets or employees and to the
conduct of its business;
(v) not change its policies or procedures, including existing
loan underwriting guidelines, in any material respect except as may be required
by law;
(vi) continue to maintain in force insurance such as is
described in Paragraph 2.26; not modify any bonds or policies of insurance in
effect as of the date hereof unless the same, as modified, provides
substantially equivalent coverage; and, not cancel, allow to be terminated or,
to the extent available, fail to renew, any such bond or policy of insurance
unless the same is replaced with a bond or policy providing substantially
equivalent coverage; and,
32
(vii) promptly provide to Yadkin such information about its
financial condition, results of operations, prospects, businesses, assets, loan
portfolio, investments, properties, employees or operations, as Yadkin
reasonably shall request.
(c) PERIODIC FINANCIAL AND OTHER INFORMATION. Following the date of
this Agreement and until the Effective Time, Main Street and Piedmont will
deliver to Yadkin, as soon as each is available:
(i) an income statement and a statement of condition after
each month end;
(ii) a copy of all interim financial statements after each
quarter end;
(iii) a copy of each report, registration, statement, or other
communication or regulatory filing made with or to any Regulatory Authority
simultaneous with the filing or making thereof;
(iv) information regarding each new extension of credit in
excess of $250,000 (other than a loan secured by a first lien on a one-to-four
family principal residence which is being made for the purchase or refinancing
of that residence) after issuance of a commitment on such loan;
(v) an analysis of the Loan Loss Reserve and management's
assessment of the adequacy of the Loan Loss Reserve, which analysis and
assessment shall include a list of all classified or "watch list" loans, along
with the outstanding balance and amount specifically allocated to the Loan Loss
Reserve for each such classified or "watch list" Loan, all after each calendar
month end; and,
(vi) the following information with respect to loans and other
extensions of credit (such assets being referred to in this Agreement as
"Loans") as of, and following, each calendar month end:
(A) a list of Loans past due for 30 days or more as to principal or
interest;
(B) a list of Loans in nonaccrual status;
(C) a list of all Loans without principal reduction for a period of
longer than one year;
(D) a list of all foreclosed real property or other real estate
owned and all repossessed personal property;
(E) a list of each reworked or restructured Loan still outstanding,
including original terms, restructured terms and status; and
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(F) a list of any actual or threatened litigation by or against Main
Street or Piedmont pertaining to any Loan or credit, which list shall contain a
description of circumstances surrounding such litigation, its present status and
management's evaluation of such litigation.
(d) NOTICE OF CERTAIN CHANGES OR EVENTS. Following the execution of
this Agreement and up to the Effective Time, Main Street or Piedmont promptly
will notify Yadkin in writing of and provide to it such information as it shall
request regarding (i) any material adverse change in Main Street's or Piedmont's
financial condition, results of operations, prospects, business, assets, loan
portfolio, investments, properties or operations, or of the actual or
prospective occurrence of any condition or event which, with the lapse of time
or otherwise, may or could cause, create or result in any such material adverse
change; or of (ii) the actual or prospective existence or occurrence of any
condition or event which, with the lapse of time or otherwise, has caused or may
or could cause any statement, representation or warranty of Main Street or
Piedmont herein to be or become inaccurate, misleading or incomplete in any
material respect, or which has resulted or may or could cause, create or result
in the breach or violation in any material respect of any of Main Street's or
Piedmont's covenants or agreements contained herein or in the failure of any of
the conditions described in Paragraphs 7.01 or 7.02 hereof.
(e) ACCRUALS FOR LOAN LOSS RESERVE AND EXPENSES. Main Street and
Piedmont will cooperate with Yadkin and will make such appropriate accounting
entries in their books and records and take such other actions as Main Street
and Piedmont shall, in their sole discretion, deem to be necessary or desirable
in anticipation of the Merger, including without limitation additional
provisions to Piedmont's Loan Loss Reserve or accruals or the creation of
reserves for employee benefit and expenses related to the transactions described
in this Agreement; provided, however, that notwithstanding any provision of this
Agreement to the contrary, and except as otherwise agreed to by Main Street and
Yadkin, Main Street and Piedmont shall not be required to make any such
accounting entries until immediately prior to the Closing.
(f) ACCESS. Main Street and Piedmont agree that, following the date
of this Agreement and to and including the Effective Time, it will provide
Yadkin and its respective employees, accountants, legal counsel, environmental
consultants or other representatives access to all its books, records, files and
other information (whether maintained electronically or otherwise), to all its
properties and facilities, and to all its employees, accountants, legal counsel
and consultants, as Yadkin shall, in its sole discretion, consider to be
necessary or appropriate; provided, however, that any investigation or reviews
conducted by or on behalf of Yadkin shall be performed in such a manner as will
not interfere unreasonably with Main Street's or Piedmont's normal operations or
with their relationships with their customers or employees, and shall be
conducted in accordance with procedures established by the parties.
(g) DEPOSIT LIABILITIES. Following the date of this Agreement and up
to the Effective Time, Piedmont will make pricing decisions with respect to its
deposit accounts in a manner consistent with its past practices based on
competition and prevailing market rates in its banking markets.
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(h) FURTHER ACTION; INSTRUMENTS OF TRANSFER. Main Street and
Piedmont each covenants and agrees with Yadkin that it (i) will use its best
efforts in good faith to take or cause to be taken all action required of it
under this Agreement as promptly as practicable so as to permit the consummation
of the transactions described herein at the earliest possible date; (ii) shall
perform all acts and execute and deliver to Yadkin all documents or instruments
required herein, or as otherwise shall be reasonably necessary or useful to or
requested by Yadkin, in consummating such transactions; and, (iii) will
cooperate with Yadkin in every way in carrying out, and will pursue diligently
the expeditious completion of, such transactions.
4.02. NEGATIVE COVENANTS OF MAIN STREET AND PIEDMONT. Main Street and
Piedmont hereby covenant and agree that, between the date hereof and the
Effective Time, neither will do any of the following things or take any of the
following actions without the prior written consent and authorization of
Yadkin's President.
(a) AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS. Neither Main
Street nor Piedmont will amend their respective Articles of Incorporation or
Bylaws.
(b) CHANGE IN CAPITAL STOCK. Neither Main Street nor Piedmont will
(i) make any change in its authorized capital stock, or create any other or
additional authorized capital stock or other securities; or (ii) issue
(including any issuance of shares pursuant to a stock dividend or any issuance
of any securities convertible into capital stock), sell, purchase, redeem,
retire, reclassify, combine or split any shares of its capital stock or other
securities, or enter into any agreement or understanding with respect to any
such action. However, notwithstanding anything contained herein to the contrary,
Main Street shall be permitted to issue shares of Main Street Common Stock in
conjunction with the exercise of outstanding options referred to in Paragraph
2.05 hereof.
(c) OPTIONS, WARRANTS AND RIGHTS. Main Street will not grant or
issue any options, warrants, calls, puts or other rights of any kind relating to
the purchase, redemption or conversion of shares of its capital stock or any
other securities (including securities convertible into capital stock) or enter
into any agreement or understanding with respect to any such action.
(d) DIVIDENDS. Main Street will not declare or pay any dividends on
its outstanding shares of capital stock or make any other distributions on or in
respect of any shares of its capital stock or otherwise to its shareholders.
(e) EMPLOYMENT, BENEFIT OR RETIREMENT AGREEMENTS OR PLANS. Except as
required by law, neither Main Street nor Piedmont will (i) enter into or become
bound by any oral or written contract, agreement or commitment for the
employment or compensation of any director, officer, employee or consultant
which is not immediately terminable by Main Street or Piedmont without cost or
other liability on no more than 30 days' notice; (ii) adopt, enter into or
become bound by any new or additional profit-sharing, bonus, incentive, change
in control or "golden parachute," stock option, stock purchase, pension,
retirement, insurance (hospitalization, life or other), paid leave (sick leave,
vacation leave or other) or similar contract, agreement, commitment,
understanding, plan or arrangement (whether formal or informal) with respect to
or which provides for benefits for any of its current or former directors,
officers, employees or
35
consultants; or (iii) enter into or become bound by any contract with or
commitment to any labor or trade union or association or any collective
bargaining group.
(f) INCREASE IN COMPENSATION; BONUSES. Neither Main Street nor
Piedmont will increase the compensation or benefits of, or pay any bonus or
other special or additional compensation to, any of its directors, officers,
employees or consultants. However, notwithstanding anything contained herein to
the contrary, prior to the Effective Time Main Street and Piedmont may make
routine increases in the salaries of their employees at such times and in such
amounts as shall be consistent with their customary salary administration and
review policies and procedures.
(g) ACCOUNTING PRACTICES. Neither Main Street nor Piedmont will make
any changes in its accounting methods, practices or procedures or in
depreciation or amortization policies, schedules or rates heretofore applied
(except as required by GAAP or governmental regulations).
(h) ACQUISITIONS; ADDITIONAL BRANCH OFFICES. Neither Main Street nor
Piedmont will directly or indirectly (i) acquire or merge with, or acquire any
branch or all or any significant part of the assets of, any other person or
entity; (ii) open any new branch office; or (iii) enter into or become bound by
any contract, agreement, commitment or letter of intent relating to, or
otherwise take or agree to take any action in furtherance of, any such
transaction or the opening of a new branch office.
(i) CHANGES IN BUSINESS PRACTICES. Except as may be required by
Regulatory Authorities (including but not limited to the Commissioner, the FDIC
and the FRB) or any other governmental or regulatory agency, or as shall be
required by applicable law, regulation or this Agreement, Main Street and
Piedmont will not (i) change in any material respect the nature of their
business or the manner in which they conduct their business; (ii) discontinue
any material portion or line of their business; or (iii) change in any material
respect their lending, investment, asset-liability management or other material
banking or business policies.
(j) EXCLUSIVE MERGER AGREEMENT. Unless, due to a material change in
circumstances after the date hereof, Main Street's Board of Directors reasonably
believes in good faith, based on the written opinion of its legal counsel, that
any such action or inaction would violate the directors' duties or obligations
as such to Main Street or to its shareholders, Main Street will not, directly,
or indirectly through any person, (i) encourage, solicit or attempt to initiate
or procure discussions, negotiations or offers with or from any person or entity
(other than Yadkin) relating to a merger or other acquisition of Main Street or
Piedmont or the purchase or acquisition of any stock of Main Street or Piedmont,
any branch office of Piedmont or all or any significant part of Main Street's or
Piedmont's assets, or provide assistance to any person in connection with any
such offer; (ii) except to the extent required by law, disclose to any person or
entity any information not customarily disclosed to the public concerning Main
Street or its business or Piedmont or its business, or afford to any other
person or entity access to its properties, facilities, books or records; (iii)
sell or transfer any branch office of Piedmont or all or any significant part of
Main Street's or Piedmont's assets to any other person or entity; or
36
(iv) enter into or become bound by any contract, agreement, commitment or letter
of intent relating to, or otherwise take or agree to take any action in
furtherance of, any such transaction.
(k) ACQUISITION OR DISPOSITION OF ASSETS. Neither Main Street nor
Piedmont will:
(i) Sell or lease (as lessor), or enter into or become bound
by any contract, agreement, option or commitment relating to the sale, lease (as
lessor) or other disposition of, any real estate in any amount;
(ii) Sell or lease (as lessor), or enter into or become bound
by any contract, agreement, option or commitment relating to the sale, lease (as
lessor) or other disposition of, any equipment or any other fixed or capital
asset (other than real estate) having a book value or a fair market value,
whichever is greater, of more than $10,000 for any individual item or asset, or
more than $25,000 in the aggregate for all such items or assets;
(iii) Purchase or lease (as lessee), or enter into or become
bound by any contract, agreement, option or commitment relating to the purchase,
lease (as lessee) or other acquisition of, any real property in any amount;
(iv) Purchase or lease (as lessee), or enter into or become
bound by any contract, agreement, option or commitment relating to the purchase,
lease (as lessee) or other acquisition of, any equipment or any other fixed
asset (other than real estate) having a purchase price, or involving aggregate
lease payments, in excess of $10,000 for any individual item or asset, or more
than $25,000 in the aggregate for all such items or assets;
(v) Enter into any purchase or other commitment or contract
for supplies or services which obligates Main Street or Piedmont for a period
longer than 30 days;
(vi) Except in the ordinary course of its business consistent
with its past practices, sell, purchase or repurchase, or enter into or become
bound by any contract, agreement, option or commitment to sell, purchase or
repurchase, any loan or other receivable or any participation in any loan or
other receivable; or
(vii) Sell or dispose of, or enter into or become bound by any
contract, agreement, option or commitment relating to the sale or other
disposition of, any other asset (whether tangible or intangible, and including
without limitation any trade name, trademark, copyright, service xxxx or
intellectual property right or license); or assign its right to or otherwise
give any other person its permission or consent to use or do business under the
corporate name of Main Street or Piedmont or any name similar thereto; or
release, transfer or waive any license or right granted to it by any other
person to use any trademark, trade name, copyright, service xxxx or intellectual
property right.
37
(l) DEBT; LIABILITIES. Except in the ordinary course of their
business consistent with their past practices, neither Main Street nor Piedmont
will (i) enter into or become bound by any promissory note, loan agreement or
other agreement or arrangement pertaining to the borrowing of money; (ii)
assume, guarantee, endorse or otherwise become responsible or liable for any
obligation of any other person or entity; or (iii) incur any other liability or
obligation (absolute or contingent).
(m) LIENS; ENCUMBRANCES. Neither Main Street nor Piedmont will
mortgage, pledge or subject any of its assets to, or permit any of its assets to
become or, except for those liens or encumbrances Previously Disclosed to
Yadkin, remain subject to, any lien or any other encumbrance (other than in the
ordinary course of business consistent with its past practices in connection
with securing public funds deposits or repurchase agreements).
(n) WAIVER OF RIGHTS. Neither Main Street nor Piedmont will waive,
release or compromise any rights in its favor against or with respect to any of
its officers, directors or shareholders or members of families of officers,
directors or shareholders, nor will Main Street or Piedmont waive, release or
compromise any material rights against or with respect to any other person or
entity except in the ordinary course of business and in good faith for fair
value in money or money's worth.
(o) OTHER CONTRACTS. Neither Main Street nor Piedmont will enter
into or become bound by any contracts, agreements, commitments or understandings
(other than those permitted elsewhere in this Paragraph 4.02) (i) for or with
respect to any charitable contributions exceeding $30,000 in the aggregate; (ii)
with any governmental or regulatory agency or authority; (iii) pursuant to which
Main Street or Piedmont would assume, guarantee, endorse or otherwise become
liable for the debt, liability or obligation of any other person or entity; (iv)
which is entered into other than in the ordinary course of its business; or (v)
which, in the case of any one contract, agreement, commitment or understanding,
and whether or not in the ordinary course of its business, would obligate or
commit Main Street or Piedmont to make expenditures over any period of time of
more than $5,000 (other than contracts, agreements, commitments or
understandings entered into in the ordinary course of Piedmont's lending
operations).
(p) DEPOSIT LIABILITIES. Piedmont will not make any material change
in its current deposit policies and procedures or take any actions designed to
materially increase or decrease the aggregate level of its deposits as of the
date of this Agreement.
(q) FORECLOSURES. In connection with any foreclosure of a mortgage
or deed of trust securing a loan, neither Main Street nor Piedmont will bid for
or purchase any real property which is covered by that mortgage or deed of trust
or which is the subject of that foreclosure.
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ARTICLE V
COVENANTS OF YADKIN
5.01. AFFIRMATIVE COVENANTS OF YADKIN. Yadkin hereby covenants and agrees
as follows with Main Street and Piedmont:
(a) YADKIN SHAREHOLDERS' MEETING. Yadkin agrees to cause a meeting
of its shareholders (the "Yadkin Shareholders' Meeting") to be duly called and
held as soon as practicable after the date of this Agreement for the purpose of
voting by Yadkin's shareholders on the approval of the Merger and the
ratification and adoption of this Agreement. In connection with the call and
conduct of, and all other matters relating to the Yadkin Shareholders' Meeting
(including the solicitation of proxies), Yadkin will comply in all material
respects with all provisions of applicable law and regulations and with its
Articles of Incorporation and Bylaws.
Unless, due to a material change in circumstances after the
date hereof, Yadkin's Board of Directors reasonably believes in good faith,
based on the written opinion of its legal counsel, that such a recommendation
would violate the directors' duties or obligations as such to Yadkin or to its
shareholders, Yadkin covenants that its Board of Directors will recommend to and
actively encourage Yadkin's shareholders that they vote their shares of Yadkin
Common Stock at the Yadkin Shareholders' Meeting in favor of ratification and
approval of this Agreement and the Merger, and the Proxy Statement will so
indicate and state that Yadkin's Board of Directors considers the Merger to be
advisable and in the best interests of Yadkin and its shareholders.
(b) CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME. While the parties
recognize that the operation of Yadkin until the Effective Time is the
responsibility of Yadkin's Board of Directors and officers, Yadkin agrees that,
between the date of this Agreement and the Effective Time, and except as
otherwise provided herein or expressly agreed to in writing by Main Street's
President, Yadkin will carry on its business in and only in the regular and
usual course in substantially the same manner as such business heretofore was
conducted, and, to the extent consistent with such business and within its
ability to do so, Yadkin agrees that it will:
(i) preserve intact its present business organization, keep
available its present officers and employees, and preserve its relationships
with customers, depositors, creditors, correspondents, suppliers, and others
having business relationships with it;
(ii) maintain all of its properties and equipment in customary
repair, order and condition, ordinary wear and tear excepted;
(iii) maintain its books of account and records in the usual,
regular and ordinary manner in accordance with sound business practices applied
on a consistent basis;
(iv) comply in all material respects with all laws, rules and
regulations applicable to it, its properties, assets or employees and to the
conduct of its business;
39
(v) continue to maintain in force insurance such as is
described in Paragraph 3.24; not modify any bonds or policies of insurance in
effect as of the date hereof unless the same, as modified, provides
substantially equivalent coverage; and, not cancel, allow to be terminated or,
to the extent available, fail to renew, any such bond or policy of insurance
unless the same is replaced with a bond or policy providing substantially
equivalent coverage; and,
(vi) promptly provide to Main Street such information about
its financial condition, results of operations, prospects, businesses, assets,
loan portfolio, investments, properties, employees or operations, as Main Street
reasonably shall request.
(c) PERIODIC FINANCIAL AND OTHER INFORMATION. Following the date of
this Agreement and until the Effective Time, Yadkin promptly will deliver to
Main Street a copy of each report, registration, statement, or other
communication or regulatory filing made with or to any Regulatory Authority
simultaneous with the filing or making thereof.
(d) NOTICE OF CERTAIN CHANGES OR EVENTS. Following the execution of
this Agreement and up to the Effective Time, Yadkin promptly will notify Main
Street in writing of and provide to it such information as it shall request
regarding (i) any material adverse change in Yadkin's financial condition,
results of operations, prospects, business, assets, loan portfolio, investments,
properties or operations, or of the actual or prospective occurrence of any
condition or event which, with the lapse of time or otherwise, may or could
cause, create or result in any such material adverse change; or (ii) the actual
or prospective existence or occurrence of any condition or event which, with the
lapse of time or otherwise, has caused or may or could cause any statement,
representation or warranty of Yadkin herein to be or become inaccurate,
misleading or incomplete in any material respect, or which has resulted or may
or could cause, create or result in the breach or violation in any material
respect of any of Yadkin's covenants or agreements contained herein or in the
failure of any of the conditions precedent described in Paragraphs 7.01 and 7.03
hereof.
(e) ACCESS. Yadkin agrees that, following the date of this Agreement
and to and including the Effective Time, it will provide Main Street and
Piedmont and their respective employees, accountants, legal counsel,
environmental consultants or other representatives access to all its books,
records, files and other information (whether maintained electronically or
otherwise), to all its properties and facilities, and to all its employees,
accountants, legal counsel and consultants, as Main Street or Piedmont shall, in
their respective sole discretion, consider to be necessary or appropriate;
provided, however, that any investigation or reviews conducted by or on behalf
of Main Street or Piedmont shall be performed in such a manner as will not
interfere unreasonably with Yadkin's normal operations or with its relationship
with its customers or employees, and shall be conducted in accordance with
procedures established by the parties; and, provided further, that neither Main
Street nor Piedmont shall have any right of access to Yadkin's personnel files
and records.
(f) DEPOSIT LIABILITIES. Following the date of this Agreement,
Yadkin will make pricing decisions with respect to its deposit accounts in a
manner consistent with its past practices based on competition and prevailing
market rates in its banking markets.
40
(g) FURTHER ACTION; INSTRUMENTS OF TRANSFER. Yadkin covenants and
agrees with Main Street and Piedmont that it (i) will use its best efforts in
good faith to take or cause to be taken all action required of it under this
Agreement as promptly as practicable so as to permit the consummation of the
transactions described herein at the earliest possible date; (ii) shall perform
all acts and execute and deliver to Main Street and Piedmont all documents or
instruments required herein, or as otherwise shall be reasonably necessary or
useful to or requested by Main Street or Piedmont, in consummating such
transactions; and, (iii) will cooperate with Main Street and Piedmont in every
way in carrying out, and will pursue diligently the expeditious completion of,
such transactions.
(h) EMPLOYMENT OF OTHER MAIN STREET AND PIEDMONT EMPLOYEES. In the
case of employees of Main Street and Piedmont other than those employees of Main
Street and Piedmont that are party to an employment agreement set forth in
Paragraph 2.25(a) hereof, and provided they remain employed by Main Street or
Piedmont at the Effective Time, Yadkin will attempt in good faith to locate
positions with Yadkin for which employment may be offered, and Yadkin will offer
employment to as many of those employees as Yadkin, in its discretion, considers
to be feasible. However, notwithstanding anything contained in this Agreement to
the contrary, Yadkin shall not have any obligation to employ or provide
employment to any employee of Main Street or Piedmont or to any particular
number of such employees. Any employment so offered to an employee of Main
Street or Piedmont shall be in such a position, at such location within Yadkin's
branch system, and for such rate of compensation, as Yadkin shall determine in
its sole discretion. Each such person's employment shall be on an "at-will"
basis, and nothing in this Agreement shall be deemed to constitute an employment
agreement with any such person or to obligate Yadkin to employ any such person
for any specific period of time or in any specific position or to restrict
Yadkin's right to terminate the employment of any such person at any time and
for any reason satisfactory to it.
(i) EMPLOYEE BENEFITS. Except as otherwise provided in this
Agreement, any employee of Main Street or Piedmont who becomes an employee of
Yadkin at the Effective Time (a "New Employee") shall be entitled to receive all
employee benefits and to participate in all benefit plans provided by Yadkin on
the same basis (including cost) and subject to the same eligibility and vesting
requirements, and to the same conditions, restrictions and limitations, as
generally are in effect and applicable to other newly hired employees of Yadkin.
Each New Employee shall be given credit for his or her full years of service
with Main Street or Piedmont for purposes of (i) eligibility for participation
and vesting in Yadkin's Section 401(k) savings plan; and (ii) for all purposes
under Yadkin's other benefit plans (including entitlement to vacation and sick
leave). For purposes of Yadkin's health insurance coverage, a New Employee's
participation will be without regard to pre-existing condition requirements
under Yadkin's health insurance plan, provided that any such pre-existing
condition at the Effective Time was covered under Main Street's or Piedmont's
health insurance plan(s) at the Effective Time and the New Employee provides
evidence of such previous coverage in a form satisfactory to Yadkin's health
insurance carrier.
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Any employee of Main Street or Piedmont who is not offered
employment by Yadkin at the Effective Time will be permitted to obtain continued
coverage through the exercise of his or her COBRA rights.
For the calendar year during which the Effective Time occurs,
Yadkin will grant to each New Employee a number of days of sick leave and
vacation leave, respectively, equal, in each case, to (i) the full number of
such days to which the New Employee would be entitled for that year, based on
his or her credited years of service and in accordance with Yadkin's standard
leave policies, less (ii) the number of days of sick leave and vacation leave
used by the New Employee as an employee of Main Street or Piedmont during that
calendar year.
(j) DIRECTORS. In accordance with the provisions of Paragraph 1.07
hereof, at the Effective Time Yadkin will cause each director of Main Street and
Piedmont who is listed on Exhibit C hereto and who is in office at the Effective
Time (but in no event more than a total of four (4) persons, one of whom shall
be Xxxxxxx X. Xxxx) to be appointed a director of Yadkin. Each director's
continued service as a director of Yadkin will be subject to the normal
nomination and election processes. Each director of Piedmont as of the Effective
Time who will not continue as a director of Yadkin after the Effective Time
shall be appointed to the advisory board of Yadkin for Iredell and Mecklenburg
Counties. Provided such person does not serve as a director, officer, employee
or consultant to an entity reasonably deemed to compete with Yadkin in Iredell
and Mecklenburg Counties, such person serving on the advisory board of Yadkin
shall be entitled to receive for the three years following the Effective Time
fees in an amount equal to the directors' fee schedule in effect for Piedmont as
of the date of this Agreement. In lieu of such fees, such director may choose to
be compensated through the purchase of an annuity for the benefit of such
director as set forth in 7.02(h) of this Agreement, the terms of such annuity
requiring the beneficiary to not compete with Yadkin as aforesaid.
(k) "BLUE SKY" APPROVALS. Yadkin shall use its best efforts to take
all actions, if any, required by applicable state securities or "blue sky" laws
(i) to cause the Yadkin Common Stock issued at the Effective Time, at the time
of the issuance thereof, to be duly qualified or registered (unless exempt)
under such laws, or to cause all conditions to any exemptions from qualification
or registration thereof under such laws to have been satisfied; and (ii) to
obtain any and all other approvals or consents to the issuance of the Yadkin
Common Stock that are required under state or federal law.
(l) PRESERVATION OF NAME. To the fullest extent permitted under
North Carolina law, Yadkin will preserve the name "Main Street BankShares, Inc."
upon consummation of the Merger.
5.02. NEGATIVE COVENANTS OF YADKIN. Yadkin hereby covenants and agrees
that, between the date hereof and the Effective Time, it will not do any of the
following things or take any of the following actions without the prior written
consent and authorization of Main Street's President.
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(a) AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS. Yadkin will
not amend its Articles of Incorporation or Bylaws.
(b) CHANGE IN CAPITAL STOCK. Yadkin will not (i) make any change in
its authorized capital stock, or create any other or additional authorized
capital stock or other securities; or (ii) issue (including any issuance of
shares pursuant to a stock dividend or any issuance of any securities
convertible into capital stock), sell, purchase, redeem, retire, reclassify,
combine or split any shares of its capital stock or other securities, or enter
into any agreement or understanding with respect to any such action. However,
notwithstanding anything contained herein to the contrary, Yadkin shall be
permitted to issue shares of Yadkin Common Stock in conjunction with the
exercise of outstanding options referred to in Paragraph 3.05 hereof.
(c) OPTIONS, WARRANTS AND RIGHTS. Yadkin will not grant or issue any
options, warrants, calls, puts or other rights of any kind relating to the
purchase, redemption or conversion of shares of its capital stock or any other
securities (including securities convertible into capital stock) or enter into
any agreement or understanding with respect to any such action. However,
notwithstanding anything contained herein to the contrary, following the date of
this Agreement Yadkin may grant additional options to purchase shares of Yadkin
Common Stock pursuant to its existing employee and/or director stock option
plans.
(d) DIVIDENDS. Yadkin will not declare or pay any dividends on its
outstanding shares of capital stock or make any other distributions on or in
respect of any shares of its capital stock or otherwise to its shareholders,
provided however, that Yadkin may continue to pay its regular quarterly cash
dividends.
(e) ACCOUNTING PRACTICES. Yadkin will not make any changes in its
accounting methods, practices or procedures or in depreciation or amortization
policies, schedules or rates heretofore applied (except as required by GAAP or
governmental regulations). However, notwithstanding anything contained herein to
the contrary, following the date of this Agreement Yadkin may change from the
cash to the accrual method of accounting for income tax purposes.
(f) ACQUISITIONS; ADDITIONAL BRANCH OFFICES. Yadkin will not
directly or indirectly (i) acquire or merge with, or acquire substantially all
of the assets of, any other person or entity; or (ii) enter into or become bound
by any contract, agreement, commitment or letter of intent relating to, or
otherwise take or agree to take any action in furtherance of, any such
transaction.
(g) CHANGES IN BUSINESS PRACTICES. Except as may be required by the
Commissioner, the FDIC, the FRB, Regulatory Authorities or any other
governmental or regulatory agency, or as shall be required by applicable law,
regulation or this Agreement, Yadkin will not (i) change in any material respect
the nature of its business; (ii) discontinue any material portion or line of its
business; or (iii) change in any material respect its lending, investment,
asset-liability management or other material banking or business policies.
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(h) EXCLUSIVE MERGER AGREEMENT. Unless, due to a material change in
circumstances after the date hereof, Yadkin's Board of Directors reasonably
believes in good faith, based on the written opinion of its legal counsel, that
any such action or inaction would violate the directors' duties or obligations
as such to Yadkin or to its shareholders, Yadkin will not, directly, or
indirectly through any person, (i) encourage, solicit or attempt to initiate or
procure discussions, negotiations or offers with or from any person or entity
(other than Main Street or Piedmont) relating to a merger or other acquisition
of Yadkin or the purchase or acquisition of any Yadkin Common Stock (except as
provided in Paragraph 5.02(b) above), or substantially all of Yadkin's assets,
or provide assistance to any person in connection with any such offer; (ii)
except to the extent required by law, disclose to any person or entity any
information not customarily disclosed to the public concerning Yadkin or its
business, or afford to any other person or entity access to its properties,
facilities, books or records; (iii) sell or transfer all or substantially all of
Yadkin's assets to any other person or entity; or (iv) enter into or become
bound by any contract, agreement, commitment or letter of intent relating to, or
otherwise take or agree to take any action in furtherance of, any such
transaction.
(i) DEPOSIT LIABILITIES. Yadkin will not make any material change in
its current deposit policies and procedures or take any actions designed to
materially increase or decrease the aggregate level of its deposits as of the
date of this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. PREPARATION AND DISTRIBUTION OF PROXY STATEMENT/OFFERING CIRCULAR.
Yadkin and Main Street jointly will prepare a joint proxy statement/offering
circular (the "Proxy Statement/Offering Circular") for distribution to Yadkin's
and Main Street's shareholders as Yadkin's proxy statement relating to Yadkin's
solicitation of proxies for use at the Yadkin Shareholders' Meeting, Main
Street's proxy statement relating to Main Street's solicitation of proxies for
use at the Main Street Shareholders' Meeting and as Yadkin's offering circular
relating to its offer and distribution of Yadkin Common Stock to Main Street's
shareholders as described in this Agreement. The Proxy Statement/Offering
Circular shall, in all material respects, be prepared in such form and contain
or be accompanied by such information regarding the Yadkin Shareholders Meeting,
the Main Street Shareholders' Meeting, this Agreement, the parties hereto, the
Merger, the Bank Merger and other transactions described herein as is required
by regulations of the Securities and Exchange Commission (the "SEC") applicable
to Yadkin and Main Street or otherwise as shall be agreed upon by Yadkin and
Main Street.
Yadkin and Main Street will mail the Proxy Statement/Offering
Circular to their shareholders on a date mutually agreed upon by Yadkin and Main
Street not less than twenty (20) days prior to the scheduled date of the Yadkin
Shareholders' Meeting and the date of the Main Street Shareholders' Meeting,
whichever is earlier; provided, however, that no such materials shall be mailed
to Yadkin's shareholders or Main Street's shareholders unless and until Yadkin
shall have received the authorization of the FDIC, Main Street shall have
received the authorization of the SEC, and Main Street and Yadkin shall have
agreed on the form and content of such materials.
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6.02. REGULATORY APPROVALS. Yadkin, Piedmont and Main Street each agrees
with the others that, as soon as practicable following the date of this
Agreement, it will prepare and file, or cause to be prepared and filed, all
applications required to be filed by it under applicable law and regulations for
approvals by Regulatory Authorities of the Merger, the Bank Merger or other
transactions described in this Agreement, including without limitation any
required applications for the approval of the Commissioner, the FDIC, the FRB
and the North Carolina Banking Commission (the "Commission"). Yadkin, Piedmont
and Main Street each agrees (i) to use its best efforts in good faith to obtain
all necessary approvals of Regulatory Authorities required for consummation of
the Merger and other transactions described herein; and (ii) before the filing
of any such application required to be filed, to give each other party an
opportunity to review and comment on the form and content of such application.
Should the appearance of any of the officers, directors, employees, financial
advisors or counsel of Yadkin, Piedmont or Main Street be requested by each
other or by any Regulatory Authority at any hearing in connection with any such
application, it will use its best efforts to arrange for such appearance.
6.03. INFORMATION FOR PROXY STATEMENT/OFFERING CIRCULAR AND APPLICATIONS
FOR REGULATORY APPROVALS. Yadkin, Piedmont and Main Street each covenants with
the other that (i) it will cooperate with the other parties in the preparation
of the Proxy Statement/Offering Circular, and applications for required
approvals of Regulatory Authorities, and it will promptly respond to requests by
the other parties and their legal counsel for information, and will provide all
information, documents, financial statements or other material, that is required
for, or that may be reasonably requested by any other party for inclusion in,
any such document; and (ii) none of the information provided by it for inclusion
in any of such documents, at the time of the mailing of those materials to Main
Street's and Yadkin's shareholders, or at the time of receipt of any such
required approval of a Regulatory Authority, as the case may be, will contain
any untrue statement of a material fact or omit any material fact required to be
stated therein or necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
6.04. EXPENSES. Subject to the provisions of Paragraph 8.03, and whether
or not this Agreement shall be terminated or the Merger or the Bank Merger shall
be consummated, Yadkin, Piedmont and Main Street each agrees to pay its own
legal, accounting and financial advisory fees and all its other costs and
expenses incurred or to be incurred in connection with the execution and
performance of its obligations under this Agreement, or otherwise in connection
with this Agreement and the transactions described herein (including without
limitation all accounting fees, legal fees, consulting or advisory fees, filing
fees, printing and mailing costs, and travel expenses). For purposes of this
Agreement, expenses associated with the printing and mailing of the Proxy
Statement/Offering Circular described in Paragraph 6.01, and with the Tax
Opinion described in Paragraph 6.10, shall be deemed to have been incurred by
Yadkin and Main Street equally. Expenses owed to The Xxxxxx Xxxxxx Company,
including its fees for rendering the "Main Street Fairness Opinion" described in
Paragraph 7.01(d)(ii), shall be deemed to have been incurred solely by Main
Street. Expenses owed to Sterne, Agee & Xxxxx, Inc. including its fees for
rendering the "Yadkin Fairness Opinion" described in Paragraph 7.01(d)(i) shall
be deemed to have been incurred solely by Yadkin.
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6.05. ANNOUNCEMENTS. Yadkin, Piedmont and Main Street each agrees that no
persons other than the parties to this Agreement are authorized to make any
public announcements or statements about this Agreement or any of the
transactions described herein, and that, without the prior review and consent of
the other parties (which consent shall not unreasonably be denied or delayed),
it will not make any public announcement, statement or disclosure as to the
terms and conditions of this Agreement or the transactions described herein,
except for such disclosures as may be required incidental to obtaining the
required approval of any Regulatory Authority to the consummation of the
transactions described herein. However, notwithstanding anything contained
herein to the contrary, neither Yadkin, Piedmont nor Main Street shall be
required to obtain the prior consent of the other parties for any such
disclosure which it, in good faith and upon the advice of its legal counsel,
believes is required by law.
6.06. REAL PROPERTY MATTERS.
(a) Yadkin, at its own option or expense, may cause to be conducted
(i) a title examination, physical survey, zoning compliance review, and
structural inspection of the Main Street Real Property and improvements thereon
(the "Property Examination"); and (ii) site inspections, historic reviews,
regulatory analyses, and Phase 1 environmental assessments of the Main Street
Real Property, together with such other studies, testing and intrusive sampling
and analyses as Yadkin shall deem necessary or desirable (the "Environmental
Survey").
(b) If, in the course of the Property Examination or Environmental
Survey, Yadkin discovers a "Material Defect" (as defined below) with respect to
the Main Street Real Property, Yadkin will give prompt written notice thereof to
Main Street describing the facts or conditions constituting the Material Defect,
and Yadkin shall have the option exercisable upon written notice to Main Street
to (i) waive the Material Defect; or (ii) terminate this Agreement.
(c) For purposes of this Agreement, a "Material Defect" shall
include:
(i) the existence of any lien (other than the lien of real
property taxes not yet due and payable), encumbrance, zoning restriction,
easement, covenant, or other restriction, title imperfection or title
irregularity, or the existence of any facts or conditions that constitute a
breach of Main Street's or Piedmont's representations and warranties contained
in Paragraph 2.16 or 2.21, in either such case that Yadkin reasonably believes
will affect its use of any parcel of the Main Street Real Property for the
purpose for which it currently is used or the value or marketability of any
parcel of the Main Street Real Property, or as to which Yadkin otherwise
objects; or
(ii) the existence of any structural defects or conditions of
disrepair in the improvements on the Main Street Real Property (including any
equipment, fixtures or other components related thereto) that Yadkin reasonably
believes would cost an aggregate of $50,000 or more to repair, remove or correct
as to all such Main Street Real Property; or
(iii) the existence of facts or circumstances relating to any
of the Main Street Real Property reflecting that (A) there likely has been a
discharge, disposal, release, threatened release, or emission by any person of
any Hazardous Substance (as such term is
46
defined in Paragraph 2.21(a)(ii) hereof) on, from, under, at, or relating to the
Main Street Real Property; or (B) any action has been taken or not taken, or a
condition or event likely has occurred or exists, with respect to the Main
Street Real Property which constitutes or would constitute a violation of any
Environmental Laws or any contract or other agreement between Main Street or
Piedmont and any other person or entity, as to which, in either such case,
Yadkin reasonably believes, based on the advice of legal counsel or other
consultants, that Main Street or Piedmont could become responsible or liable, or
that Main Street or Piedmont could become responsible or liable following the
Effective Time, for assessment, removal, remediation, monetary damages, or
civil, criminal or administrative penalties or other corrective action and in
connection with which the amount of expense or liability which Main Street or
Piedmont could incur, or for which Main Street or Piedmont could become
responsible or liable, following consummation of the Merger at any time or over
any period of time could equal or exceed an aggregate of $50,000 or more as to
all such Main Street Real Property.
6.07. TREATMENT OF STOCK OPTIONS. Yadkin and Main Street agree that, as of
the Effective Time, all outstanding options to purchase shares of Main Street
Common Stock referenced in Paragraph 2.05 (each a "Main Street Option" and
collectively the "Main Street Options") shall be assumed by Yadkin on their then
current terms and conditions and be converted into options to purchase shares of
Yadkin Common Stock, such conversion to be made such that following the
Effective Time each Main Street Option will represent an option to purchase 1.68
shares of Yadkin Common Stock for every one (1) share of Main Street Common
Stock covered by such Main Street Option prior to the Effective Time. Main
Street and Piedmont will obtain from each person who holds a Main Street Option,
and will deliver to Yadkin at the Closing, a written agreement in a form
specified by Yadkin confirming and agreeing to the conversion of such person's
Main Street Option as described above with an appropriate adjustment of the
exercise price of the option.
6.08. TREATMENT OF 401(k) PLAN. As may be agreed upon mutually by both
Main Street and Yadkin, Main Street's Section 401(k) plan will either be:
(i) terminated, in which case each participant in Main Street's plan
on the termination date may elect, upon completion of the termination and the
final liquidation of the plan, to receive a distribution of the assets credited
to his or her plan account at that time or, if the participant has become a
participant in Yadkin's Section 401(k) plan, to have those assets credited as a
"roll-over" to the participant's plan account under Yadkin' plan; or,
(ii) merged into Yadkin's Section 401(k) plan.
Main Street and Piedmont agree that, prior to the Effective Time, they
will take or cause to be taken such actions as Yadkin shall reasonably consider
to be necessary or desirable in connection with or to effect or facilitate any
such plan termination or merger. Yadkin agrees that it will assume, as of the
Effective Time, any and all administrative and fiduciary duties of Main Street
with respect to the day-to-day operation of Main Street's plan, including duties
relating to filings with the Internal Revenue Service relating to the plan.
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6.09. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. Yadkin and Main Street
agree that, to the extent the same can be purchased at a cost to which they both
agree, then immediately prior to the Effective Time Main Street shall purchase
"tail" coverage, effective at the Effective Time, under and in the same amount
of coverage as is provided by its then current directors' and officers'
liability insurance policy.
6.10. TAX OPINION. Yadkin and Main Street agree to use their best efforts
to cause the Bank Merger, the Merger, and the conversion of outstanding shares
of Main Street Common Stock into shares of Yadkin Common Stock, on the terms
contained in this Agreement, to be treated as a tax-free reorganization within
the meaning of Section 368(a) of the Internal Revenue Code and to obtain from
Xxxxx Xxxx PLLC a written opinion (the "Tax Opinion"), addressed jointly to the
Boards of Directors of Yadkin and Main Street, to the foregoing effect.
ARTICLE VII
CONDITIONS PRECEDENT TO MERGER
7.01. CONDITIONS TO ALL PARTIES' OBLIGATIONS. Notwithstanding any other
provision of this Agreement to the contrary, the obligations of each of the
parties to this Agreement to consummate the transactions described herein shall
be conditioned upon the satisfaction of each of the following conditions
precedent on or prior to the Closing Date.
(a) APPROVAL BY REGULATORY AUTHORITIES; DISADVANTAGEOUS CONDITIONS.
(i) The Merger, the Bank Merger and other transactions described in this
Agreement shall have been approved, to the extent required by law, by the FDIC,
the FRB, the Commissioner, the Commission, and by all other Regulatory
Authorities having jurisdiction over such transactions; (ii) no Regulatory
Authority shall have objected to or withdrawn its approval of such transactions
or imposed any condition on such transactions or its approval thereof, which
condition is reasonably deemed by Main Street or Yadkin to so adversely impact
the economic or business benefits of this Agreement to Main Street, Piedmont or
Yadkin as to render it inadvisable for Main Street, Piedmont or Yadkin to
consummate the Merger or the Bank Merger; (iii) the 15-day or 30-day waiting
period, as applicable, required following necessary approvals by the FDIC and
the FRB for review of the transactions described herein by the United States
Department of Justice shall have expired, and, in connection with any such
review, no objection to the Merger or the Bank Merger shall have been raised;
and (iv) all other consents, approvals and permissions, and the satisfaction of
all of the requirements prescribed by law or regulation, necessary to the
carrying out of the transactions contemplated herein shall have been procured.
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(b) ADVERSE PROCEEDINGS, INJUNCTION, ETC. There shall not be (i) any
order, decree or injunction of any court or agency of competent jurisdiction
which enjoins or prohibits the Merger, the Bank Merger or any of the other
transactions described in this Agreement or any of the parties hereto from
consummating any such transaction; (ii) any pending or threatened investigation
of the Merger, the Bank Merger or any of such other transactions by the United
States Department of Justice, or any actual or threatened litigation under
federal antitrust laws relating to the Merger, the Bank Merger or any other such
transaction; (iii) any suit, action or proceeding by any person (including any
governmental, administrative or regulatory agency), pending or threatened before
any court or governmental agency in which it is sought to restrain or prohibit
Yadkin, Piedmont or Main Street from consummating the Merger or the Bank Merger
or carrying out any of the terms or provisions of this Agreement; or (iv) any
other suit, claim, action or proceeding pending or threatened against Yadkin,
Piedmont or Main Street or any of their respective officers or directors which
shall reasonably be considered by Yadkin, Piedmont or Main Street to be
materially burdensome in relation to the proposed Merger or Bank Merger or
materially adverse in relation to the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of any party hereto, and which has not been dismissed,
terminated or resolved to the satisfaction of all parties hereto within 90 days
of the institution or threat thereof.
(c) APPROVAL BY BOARDS OF DIRECTORS AND SHAREHOLDERS. The respective
Boards of Directors of Yadkin, Piedmont and Main Street shall have duly
approved, adopted and ratified this Agreement by appropriate resolutions, the
shareholders of Yadkin shall have duly approved, ratified and adopted this
Agreement at the Yadkin Shareholders' Meeting, the shareholders of Main Street
shall have duly approved, ratified and adopted this Agreement at the Main Street
Shareholders' Meeting and Main Street, acting in its capacity as the sole
shareholder of Piedmont, shall have duly approved, ratified and adopted this
Agreement, all to the extent required by and in accordance with the provisions
of this Agreement, applicable law, and applicable provisions of their respective
Articles of Incorporation and Bylaws.
(d) FAIRNESS OPINIONS.
(i) Yadkin shall have received from Sterne, Agee & Xxxxx, Inc.
a written opinion (the "Yadkin Fairness Opinion") to the effect that the Merger
is fair, from a financial point of view, to Yadkin and its shareholders; and,
Sterne, Agee & Xxxxx, Inc. shall have delivered a letter to Yadkin, dated as of
a date within five business days preceding the Closing Date, to the effect that
it remains its opinion that the terms of the Merger are fair, from a financial
point of view, to Yadkin and its shareholders.
(ii) Main Street shall have received from The Xxxxxx Xxxxxx
Company, a written opinion (the "Main Street Fairness Opinion") to the effect
that the consideration received by Main Street's shareholders is fair, from a
financial point of view, to Main Street and its shareholders; and The Xxxxxx
Xxxxxx Company shall have delivered a letter to Main Street, dated as of a date
within five business days preceding the Closing Date, to the effect that it
remains its opinion that the terms of the Merger are fair, from a financial
point of view, to Main Street and its shareholders.
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(e) TAX OPINION. Yadkin and Main Street shall have received the Tax
Opinion from Xxxxx Xxxx PLLC in form satisfactory to each of them.
(f) WAIVER OF CHANGE IN CONTROL. Each employee of Main Street or
Piedmont that has entered into an employment agreement described in Paragraph
2.25(a) hereof shall have entered into a written agreement with Main Street and
Piedmont stating that the transactions described herein, including but not
limited to the Merger and the Bank Merger, shall not constitute a "Change in
Control" for purposes of such employment agreement.
(g) NO TERMINATION OR ABANDONMENT. This Agreement shall not have
been terminated or abandoned by any party hereto.
(h) ARTICLES OF MERGER; OTHER ACTIONS. Separate Articles of Merger
described in Paragraph 1.09 of this Agreement pertaining to the Merger and the
Bank Merger shall have been duly executed by Yadkin and filed with the North
Carolina Secretary of State as provided in that Paragraph.
7.02. ADDITIONAL CONDITIONS TO YADKIN'S OBLIGATIONS. Notwithstanding any
other provision of this Agreement to the contrary, Yadkin's separate obligation
to consummate the transactions described herein shall be conditioned upon the
satisfaction of each of the following conditions precedent on or before the
Closing Date:
(a) MATERIAL ADVERSE CHANGE. There shall not have occurred any
material adverse change in the consolidated financial condition or results of
operations of Main Street, and there shall not have occurred any event or
development, and there shall not exist any condition or circumstance which, with
the lapse of time or otherwise, may or could cause, create or result in any such
material adverse change.
(b) COMPLIANCE WITH LAWS. Main Street and Piedmont shall have
complied in all material respects with all federal and state laws and
regulations applicable to them in connection with the transactions described in
this Agreement where the violation of or failure to comply with any such law or
regulation could or may have a material adverse effect on the financial
condition, results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations of Main Street or Piedmont, or of Yadkin
after the Effective Time, or on Main Street's or Piedmont's ability to
consummate the Merger or the Bank Merger.
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(c) MAIN STREET'S AND PIEDMONT'S REPRESENTATIONS AND WARRANTIES AND
PERFORMANCE OF AGREEMENTS; OFFICERS' CERTIFICATE. Unless waived in writing by
Yadkin as provided in Paragraph 10.02 hereof, each of the representations and
warranties of Main Street and Piedmont contained in this Agreement shall have
been true and correct in all material respects as of the date hereof, and they
shall remain true and correct on and as of the Closing Date with the same force
and effect as though made on and as of such date, except (i) for changes which
are not, in the aggregate, material and adverse to the financial condition,
results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations of Main Street or Piedmont or to Main
Street's or Piedmont's ability to consummate the Merger, the Bank Merger and
other transactions described herein; and (ii) as otherwise contemplated by this
Agreement; and Main Street and Piedmont each shall have performed in all
material respects all of its obligations, covenants and agreements hereunder to
be performed by it on or before the Closing Date.
Yadkin shall have received a certificate dated as of the Closing
Date and executed by the President and CEO and the Chief Financial Officer of
Main Street and Piedmont to the effect that the conditions of this subparagraph
have been met and as to such other matters as may be reasonably requested by
Yadkin.
(d) LEGAL OPINION OF MAIN STREET'S COUNSEL. Yadkin shall have
received the written legal opinion of Xxxxxx Xxxxxx & Xxxxx P.A., counsel for
Main Street and Piedmont, dated as of the Closing Date and in form and substance
reasonably satisfactory to Yadkin.
(e) OTHER DOCUMENTS AND INFORMATION. Main Street and Piedmont shall
have provided to Yadkin correct and complete copies (certified by their
respective Secretaries) of resolutions of their respective Boards of Directors
and shareholders pertaining to approval of this Agreement and the Merger and
other transactions contemplated herein, together with a certificate of the
incumbency of their officers who executed this Agreement or any other documents
delivered to Yadkin in connection with the Closing.
(f) ACCEPTANCE BY YADKIN'S COUNSEL. The form and substance of all
legal matters described in this Agreement or related to the transactions
contemplated herein shall be reasonably acceptable to Yadkin's legal counsel.
(g) OPTION PLAN MATTERS. Main Street and Piedmont shall have
delivered to Yadkin the written agreement of each individual holder of the Main
Street Options, as required by Paragraph 6.07.
(h) Each of the officers and directors of Piedmont who are
beneficiaries under certain policies of bank owned life insurance purchased by
Piedmont ("BOLI"), shall have executed a waiver of their rights under BOLI
provided, however, that each of the directors of Piedmont, whose terms will end
as a director of Piedmont at the Effective Time, will have the option of causing
Yadkin to purchase an annuity in his name for an amount equal to, and in lieu
of, the director's fees to be received pursuant to 5.01(j) hereof and, provided
further, that any officer executing a waiver shall not be in a disadvantageous
position as a result of said waiver as reasonably determined by Yadkin.
51
7.03. ADDITIONAL CONDITIONS TO MAIN STREET'S AND PIEDMONT'S OBLIGATIONS.
Notwithstanding any other provision of this Agreement to the contrary, Main
Street's and Piedmont's separate obligations to consummate the transactions
described herein shall be conditioned upon the satisfaction of each of the
following conditions precedent on or before the Closing Date:
(a) MATERIAL ADVERSE CHANGE. There shall not have occurred any
material adverse change in the financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations of Yadkin, and there shall not have occurred any event or
development, and there shall not exist any condition or circumstance which, with
the lapse of time or otherwise, may or could cause, create or result in any such
material adverse change.
(b) COMPLIANCE WITH LAWS. Yadkin shall have complied in all material
respects with all federal and state laws and regulations applicable to it in
connection with the transactions described in this Agreement and where the
violation of or failure to comply with any such law or regulation could or may
have a material adverse effect on the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of Yadkin after the Effective Time, or on Yadkin's
ability to consummate the Merger or the Bank Merger.
(c) YADKIN'S REPRESENTATIONS AND WARRANTIES AND PERFORMANCE OF
AGREEMENTS; OFFICERS' CERTIFICATE. Unless waived in writing by Main Street or
Piedmont as provided in Paragraph 10.02, each of the representations and
warranties of Yadkin contained in this Agreement shall have been true and
correct in all material respects as of the date hereof, and they shall remain
true and correct at and as of the Closing Date with the same force and effect as
though made on and as of such date, except (i) for changes which are not, in the
aggregate, material and adverse to the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of Yadkin or to Yadkin's ability to consummate the
Merger, the Bank Merger and other transactions described herein: and (ii) as
otherwise contemplated by this Agreement; and, Yadkin shall have performed in
all material respects all its obligations, covenants and agreements hereunder to
be performed by it on or before the Closing Date.
Main Street shall have received a certificate dated as of the
Closing Date and executed by Yadkin's President and CEO and Chief Financial
Officer to the effect that the conditions of this subparagraph have been met and
as to such other matters as may be reasonably requested by Main Street.
(d) LEGAL OPINION OF YADKIN'S COUNSEL. Main Street shall have
received the written legal opinion of Xxxxx & Xxxxxxxx, P.A., counsel to Yadkin,
dated as of the Closing Date and in form and substance reasonably satisfactory
to Main Street.
52
(e) OTHER DOCUMENTS AND INFORMATION. Yadkin shall have provided to
Main Street correct and complete copies (all certified by Yadkin's Secretary) of
Yadkin's Articles of Incorporation and Bylaws, and resolutions of its Board of
Directors and shareholders pertaining to approval of this Agreement and the
Merger and other transactions contemplated herein, together with a certificate
as to the incumbency of Yadkin's officers who executed this Agreement or any
other documents delivered to Main Street or Piedmont in connection with the
Closing.
(f) ACCEPTANCE BY MAIN STREET'S COUNSEL. The form and substance of
all legal matters described in this Agreement or related to the transactions
contemplated herein shall be reasonably acceptable to Main Street's legal
counsel.
ARTICLE VIII
TERMINATION; BREACH; REMEDIES
8.01. MUTUAL TERMINATION. At any time prior to the Effective Time (and
whether before or after approval hereof by the shareholders of Yadkin or Main
Street), this Agreement may be terminated by the mutual agreement of Main Street
and Yadkin. Upon any such mutual termination, all obligations of Yadkin,
Piedmont and Main Street hereunder shall terminate and each party shall pay its
own costs and expenses as provided in Paragraph 6.04.
8.02. UNILATERAL TERMINATION. Prior to the Effective Time, this Agreement
may be terminated by either Main Street or Yadkin (whether before or after
approval hereof by Yadkin's shareholders or Main Street's shareholders) upon
written notice to the other parties in the manner provided herein and under the
circumstances described below.
(a) TERMINATION BY MAIN STREET AND PIEDMONT. This Agreement may be
terminated by Main Street by action of its Board of Directors:
(i) if any of the conditions to the obligations of Main Street
or Piedmont set forth in Paragraphs 7.01 and 7.03 shall not have been satisfied
in all material respects or effectively waived in writing by Main Street by June
30, 2002 (except to the extent that the failure of such condition to be
satisfied has been caused by the failure of Main Street or Piedmont to satisfy
any of its obligations, covenants or agreements contained herein);
(ii) if Yadkin shall have violated or failed to fully perform
any of its obligations, covenants or agreements contained in Articles V or VI
herein in any material respect;
(iii) if Main Street or Piedmont determines at any time that
any of Yadkin's representations or warranties contained in Article III hereof or
in any other certificate or writing delivered pursuant to this Agreement shall
have been false or misleading in any material respect when made or would have
been false or misleading in any material respect except for the fact that the
representation or warranty was limited to or qualified based on the Best
Knowledge of any person, or that there has occurred any event or development or
that there exists any condition or circumstance which has caused or, with the
lapse of time or otherwise,
53
may or could cause any such representations or warranties to become false or
misleading in any material respect or that would cause any such representation
or warranty to become false or misleading in any material respect except for the
fact that the representation or warranty was limited to or qualified based on
the Best Knowledge of any person;
(iv) if, notwithstanding Main Street's and Piedmont's
satisfaction of their respective obligations under Paragraphs 6.01 and 6.03,
Main Street's shareholders do not ratify and approve this Agreement and the
Merger at the Main Street Shareholders' Meeting, or if the Yadkin Shareholders'
Meeting is not held by June 30, 2002; or
(v) if the Merger shall not have become effective on or before
September 30, 2002 or such later date as shall be mutually agreed upon in
writing by Main Street and Yadkin.
However, before Main Street may terminate this Agreement for
any of the reasons specified above in (i), (ii) or (iii) of this Paragraph
8.02(a), it shall give written notice to Yadkin in the manner provided herein
stating its intent to terminate and a description of the specific breach,
default, violation or other condition giving rise to its right to so terminate,
and, such termination by Main Street shall not become effective if, within 30
days following the giving of such notice, Yadkin shall cure such breach, default
or violation or satisfy such condition to the reasonable satisfaction of Main
Street. In the event Yadkin cannot or does not cure such breach, default or
violation or satisfy such condition to the reasonable satisfaction of Main
Street within such notice period, termination of this Agreement by Main Street
thereafter shall be effective upon its giving of written notice thereof to
Yadkin in the manner provided herein.
(b) TERMINATION BY YADKIN. Prior to the Effective Time, this
Agreement may be terminated by Yadkin:
(i) if any of the conditions to the obligations of Yadkin set
forth in Paragraphs 7.01 and 7.02 shall not have been satisfied in all material
respects or effectively waived in writing by Yadkin by June 30, 2002 (except to
the extent that the failure of such condition to be satisfied has been caused by
the failure of Yadkin to satisfy any of its obligations, covenants or agreements
contained herein);
(ii) if Main Street or Piedmont shall have violated or failed
to fully perform any of their respective obligations, covenants or agreements
contained in Articles IV or VI herein in any material respect;
(iii) if Yadkin determines that any of Main Street's or
Piedmont's respective representations and warranties contained in Article II
hereof or in any other certificate or writing delivered pursuant to this
Agreement shall have been false or misleading in any material respect when made
or would have been false or misleading in any material respect except for the
fact that the representation or warranty was limited to or qualified based on
the Best Knowledge of any person, or that there has occurred any event or
development or that there exists any condition or circumstance which has caused
or, with the lapse of time or otherwise,
54
may or could cause any such representations or warranties to become false or
misleading in any material respect or that would cause any such representation
or warranty to become false or misleading in any material respect except for the
fact that the representation or warranty was limited to or qualified based on
the Best Knowledge of any person;
(iv) if, notwithstanding Yadkin's satisfaction of its
obligations contained in Paragraphs 6.01 and 6.03, its shareholders do not
ratify and approve this Agreement and approve the Merger at the Yadkin
Shareholders' Meeting, or the Main Street shareholders' Meeting is not held by
June 30, 2002; or
(v) if the Merger shall not have become effective on or before
September 30, 2002, or such later date as shall be mutually agreed upon in
writing by Main Street and Yadkin.
However, before Yadkin may terminate this Agreement for any of
the reasons specified above in clause (i), (ii) or (iii) of this Paragraph
8.02(b), it shall give written notice to Main Street in the manner provided
herein stating its intent to terminate and a description of the specific breach,
default, violation or other condition giving rise to its right to so terminate,
and, such termination by Yadkin shall not become effective if, within 30 days
following the giving of such notice, Main Street or Piedmont shall cure such
breach, default or violation or satisfy such condition to the reasonable
satisfaction of Yadkin. In the event Main Street or Piedmont cannot or does not
cure such breach, default or violation or satisfy such condition to the
reasonable satisfaction of Yadkin within such notice period, termination of this
Agreement by Yadkin thereafter shall be effective upon its giving of written
notice thereof to Main Street in the manner provided herein.
8.03. BREACH; REMEDIES. Except as otherwise provided below, (i) in the
event of a breach by Yadkin of any of its representations or warranties
contained in Article III of this Agreement or in any other certificate or
writing delivered pursuant to this Agreement, or in the event of its failure to
perform or violation of any of its obligations, agreements or covenants
contained in Articles V or VI of this Agreement, then Main Street's and
Piedmont's sole right and remedy shall be to terminate this Agreement prior to
the Effective Time as provided in Paragraph 8.02(a) or, in the case of a failure
to perform or violation of any obligations, agreements or covenants, to seek
specific performance thereof; and (ii) in the event of any such termination of
this Agreement by Main Street or Piedmont due to a failure by Yadkin to perform
any of its obligations, agreements or covenants contained in Articles V or VI of
this Agreement, then Yadkin shall be obligated to reimburse Main Street and
Piedmont for up to (but not more than) $200,000 in expenses described in
Paragraph 6.04 which actually have been incurred by Main Street and Piedmont.
Likewise, and except as otherwise provided below, (i) in the event
of a breach by Main Street or Piedmont of any of its representations or
warranties contained in Article II of this Agreement, or in the event of its
failure to perform or violation of any of its obligations, agreements or
covenants contained in Articles IV or VI of this Agreement, then Yadkin's sole
right and remedy shall be to terminate this Agreement prior to the Effective
Time as provided in Paragraph 8.02(b), or, in the case of a failure to perform
or violation of any obligations,
55
agreements or covenants, to seek specific performance thereof; and (ii) in the
event of any such termination of this Agreement by Yadkin due to a failure by
Main Street or Piedmont to perform any of its obligations, agreements or
covenants contained in Articles IV or VI of this Agreement, then Main Street or
Piedmont shall be obligated to reimburse Yadkin for up to (but not more than)
$200,000 in expenses described in Paragraph 6.04 which actually have been
incurred by Yadkin, plus the amount set forth in Paragraph 10.16 hereof, should
the provisions of that Paragraph be applicable.
Notwithstanding any provision of this Agreement to the contrary, if
any party to this Agreement breaches this Agreement by willfully or
intentionally failing to perform or violating any of its obligations, agreements
or
covenants contained in Articles IV, V or VI of this Agreement, such party shall
be obligated to pay all expenses of the other parties described in Paragraph
6.04, together with other damages recoverable at law or in equity.
ARTICLE IX
INDEMNIFICATION
9.01. INDEMNIFICATION FOLLOWING TERMINATION OF AGREEMENT.
(a) BY YADKIN. Yadkin agrees that, in the event this Agreement is
terminated for any reason and the transactions described in this Agreement are
not consummated, it will indemnify, hold harmless and defend Main Street and
Piedmont and their respective officers, directors, attorneys and financial
advisors from and against any and all claims, disputes, demands, causes of
action, suits or proceedings of any third party (including any Regulatory
Authority), together with all losses, damages, liabilities, obligations, costs
and expenses of every kind and nature in connection therewith (including without
limitation reasonable attorneys' fees and legal costs and expenses in connection
therewith), whether known or unknown, and whether now existing or hereafter
arising, which may be threatened against, incurred, undertaken, received or paid
by Main Street or Piedmont:
(i) in connection with or which arise out of, result from, or
are based upon (A) Yadkin's operations or business transactions or its
relationship with any of its employees; or (B) Yadkin's failure to comply with
any statute or regulation of any federal, state or local government or agency
(or any political subdivision thereof) in connection with the transactions
described in this Agreement;
(ii) in connection with or which arise out of, result from, or
are based upon any fact, condition or circumstance that constitutes a breach by
Yadkin of, or any inaccuracy, incompleteness or inadequacy in, any of its
representations or warranties under or in connection with this Agreement, or any
failure of Yadkin to perform any of its covenants, agreements or obligations
under or in connection with this Agreement; or,
(iii) in connection with or which arise out of, result from,
or are based upon any information provided by Yadkin which is included in the
Proxy Statement/Offering Circular and which information causes the Proxy
Statement/Offering Circular, at the time of its
56
mailing to Yadkin's shareholders and Main Street's shareholders, to contain any
untrue statement of a material fact or to omit any material fact required to be
stated therein or necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, not false or
misleading.
(b) BY MAIN STREET AND PIEDMONT. Main Street and Piedmont agree
that, in the event this Agreement is terminated for any reason and the Merger is
not consummated, it will indemnify, hold harmless and defend Yadkin and its
officers, directors, attorneys and financial advisors from and against any and
all claims, disputes, demands, causes of action, suits, proceedings of any third
party (including any Regulatory Authority), together with all losses, damages,
liabilities, obligations, costs and expenses of every kind and nature in
connection therewith (including without limitation reasonable attorneys' fees
and legal costs and expenses in connection therewith), whether known or unknown,
and whether now existing or hereafter arising, which may be threatened against,
incurred, undertaken, received or paid by Yadkin:
(i) in connection with or which arise out of, result from, or
are based upon (A) Main Street's or Piedmont's operations or business
transactions or its relationship with any of its employees; or (B) Main Street's
or Piedmont's failure to comply with any statute or regulation of any federal,
state or local government or agency (or any political subdivision thereof) in
connection with the transactions described in this Agreement;
(ii) in connection with or which arise out of, result from, or
are based upon any fact, condition or circumstance that constitutes a breach by
Main Street or Piedmont of, or any inaccuracy, incompleteness or inadequacy in,
any of its representations or warranties under or in connection with this
Agreement, or any failure of Main Street or Piedmont to perform any of its
covenants, agreements or obligations under or in connection with this Agreement;
or,
(iii) in connection with or which arise out of, result from,
or are based upon any information provided by Main Street or Piedmont which is
included in the Proxy Statement/Offering Circular and which information causes
the Proxy Statement/Offering Circular, at the time of its mailing to Yadkin's
shareholders and Main Street's shareholders, to contain any untrue statement of
a material fact or to omit any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not false or misleading.
9.02. PROCEDURE FOR CLAIMING INDEMNIFICATION. If any matter subject to
indemnification under this Article IX arises in the form of a claim (herein
referred to as a "Third Party Claim") against Main Street, Piedmont or Yadkin,
or their respective successors and assigns, or any of their respective
subsidiary corporations, officers, directors, attorneys or financial advisors
(collectively, the "Indemnitees"), the Indemnitee promptly shall give notice and
details thereof, including copies of all pleadings and pertinent documents, to
the party obligated for indemnification hereunder (the "Indemnitor"). Within 15
days of such notice, the Indemnitor either (i) shall pay the Third Party Claim
either in full or upon agreed compromise; or (ii) shall notify the applicable
Indemnitee that the Indemnitor disputes the Third Party Claim and intends to
defend against it, and thereafter shall so defend and pay any adverse final
judgment or
57
award in regard thereto. Such defense shall be controlled by the Indemnitor and
the cost of such defense shall be borne by it, except that the Indemnitee shall
have the right to participate in such defense at its own expense and provided
that the Indemnitor shall have no right in connection with any such defense or
the resolution of any such Third Party Claim to impose any cost, restriction,
limitation or condition of any kind that compromises the Indemnitee hereunder.
In the case of an Indemnitee that is an officer, director, financial advisor or
attorney of a party to this Agreement, then that party agrees that it shall
cooperate in all reasonable respects in the defense of any such Third Party
Claim, including making personnel, books and records relevant to the Third Party
Claim available to the Indemnitor without charge therefor except for
out-of-pocket expenses. If the Indemnitor fails to take action within 15 days as
hereinabove provided or, having taken such action, thereafter fails diligently
to defend and resolve the Third Party Claim, the Indemnitee shall have the right
to pay, compromise or defend the Third Party Claim and to assert the
indemnification provisions hereof. The Indemnitee also shall have the right,
exercisable in good faith, to take such action as may be necessary to avoid a
default prior to the assumption of the defense of the Third Party Claim by the
Indemnitor.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES, INDEMNIFICATION AND OTHER
AGREEMENTS.
(a) REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. None of the
representations, warranties or agreements contained in this Agreement shall
survive the effectiveness of the Merger and the Bank Merger, and no party shall
have any right after the Effective Time to recover damages or any other relief
from any other party to this Agreement by reason of any breach of representation
or warranty, any nonfulfillment or nonperformance of any agreement contained
herein, or otherwise.
(b) INDEMNIFICATION. The parties' indemnification agreements and
obligations pursuant to Paragraph 9.01 shall become effective only in the event
this Agreement is terminated and shall survive any such termination, and neither
of the parties shall have any obligations under Paragraph 9.01 in the event of
or following consummation of the Merger and the Bank Merger.
10.02. WAIVER. Any term or condition of this Agreement may be waived
(except as to matters of regulatory approvals and other approvals required by
law), either in whole or in part, at any time by the party which is, and whose
shareholders are, entitled to the benefits thereof; provided, however, that any
such waiver shall be effective only upon a determination by the waiving party
(through action of its Board of Directors) that such waiver would not adversely
affect the interests of the waiving party or its shareholders; and, provided
further, that no waiver of any term or condition of this Agreement by any party
shall be effective unless such waiver is in writing and signed by the waiving
party, nor shall any such waiver be construed to be a waiver of any succeeding
breach of the same term or condition or a waiver of any other or different term
or condition. No failure or delay of any party to exercise any power, or to
insist upon a strict compliance by any other party of any obligation, and no
custom or practice at variance with any
58
terms hereof, shall constitute a waiver of the right of any party to demand full
and complete compliance with such terms.
10.03. AMENDMENT. This Agreement may be amended, modified or supplemented
at any time or from time to time prior to the Effective Time, and either before
or after its approval by the shareholders of Yadkin or the shareholders of Main
Street, by an agreement in writing approved by the Boards of Directors of Main
Street, Piedmont and Yadkin executed in the same manner as this Agreement;
provided however, that, except with the further approval of Yadkin's
shareholders and Main Street's shareholders of that change or as otherwise
provided herein, following approval of this Agreement by Yadkin's shareholders
and Main Street's shareholders no change may be made in the amount of
consideration into which each share of Main Street Common Stock will be
converted.
10.04. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
by courier, or by U.S. mail, first class postage prepaid, and addressed as
follows:
IF TO YADKIN: WITH COPY TO:
Xxxxx X. Xxxxx Xxxxxxx Xxxxx, Xx.
President and CEO Xxxxx & Xxxxxxxx, P.A.
Yadkin Valley Bank and Trust Company 000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
000 Xxxxx Xxxxxx Xxxxxx Xxxxxxx, XX 00000
Elkin, NC 28621-3404
IF TO MAIN STREET OR PIEDMONT: WITH COPY TO:
Xxxxxxx X. Xxxx Xxxxxx X. Xxxxxx
President and CEO Xxxxxx Xxxxxx & Xxxxx P.A.
Piedmont Bank Highwoods Tower One, Suite 500
000 Xxxx Xxxxx Xxxxxx 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000 Xxxxxxx, XX 00000
10.05. FURTHER ASSURANCE. Yadkin, Piedmont and Main Street each agrees to
furnish to each other party such further assurances with respect to the matters
contemplated in this Agreement and their respective agreements, covenants,
representations and warranties contained herein, including the opinion of legal
counsel, as such other party may reasonably request.
10.06. HEADINGS AND CAPTIONS. Headings and captions of the Paragraphs of
this Agreement have been inserted for convenience of reference only and do not
constitute a part hereof.
10.07. GENDER AND NUMBER. As used herein, the masculine gender shall
include the feminine and neuter, the singular number, the plural, and vice
versa, whenever such meanings are appropriate.
59
10.08. ENTIRE AGREEMENT. This Agreement (including all schedules and
exhibits attached hereto and all documents incorporated herein by reference)
contains the entire agreement of the parties with respect to the transactions
described herein and supersedes any and all other oral or written agreement(s)
heretofore made, and there are no representations or inducements by or to, or
any agreements between, any of the parties hereto other than those contained
herein in writing.
10.09. SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision hereof shall in no way affect the validity or enforceability of any
other provision or part hereof.
10.10. ASSIGNMENT. This Agreement may not be assigned by any party hereto
except with the prior written consent of each of the other parties hereto.
10.11. COUNTERPARTS. Any number of counterparts of this Agreement may be
signed and delivered, each of which shall be considered an original and which
together shall constitute one agreement.
10.12. GOVERNING LAW. This Agreement is made in and shall be construed and
enforced in accordance with the laws of the State of North Carolina.
10.13. PREVIOUSLY DISCLOSED INFORMATION. As used in this Agreement,
"Previously Disclosed" shall mean the disclosure of information by Yadkin to
Main Street and Piedmont, or by Main Street and Piedmont to Yadkin, in a letter
delivered by the disclosing party or parties to the other parties prior to the
date hereof, specifically referring to this Agreement, and arranged in
paragraphs corresponding to the Paragraphs, Subparagraphs and items of this
Agreement applicable thereto. Information shall be deemed Previously Disclosed
for the purpose of a given Paragraph, Subparagraph or item of this Agreement
only to the extent that a specific reference thereto is made in connection with
disclosure of such information at the time of such delivery.
10.14 BEST KNOWLEDGE. The terms "Best Knowledge" and "Knowledge" as used
in this Agreement with reference to certain facts or information shall be deemed
to refer to facts or information of which officers of Yadkin, or officers of
Main Street or Piedmont, as the case may be, are consciously aware or of which
they should have become consciously aware in the ordinary course of business and
the performance of their management duties.
10.15 INSPECTION.
(a) Any right of Main Street or Piedmont under this Agreement to
investigate or inspect the assets, books, records, files and other information
of Yadkin in no way shall establish any presumption that Main Street or Piedmont
should have conducted any investigation or that such right has been exercised by
Main Street or Piedmont, their respective agents, representatives or others. Any
investigations or inspections actually made by Main Street or Piedmont or their
respective agents, representatives or others prior to the date of this Agreement
or otherwise prior to the Effective Time shall not be deemed in any way in
derogation or
60
limitation of the covenants, representations and warranties made by or on behalf
of Yadkin in this Agreement.
(b) Any right of Yadkin under this Agreement to investigate or
inspect the assets, books, records, files and other information of Main Street
or Piedmont in no way shall establish any presumption that Yadkin should have
conducted any investigation or that such right has been exercised by Yadkin, its
respective agents, representatives or others. Any investigations or inspections
actually made by Yadkin or its respective agents, representatives or others
prior to the date of this Agreement or otherwise prior to the Effective Time
shall not be deemed in any way in derogation or limitation of the covenants,
representations and warranties made by or on behalf of Main Street or Piedmont
in this Agreement.
10.16. EXCLUSIVITY. Main Street and Piedmont will deal exclusively with
Yadkin in connection with any merger or sale of Main Street or Piedmont and
neither Main Street nor Piedmont nor any officers, employees, agents or
representatives of Main Street or Piedmont will, directly or indirectly, without
the prior written consent of Yadkin, solicit, encourage or initiate any offer or
proposal from, engage in any discussion or negotiation with or provide any
information to, any party or entity other than Yadkin or its representatives,
regarding the sale or merger of Main Street or Piedmont. If Main Street or
Piedmont does receive any proposal in respect of the foregoing, Main Street and
Piedmont will immediately communicate to Yadkin the terms of such proposal. If
(i) Main Street or Piedmont breaches any provision of this Paragraph 10.16; (ii)
the Merger is not consummated; and (iii) within twelve (12) months of the date
of this Agreement (A) Main Street or Piedmont enters into an agreement with one
or more persons or entities to acquire Main Street or Piedmont, merge with Main
Street or Piedmont or acquire substantially all of the assets of Main Street or
Piedmont (each an "Acquisition") or (B) an Acquisition is consummated, then Main
Street or Piedmont will promptly pay to Yadkin a termination fee of One Million
Dollars ($1,000,000).
61
IN WITNESS WHEREOF, Yadkin, Piedmont and Main Street each has caused
this Agreement to be executed in its name by its duly authorized officers and
its corporate seal to be affixed hereto as of the date first above written.
YADKIN VALLEY BANK AND TRUST COMPANY
[CORPORATE SEAL]
By:______________________________
Xxxxx X. Xxxxx
Chairman, CEO and President
ATTEST:
-------------------------------------
Secretary
MAIN STREET BANKSHARES, INC.
[CORPORATE SEAL]
By:______________________________
Xxxxxxx X. Xxxx
Chairman, CEO and President
ATTEST:
-------------------------------------
Secretary
PIEDMONT BANK
[CORPORATE SEAL]
By:______________________________
Xxxxxxx X. Xxxx
Chairman, CEO and President
ATTEST:
-------------------------------------
Secretary
62
INDEX OF EXHIBITS
DOCUMENT EXHIBIT
-------- -------
Plan of Merger A
Plan of Bank Merger B
Positions of Officers and Directors of Main Street BankShares, C
Inc. with Yadkin Valley Bank and Trust Company
63
EXHIBIT A
PLAN OF MERGER
BY AND BETWEEN
YADKIN VALLEY BANK AND TRUST COMPANY
AND
MAIN STREET BANKSHARES, INC.
1.01. NAMES OF MERGING CORPORATIONS. The names of the corporations
proposed to be merged are Yadkin Valley Bank and Trust Company ("Yadkin") and
Main Street BankShares, Inc. ("Main Street").
1.02. NATURE OF TRANSACTION; PLAN OF MERGER. At the "Effective Time"
specified in the Articles of Merger filed with the North Carolina Secretary of
State, Main Street will be merged into and with Yadkin (the "Merger") as
provided in this Plan of Merger.
1.03 EFFECT OF MERGER; SURVIVING CORPORATION. At the Effective Time, and
by reason of the Merger, the separate corporate existence of Main Street shall
cease while the corporate existence of Yadkin, 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, Yadkin shall continue to operate
as a North Carolina banking corporation and will conduct its business at its
then legally established branch and main offices. The duration of the corporate
existence of Yadkin, as the surviving corporation in the Merger, shall be
perpetual and unlimited.
1.04. ASSETS AND LIABILITIES OF MAIN STREET. 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 other kind and character of Main Street
(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 Main Street, whether tangible or intangible) shall be
transferred to and vest in Yadkin, and Yadkin shall succeed to all the rights,
privileges, immunities, powers, purposes and franchises of a public or private
nature of Main Street (including all trust and other fiduciary properties,
powers and rights), all without any conveyance, assignment or further act or
deed; and, Yadkin shall become responsible for all of the liabilities, duties
and obligations of every kind, nature and description of Main Street (including
duties as trustee or fiduciary) as of the Effective Time. By virtue of the
Merger, Main Street's interest in and ownership of the outstanding shares of
$5.00 par value common stock of its wholly-owned subsidiary, Piedmont Bank
("Piedmont") shall be transferred to and vest in Yadkin, and Piedmont shall
become a wholly-owned subsidiary of Yadkin.
1.05. CONVERSION AND EXCHANGE OF STOCK.
(a) CONVERSION OF MAIN STREET STOCK. Except as otherwise provided in
this Plan of Merger, at the Effective Time all rights of Main Street's
shareholders with respect to all outstanding shares of Main Street's no par
value common stock (the "Main Street Stock") shall cease to exist and, as
consideration for and to effect the Merger, each such outstanding share
64
shall be converted, without any action by Yadkin, Main Street or any Main Street
shareholder, into the right to receive 1.68 shares of $1.00 par value common
stock of Yadkin (the "Yadkin Stock") or $18.50, such that 70% of the outstanding
shares of Main Street Stock are exchanged for Yadkin Stock at the exchange ratio
of 1.68 shares of Yadkin Stock for each share of Main Street Stock and such that
30% of the outstanding shares of Main Street Stock are exchanged for cash in the
amount of $18.50 per share.
At the Effective Time, and without any action by Yadkin, Main Street
or any Main Street shareholder, Main Street's stock transfer books shall be
closed and there shall be no further transfers of Main Street Stock on its stock
transfer books or the registration of any transfer of a certificate evidencing
Main Street Stock (a "Main Street Certificate") by any holder thereof, and the
holders of Main Street Certificates shall cease to be, and shall have no further
rights as, stockholders of Main Street other than as provided in the Agreement.
Following the Effective Time, Main Street Certificates shall evidence only the
right of the registered holder thereof to receive certificates evidencing shares
of Yadkin Stock or cash.
(b) EXCHANGE AND PAYMENT PROCEDURES; SURRENDER OF CERTIFICATES. As
promptly as practicable, but not more than five business days following the
Effective Time, Yadkin shall send or cause to be sent to each former Main Street
shareholder of record immediately prior to the effective time written
instructions and transmittal materials (a "Transmittal Letter") for use in
surrendering Main Street Certificates to Yadkin or to an exchange agent
appointed by Yadkin. Upon the proper surrender and delivery to Yadkin or its
agent (in accordance with its instructions, and accompanied by a properly
completed Transmittal Letter) by a former shareholder of Main Street of his or
her Main Street Certificate(s), and in exchange therefore, Yadkin shall as soon
as practicable issue and deliver to the shareholder certificates representing
the Yadkin Stock into which the shareholder's Main Street Stock has been
converted.
Subject to Paragraph 1.05(e) hereof, no Yadkin Stock shall be issued
or delivered to any former Main Street shareholder unless and until such
shareholder shall have properly surrendered to Yadkin or its agent the Main
Street Certificate(s) formerly representing his or her shares of Main Street
Stock, together with a properly completed Transmittal Letter. Further, until a
former Main Street shareholder's Main Street Certificate(s) are so surrendered
and certificates for the Yadkin Stock into which his or her Main Street Stock
was converted at the Effective Time actually are issued to him or her, no
dividend or other distribution payable by Yadkin with respect to that Yadkin
Stock as of any date subsequent to the Effective Time shall be paid or delivered
to the former Main Street shareholder. However, upon the proper surrender of the
shareholder's Main Street Certificate, Yadkin shall pay to the shareholder the
amount of any such dividends or other distributions that have accrued but remain
unpaid with respect to the Yadkin Stock.
(c) ANTIDILUTIVE ADJUSTMENTS. If, prior to the Effective Time, Main
Street or Yadkin shall declare any dividend payable in shares of Main Street
Stock or Yadkin Stock or shall subdivide, split, reclassify or combine the
presently outstanding shares of Main Street Stock or Yadkin Stock, then an
appropriate and proportionate adjustment shall be made in the number
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of shares of Yadkin Stock to be issued in exchange for each of the shares of
Main Street Stock and the amount of cash to be paid for each share of Main
Street Stock.
(d) DISSENTERS. Any shareholder of Main Street who properly
exercises the right of dissent and appraisal with respect to the Merger as
provided in Section 55-13-02 of the North Carolina General Statutes
("Dissenters' Rights") shall be entitled to receive payment of the fair value of
his or her shares of Main Street Stock in the manner and pursuant to the
procedures provided therein. Shares of Main Street Stock held by persons who
exercise Dissenter's Rights shall not be converted as described in Paragraph
1.05(a) hereof.
(e) LOST CERTIFICATES. Shareholders of Main Street whose Main Street
Certificates have been lost, destroyed, stolen or otherwise are missing shall be
entitled to receive the certificates evidencing Yadkin Stock to which they are
entitled in accordance with and upon compliance with reasonable conditions
imposed by Yadkin, including without limitation a requirement that those
shareholders provide lost instruments indemnities or surety bonds in form,
substance and amount satisfactory to Yadkin.
1.06. ARTICLES OF INCORPORATION. The Articles of Incorporation and Bylaws
of Yadkin in effect at the Effective Time shall be the Articles of Incorporation
and Bylaws of Yadkin as the surviving corporation in the Merger. Three directors
of Main Street, whose identities have been agreed upon by Main Street and
Yadkin, shall be appointed to the Board of Directors of Yadkin, each to hold
such office until removed as provided by law or until the election or
appointment of their respective successors. The directors of Yadkin 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. The
officers of Main Street in office at the effective time shall be named to
positions with Yadkin as agreed upon by Yadkin and Main Street.
1.07. CLOSING; EFFECTIVE TIME. The closing of the Merger and other
transactions contemplated by this Plan of Merger (the "Closing") shall take
place at the offices of Yadkin, in Elkin, North Carolina, or at such other place
as Yadkin shall designate, on a date mutually agreeable to Yadkin and Main
Street (the "Closing Date") after 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 sixty (60)
days following the expiration of all such required waiting periods).
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EXHIBIT B
PLAN OF BANK MERGER
BY AND BETWEEN
YADKIN VALLEY BANK AND TRUST COMPANY
AND
PIEDMONT BANK
1.01. NAMES OF THE MERGING CORPORATIONS. The names of the banking
corporations proposed to be merged are Yadkin Valley Bank and Trust Company
("Yadkin") and Piedmont Bank ("Piedmont"). Yadkin, as parent corporation of
Piedmont, is the owner of all of the issued and outstanding shares of capital
stock of Piedmont.
1.02. NATURE OF TRANSACTION; PLAN OF BANK MERGER. Subject to the
provisions of this Plan of Merger, at the "Effective Time" specified in the
Articles of Merger filed with the North Carolina Secretary of State, Piedmont
will be merged into and with Yadkin (the "Bank Merger").
1.03. EFFECT OF BANK MERGER; SURVIVING CORPORATION. At the Effective Time,
and by reason of the Bank Merger, the separate corporate existence of Piedmont
shall cease while the corporate existence of Yadkin, as the surviving
corporation in the Bank Merger, shall continue with all of its purposes,
objects, rights, privileges, powers and franchises, all of which shall be
unaffected and unimpaired by the Bank Merger. Following the Bank Merger, Yadkin
shall continue to operate as a North Carolina banking corporation and will
conduct its business at the then legally established branch and main offices of
Piedmont and Yadkin under the name "Yadkin Valley Bank and Trust Company,"
except in Piedmont's relevant market area, where it shall conduct its business
under the name "Piedmont Bank." The duration of the corporate existence of
Yadkin, as the surviving corporation in the Bank Merger, shall be perpetual and
unlimited.
1.04. ASSETS AND LIABILITIES OF PIEDMONT. At the Effective Time, and by
reason of the Bank Merger, and in accordance with applicable law, all property,
assets and rights of every kind and character of Piedmont (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 Piedmont, whether tangible or intangible) shall be transferred to and
vest in Yadkin, and Yadkin shall succeed to all the rights, privileges,
immunities, powers, purposes and franchises of a public or private nature of
Piedmont (including all trust and other fiduciary properties, powers and
rights), all without any conveyance, assignment or further act or deed; and,
Yadkin shall become responsible for all other liabilities, duties and
obligations of every kind, nature and description of Piedmont (including duties
as trustee or fiduciary) as of the Effective Time.
1.05. CANCELLATION OF PIEDMONT STOCK. At the Effective Time, all rights of
Yadkin as sole shareholder of all of Piedmont's issued and outstanding shares of
$5.00 par value common stock shall cease to exist and Yadkin shall receive no
consideration for such shares of Piedmont, with such shares and all rights
related thereto being canceled, terminated and extinguished.
67
1.06. ARTICLES OF INCORPORATION, BYLAWS AND MANAGEMENT. The Articles of
Incorporation and Bylaws of Yadkin in effect at the Effective Time shall be the
Articles of Incorporation and Bylaws of Yadkin as the surviving corporation in
the Bank merger.
1.07. CLOSING; EFFECTIVE TIME. The closing of the Bank Merger and other
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Yadkin, in Elkin, North Carolina, or at such other place as
Yadkin shall designate, on a date mutually agreeable to Yadkin and Piedmont (the
"Closing Date") after the expiration of any and all required waiting periods
following the effective date of required approvals of the Bank Merger by
governmental or regulatory authorities (but in no event more than sixty (60)
days following the expiration of all such required waiting periods).
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EXHIBIT C
The following officers and directors of Piedmont Bank shall be named to
the positions with Yadkin Valley Bank and Trust Company indicated below,
following the Effective Time:
POSITION(S) WITH YADKIN VALLEY BANK
AND TRUST COMPANY
NAME FOLLOWING THE EFFECTIVE TIME
---- ----------------------------
X. X. Xxxxxxxxx, Xx. Director
Xx. Xxxxx X. Xxxxxxx Director
Xxxxxxx X. Xxxx President, Chief Executive Officer and Director
Xxxxx X. Xxxxx Director
69
