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AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 12, 2004
BY AND BETWEEN
FIRST COMMUNITY CORPORATION
AND
DUTCHFORK BANCSHARES, INC.
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April 12, 2004
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TABLE OF CONTENTS
Page No.
INTRODUCTORY STATEMENT.......................................................1
ARTICLE I DEFINITIONS.....................................................1
ARTICLE II THE MERGER......................................................6
2.1 THE MERGER......................................................6
2.2 CLOSING.........................................................6
2.3 EFFECTIVE TIME..................................................6
2.4 EFFECTS OF THE MERGER...........................................7
2.5 EFFECT ON OUTSTANDING SHARES OF DFBS COMMON STOCK...............7
2.6 ELECTION AND PRORATION PROCEDURES...............................8
2.7 EXCHANGE PROCEDURES............................................11
2.8 EFFECT ON OUTSTANDING SHARES OF FCCO COMMON STOCK..............13
2.9 DIRECTORS OF THE SURVIVING CORPORATION AFTER THE EFFECTIVE TIME13
2.10 CERTIFICATE OF INCORPORATION AND BYLAWS........................14
2.11 TREATMENT OF STOCK OPTIONS.....................................14
2.12 DISSENTERS' RIGHTS.............................................14
2.13 BANK MERGER....................................................15
2.14 ALTERNATIVE STRUCTURE..........................................15
2.15 COMPANY RESTRICTED SHARES......................................15
ARTICLE III REPRESENTATIONS AND WARRANTIES................................15
3.1 DISCLOSURE LETTERS.............................................16
3.2 REPRESENTATIONS AND WARRANTIES OF DFBS.........................16
3.3 REPRESENTATIONS AND WARRANTIES OF FCCO.........................29
ARTICLE IV CONDUCT PENDING THE MERGER....................................37
4.1 FORBEARANCES BY DFBS...........................................37
4.2 FORBEARANCES BY FCCO...........................................40
ARTICLE V COVENANTS.....................................................41
5.1 ACQUISITION PROPOSALS..........................................41
5.2 CERTAIN POLICIES AND ACTIONS OF DFBS...........................42
5.3 ACCESS AND INFORMATION.........................................42
5.4 APPLICATIONS; CONSENTS.........................................43
5.5 ANTITAKEOVER PROVISIONS........................................44
5.6 ADDITIONAL AGREEMENTS..........................................44
5.7 PUBLICITY......................................................44
5.8 STOCKHOLDER MEETINGS...........................................44
5.9 REGISTRATION OF FCCO COMMON STOCK..............................46
5.10 AFFILIATE LETTERS..............................................47
5.11 NOTIFICATION OF CERTAIN MATTERS................................47
5.12 EMPLOYEES, DIRECTORS AND OFFICERS..............................47
5.13 INDEMNIFICATION................................................48
5.14 SECTION 16 MATTERS.............................................49
5.15 BOARD OF DIRECTORS.............................................49
5.16 FINANCIAL ABILITY..............................................49
ARTICLE VI CONDITIONS TO CONSUMMATION....................................49
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6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.........................49
6.2 CONDITIONS TO THE OBLIGATIONS OF FCCO..........................51
6.3 CONDITIONS TO THE OBLIGATIONS OF DFBS..........................51
ARTICLE VII TERMINATION.................................................52
7.1 TERMINATION....................................................52
7.2 DFBS TERMINATION FEE...........................................53
7.3 EFFECT OF TERMINATION..........................................54
ARTICLE VIII CERTAIN OTHER MATTERS.......................................54
8.1 INTERPRETATION.................................................54
8.2 SURVIVAL.......................................................54
8.3 WAIVER; AMENDMENT..............................................54
8.4 COUNTERPARTS...................................................55
8.5 GOVERNING LAW..................................................55
8.6 EXPENSES.......................................................55
8.7 NOTICES........................................................55
8.8 ENTIRE AGREEMENT; ETC..........................................56
8.9 SUCCESSORS AND ASSIGNS; ASSIGNMENT.............................56
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EXHIBITS
Exhibit A Form of Voting Agreement
Exhibit B Form of Non-Competition Agreement
Exhibit C Plan of Bank Merger
Exhibit D Form of Affiliate Letter
Exhibit E Employment, Consulting, and Non-Compete Agreement with J.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Exhibit F Employment, Consulting, and Non-Compete Agreement with
▇▇▇▇▇ ▇. ▇▇▇▇▇
Exhibit G Termination and Release Agreement
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AGREEMENT AND PLAN OF MERGER
This is an AGREEMENT AND PLAN OF MERGER, dated as of the 12th day of
April, 2004 ("AGREEMENT"), by and between First Community Corporation, a South
Carolina corporation ("FCCO"), and DutchFork Bancshares, Inc., a Delaware
corporation ("DFBS").
INTRODUCTORY STATEMENT
The Board of Directors of each of FCCO and DFBS (i) has determined that
this Agreement and the business combination and related transactions
contemplated hereby are advisable and in the best interests of FCCO or DFBS, as
the case may be, and in the best long-term interests of the stockholders of FCCO
or DFBS, as the case may be, and (ii) has determined that this Agreement and the
transactions contemplated hereby are consistent with, and in furtherance of, its
respective business strategies.
The parties hereto intend that the Merger as defined herein shall qualify
as a reorganization under the provisions of Section 368(a) of the IRC for
federal income tax purposes.
FCCO and DFBS each desire to make certain representations, warranties and
agreements in connection with the business combination and related transactions
provided for herein and to prescribe various conditions to such transactions.
As a condition and inducement to FCCO's willingness to enter into this
Agreement, each of the members of the Board of Directors of DFBS has entered
into (a) an agreement dated as of the date hereof in the form of Exhibit A
pursuant to which he will vote his shares of DFBS Common Stock in favor of this
Agreement and the transactions contemplated hereby and (b) a Non-Competition
Agreement dated as of the date hereof in the form of Exhibit B.
In consideration of their mutual promises and obligations hereunder, the
parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
ARTICLE I
DEFINITIONS
The following terms are defined in this Agreement in the Section
indicated:
Defined Term Location of Definition
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Articles of Merger Section 2.3
Bank Merger Section 2.13
Cash Consideration Section 2.5(a)
Cash Election Section 2.6(b)
Cash Election Shares Section 2.6(b)
Cash Proration Factor Section 2.6(e)(i)(B)(1)
Certificate(s) Section 2.6(c)
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Certificate Amendment Section 3.3(c)(v)
Certificate of Merger Section 2.3
Closing Section 2.2
Closing Date Section 2.2
Continuing Employee Section 5.12(a)
Converted Options Section 2.11(a)
Determination Date Article I
Disclosure Letter Section 3.1
Dissenters' Shares Section 2.12
Effective Time Section 2.3
Election Deadline Section 2.6(c)
Election Form Section 2.6(a)
Exchange Agent Section 2.6(c)
Exchange Ratio Section 2.5(a)
▇▇▇▇▇▇▇▇ Federal Section 2.13
DFBS Preamble
DFBS Employee Plans Section 3.2(r)(i)
DFBS Option Section 2.11(a)
DFBS Pension Plan Section 3.2(r)(iii)
DFBS Qualified Plan Section 3.2(r)(iv)
DFBS's D&O Policy Section 5.13(c)
DFBS's Reports Section 3.2(g)
DFBS Stockholder Meeting Section 5.8(a)
Indemnified Party Section 5.13(a)
Joint Proxy Statement-Prospectus Section 5.9(a)
Letter of Transmittal Section 2.7(a)
Mailing Date Section 2.6(a)
Merger Section 2.1
Merger Consideration Section 2.5(a)
Mixed Election Section 2.6(b)
Non-Election Section 2.6(b)
Non-Election Proration Factor Section 2.6(e)(ii)(A)(2)
Non-Election Shares Section 2.6(b)
Premium Multiple Section 5.13(c)
First Community Section 2.13
Registration Statement Section 5.9(a)
Representative Section 2.6(b)
Shortfall Number Section 2.6(e)(ii)
Stock Consideration Section 2.5(a)
Stock Conversion Number Section 2.6(d)
Stock Election Section 2.6(b)
Stock Election Shares Section 2.6(b)
Stock Proration Factor Section 2.6(e)(ii)(B)(2)
Surviving Corporation Section 2.1
FCCO Preamble
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FCCO Stockholder Meeting Section 5.8(b)
FCCO's Reports Section 3.3(g)
In addition, for purposes of this Agreement:
"ACQUISITION PROPOSAL" means any proposal or offer with respect to any of
the following (other than the transactions contemplated hereunder): (i) any
merger, consolidation, share exchange, business combination, or other similar
transaction involving DFBS or any of its Subsidiaries; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more of
DFBS's consolidated assets in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 25% or more of the outstanding
shares of DFBS's capital stock or the filing of a registration statement under
the Securities Act in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in an any of the foregoing.
"AGREEMENT" means this Agreement, as amended, modified or amended and
restated from time to time in accordance with its terms.
"BHC ACT" means the Bank Holding Company Act of 1956, as amended.
"CRA" means the Community Reinvestment Act.
"DGCL" means the Delaware General Corporation Law.
"ENVIRONMENTAL LAW" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, directive, executive or administrative order, judgment, decree,
injunction, or agreement with any Governmental Entity relating to (i) the
protection, preservation or restoration of the environment (which includes,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, soil, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety as it relates to Hazardous
Materials, or (ii) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of, Hazardous Materials, in each case as amended and as now in
effect. The term Environmental Law includes, without limitation, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Water
Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of 1976, the
Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the
Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970 as it relates to Hazardous Materials, the Federal
Hazardous Substances Transportation Act, the Emergency Planning and Community
Right-To-Know Act, the Safe Drinking Water Act, the Endangered Species Act, the
National Environmental Policy Act, the Rivers and Harbors Appropriation Act or
any so-called "Superfund" or "Superlien" law, each as amended and as now in
effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ERISA AFFILIATE" means any entity that is considered one employer with
DFBS under Section 4001(b)(1) of ERISA or Section 414 of the IRC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"EXCLUDED SHARES" shall consist of (i) Dissenters' Shares, (ii) shares of
DFBS Common Stock held directly or indirectly by FCCO (other than shares held in
a fiduciary capacity or in satisfaction of a debt previously contracted), and
(iii) Ungranted Restricted Shares.
"FCCO COMMON STOCK" means the common stock, par value $1.00 per share, of
FCCO.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System.
"FINAL FCCO STOCK PRICE" shall mean the average of the closing sale prices
of FCCO Common Stock as reported on the Nasdaq SmallCap Market during the
Measurement Period; provided, however, that in the event FCCO Common Stock does
not trade on any one or more of the trading days during the Measurement Period,
any such date shall be disregarded in computing the average closing sales price
and the average shall be based upon the closing sales prices and number of days
on which FCCO Common Stock actually traded during the Measurement Period.
"DFBS COMMON STOCK" means the common stock, par value $.01 per share, of
DFBS.
"GAAP" means accounting principles generally accepted in the United States
of America.
"GOVERNMENT REGULATOR" means any federal or state governmental authority
charged with the supervision or regulation of depository institutions or
depository institution holding companies or engaged in the insurance of bank
deposits.
"GOVERNMENTAL ENTITY" means any court, administrative agency or commission
or other governmental authority or instrumentality.
"HAZARDOUS MATERIAL" means any substance (whether solid, liquid or gas)
that is or could be detrimental to human health or safety or to the environment,
currently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, under any Environmental
Law, whether by type or by quantity, including any substance containing any such
substance as a component. Hazardous Material includes, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance, oil or petroleum, or any
derivative or by-product thereof, radon, radioactive material, asbestos,
asbestos-containing material, urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
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"HOLA" means the Home Owners Loan Act, as amended.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means, with respect to a party hereto, actual knowledge of the
members of the Board of Directors of that party or any officer of that party
with the title ranking not less than senior vice president.
"LIEN" means any charge, mortgage, pledge, security interest, claim, lien
or encumbrance.
"LOAN" means a loan, lease, advance, credit enhancement, guarantee or
other extension of credit.
"LOAN PROPERTY" means any property in which the applicable party (or a
Subsidiary of it) holds a security interest and, where required by the context,
includes the owner or operator of such property, but only with respect to such
property.
"MATERIAL ADVERSE EFFECT" means an effect which is material and adverse to
the business, prospects, financial condition, or results of operations of DFBS
or FCCO, as the context may dictate, and its Subsidiaries taken as a whole;
PROVIDED, HOWEVER, that any such effect resulting from any (i) changes in laws,
rules or regulations or generally accepted accounting principles or regulatory
accounting requirements or interpretations thereof that apply to FCCO or DFBS,
as the case may be, or to financial and/or depository institutions generally,
(ii) changes in economic conditions affecting financial institutions generally,
including but not limited to, changes in the general level of market interest
rates, (iii) actions and omissions of FCCO or DFBS taken with the prior written
consent of the other in contemplation of the transactions contemplated hereby,
or (iv) direct effects of compliance with this Agreement on the operating
performance of the parties, including expenses incurred by the parties in
consummating the transactions contemplated by this Agreement, shall not be
considered in determining if a Material Adverse Effect has occurred.
"MEASUREMENT PERIOD" shall mean the 20 consecutive trading days ending on
the fifth calendar day immediately prior to the date on which the Effective Time
is to occur (such day, the "DETERMINATION DATE").
"NASD" means the National Association of Securities Dealers, Inc.
"PARTICIPATION FACILITY" means any facility in which the applicable party
(or a Subsidiary of it) participates in the management (including all property
held as trustee or in any other fiduciary capacity) and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property.
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"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization or other entity.
"SCBCA" means the South Carolina Business Corporation Act of 1988, as
amended.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SUBSIDIARY" means a corporation, partnership, joint venture or other
entity in which DFBS or FCCO, as the case may be, has, directly or indirectly,
an equity interest representing 50% or more of any class of the capital stock
thereof or other equity interests therein.
"SUPERIOR PROPOSAL" means an unsolicited, bona fide, written offer made by
a third party to consummate an Acquisition Proposal that DFBS's Board of
Directors determines in good faith, after consulting with its outside legal
counsel and its financial advisor, would, if consummated, result in a
transaction that is more favorable to the stockholders of DFBS than the
transactions contemplated hereby (taking into account the effects of Section 7.2
and all legal, financial, regulatory and other aspects of the proposal and the
entity making the proposal).
"TAXES" means all income, franchise, gross receipts, real and personal
property, real property transfer and gains, wage and employment taxes.
"UNGRANTED RESTRICTED SHARES" means shares of DFBS Common Stock held by a
trust that have not been granted as of the date hereof as restricted stock
awards or otherwise under the DFBS 2001 Stock-Based Incentive Plan.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, DFBS will merge with and into FCCO ("MERGER") at the Effective
Time. At the Effective Time, the separate corporate existence of DFBS shall
cease. FCCO shall be the surviving corporation (hereinafter sometimes referred
to in such capacity as the "SURVIVING CORPORATION") in the Merger and shall
continue to be governed by the SCBCA and its name and separate corporate
existence, with all of its rights, privileges, immunities, powers and
franchises, shall continue unaffected by the Merger.
2.2 CLOSING. The closing of the Merger (the "CLOSING") will take place in
the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇▇▇▇ Plaza, Suite
900, 104 South Main Street, Greenville, South Carolina at 10:00 a.m. on the date
designated by FCCO within 5 business days following satisfaction or waiver of
the conditions to Closing set forth in Article VI (other than those conditions
that by their nature are to be satisfied at the Closing), or such later date as
the parties may otherwise agree (the "CLOSING DATE").
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2.3 EFFECTIVE TIME. In connection with the Closing, FCCO shall duly
execute and deliver (a) a certificate of merger (the "CERTIFICATE OF MERGER") to
the Delaware Secretary of State for filing pursuant to the DGCL and (b) articles
of merger (the "ARTICLES OF MERGER") to the South Carolina Secretary of State
for filing pursuant to the SCBCA. The parties will make all other filings or
recordings required under the DGCL and the SCBCA. The Merger shall become
effective at such time as the Articles of Merger is duly filed with the South
Carolina Secretary of State or at such later date or time as FCCO and DFBS agree
and specify in the Certificate of Merger and the Articles of Merger (the date
and time the Merger becomes effective being the "EFFECTIVE TIME").
2.4 EFFECTS OF THE MERGER. The Merger will have the effects set forth in
the DGCL and the SCBCA. Without limiting the generality of the foregoing, and
subject thereto, from and after the Effective Time, FCCO shall possess all of
the properties, rights, privileges, powers and franchises of DFBS and be subject
to all of the debts, liabilities and obligations of DFBS.
2.5 EFFECT ON OUTSTANDING SHARES OF DFBS COMMON STOCK.
(a) Subject to the provisions of SECTION 2.6 hereof, by virtue of
the Merger, automatically and without any action on the part of the holder
thereof, each share of DFBS Common Stock issued and outstanding at the Effective
Time, other than Excluded Shares, shall become and be converted into, at the
election of the holder as provided in and subject to the limitations set forth
in this Agreement, either (i) a number of shares of FCCO Common Stock equal to
the Exchange Ratio (as defined below) or (ii) the right to receive $42.75 in
cash without interest (the "CASH CONSIDERATION"). The Stock Consideration and
the Cash Consideration are referred to herein collectively as the "MERGER
CONSIDERATION." The "Exchange Ratio" shall be equal to 1.78125.
(b) Notwithstanding any other provision of this Agreement, no
fraction of a share of FCCO Common Stock and no certificates or scrip therefor
will be issued in the Merger; instead, FCCO shall pay to each holder of DFBS
Common Stock who would otherwise be entitled to a fraction of a share of FCCO
Common Stock an amount in cash, rounded to the nearest cent, determined by
multiplying such fraction by the Final FCCO Stock Price.
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of FCCO Common Stock shall have been changed into a
different number of shares or into a different class by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Exchange Ratio shall be adjusted appropriately to
provide the holders of DFBS Common Stock the same economic effect as
contemplated by this Agreement prior to such event. If FCCO enters into an
agreement pursuant to which shares of FCCO Common Stock would be converted
before the Effective Time into shares or other securities or obligations of
another corporation, proper provision shall be made in such agreement so that
each holder of DFBS Common Stock shall be entitled to receive at the Effective
Time such number of shares or other securities or amount of obligations of such
other corporation as such holder would be entitled to receive if the Effective
Time had occurred immediately before the consummation of such conversion,
subject to the right of this other corporation "as successor to FCCO" under
Section 7.1(j).
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(d) As of the Effective Time, each Excluded Share, other than
Dissenters' Shares, shall be canceled and retired and shall cease to exist, and
no exchange or payment shall be made with respect thereto. All shares of FCCO
Common Stock that are held by DFBS, if any, other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted, shall be
canceled and shall constitute authorized but unissued shares. In addition, no
Dissenters' Shares shall be converted into shares of FCCO Common Stock pursuant
to this SECTION 2.5 but instead shall be treated in accordance with the
provisions set forth in SECTION 2.12 of this Agreement.
2.6 ELECTION AND PRORATION PROCEDURES.
(a) An election form in such form as DFBS and FCCO shall mutually
agree (an "ELECTION FORM") shall be mailed on the Mailing Date (as defined
below) to each holder of record of shares of DFBS Common Stock as of a record
date which shall be the same date as the record date for eligibility to vote on
the Merger. The "MAILING DATE" shall be the date on which proxy materials
relating to the Merger are mailed to holders of shares of DFBS Common Stock.
FCCO shall make available Election Forms as may be reasonably requested by all
persons who become holders of DFBS Common Stock after the record date for
eligibility to vote on the Merger and prior to the Election Deadline (as defined
herein), and DFBS shall provide to the Exchange Agent all information reasonably
necessary for it to perform its obligations as specified herein.
(b) Each Election Form shall entitle the holder of shares of DFBS
Common Stock (or the beneficial owner through appropriate and customary
documentation and instructions) to (i) elect to receive the Cash Consideration
for all of such holder's shares (a "CASH ELECTION"), (ii) elect to receive the
Stock Consideration for all of such holder's shares (a "STOCK ELECTION"), (iii)
elect to receive the Cash Consideration with respect to some of such holder's
shares and the Stock Consideration with respect to such holder's remaining
shares (a "MIXED ELECTION"), or (iv) make no election or indicate that such
holder has no preference as to the receipt of the Cash Consideration or the
Stock Consideration (a "NON-ELECTION"). Holders of record of shares of DFBS
Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "REPRESENTATIVE") may submit multiple Election
Forms, provided that such Representative certifies that each such Election Form
covers all the shares of DFBS Common Stock held by that Representative for a
particular beneficial owner. Shares of DFBS Common Stock as to which a Cash
Election has been made (including pursuant to a Mixed Election) are referred to
herein as "CASH ELECTION SHARES." Shares of DFBS Common Stock as to which a
Stock Election has been made (including pursuant to a Mixed Election) are
referred to herein as "STOCK ELECTION Shares." Shares of DFBS Common Stock as to
which no election has been made are referred to as "NON-ELECTION SHARES."
(c) To be effective, a properly completed Election Form must be
received by a bank or trust company designated by FCCO and reasonably
satisfactory to DFBS (the "EXCHANGE AGENT") on or before 5:00 p.m., Lexington,
South Carolina time, on the third business day immediately preceding the DFBS
Stockholder Meeting (or such other time and date as DFBS and FCCO may mutually
agree) (the "ELECTION DEADLINE"). An election shall have been properly made only
if the Exchange Agent shall have actually received a properly completed Election
Form by the Election Deadline. An Election Form shall be deemed properly
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completed only if accompanied by one or more certificates theretofore
representing DFBS Common Stock ("CERTIFICATE(S)") (or customary affidavits and,
if required by FCCO pursuant to SECTION 2.7(I), indemnification regarding the
loss or destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of DFBS Common Stock covered by such
Election Form, together with duly executed transmittal materials included with
the Election Form. Any DFBS stockholder may at any time prior to the Election
Deadline change his or her election by written notice received by the Exchange
Agent prior to the Election Deadline accompanied by a properly completed and
signed revised Election Form. Any DFBS stockholder may, at any time prior to the
Election Deadline, revoke his or her election by written notice received by the
Exchange Agent prior to the Election Deadline or by withdrawal prior to the
Election Deadline of his or her Certificates, or of the guarantee of delivery of
such Certificates, previously deposited with the Exchange Agent. All elections
shall be revoked automatically if the Exchange Agent is notified in writing by
FCCO and DFBS that this Agreement has been terminated. If a stockholder either
(i) does not submit a properly completed Election Form by the Election Deadline
or (ii) revokes its Election Form prior to the Election Deadline and does not
submit a new properly executed Election Form prior to the Election Deadline, the
shares of DFBS Common Stock held by such stockholder shall be designated
Non-Election Shares. FCCO shall cause the Certificates representing DFBS Common
Stock described in (ii) to be promptly returned without charge to the person
submitting the Election Form upon written request to that effect from the person
who submitted the Election Form. Subject to the terms of this Agreement and of
the Election Form, the Exchange Agent shall have reasonable discretion to
determine whether any election, revocation or change has been properly or timely
made and to disregard immaterial defects in any Election Form, and any good
faith decisions of the Exchange Agent regarding such matters shall be binding
and conclusive.
(d) Notwithstanding any other provision contained in this Agreement,
60% of the total number of shares of DFBS Common Stock outstanding at the
Effective Time (the "Stock Conversion Number") shall be converted into the Stock
Consideration and the remaining outstanding shares of DFBS Common Stock (other
than the Excluded Shares) shall be converted into the Cash Consideration.
(e) Within three business days after the later to occur of the
Election Deadline or the Effective Time, FCCO shall cause the Exchange Agent to
effect the allocation among holders of DFBS Common Stock of rights to receive
the Cash Consideration and the Stock Consideration as follows:
(i) If the number of Stock Election Shares exceeds the Stock
Conversion Number, then:
(A) all Cash Election Shares and all Non-Election
Shares shall be converted into the right to receive the Cash Consideration,
and
(B) each holder of Stock Election Shares will be
entitled to receive:
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(1) the number of shares of FCCO Common Stock
equal to the product obtained by multiplying (a) the number of Stock Election
Shares held by such holder by (b) the Exchange Ratio by (c) a fraction the
numerator of which is the Stock Conversion Number and the denominator of which
is the Stock Election Number (the "Stock Proration Factor"), and
(2) cash in an amount equal to the product
obtained by multiplying (a) the number of Stock Election Shares held by such
holder by (b) the Cash Consideration by (c) one minus the Stock Proration
Factor.
(ii) If the number of Stock Election Shares is less than the
Stock Conversion Number (the amount by which the Stock Conversion Number exceeds
the number of Stock Election Shares being referred to herein as the "SHORTFALL
NUMBER"), then all Stock Election Shares shall be converted into the right to
receive the Stock Consideration and the Non-Election Shares and Cash Election
Shares shall be treated in the following manner:
(A) if the Shortfall Number is less than or equal
to the number of Non-Election Shares, then:
(1) all Cash Election Shares shall be
converted into the right to receive the Cash Consideration; and
(2) each Non-Election Share shall be
converted into the right to receive (a) the number of shares of FCCO Common
Stock equal to the product obtained by multiplying (x) the number of
Non-Election Shares held by such holder by (y) the Exchange Ratio by (z) a
fraction the numerator of which is the Shortfall Number and the denominator of
which is the total number of Non-Election Shares (the "Non-Election Proration
Factor") and (b) cash in an amount equal to the product obtained by multiplying
(x) the number of Non-Election Shares held by such holder by (y) the Cash
Consideration by (z) one minus the Non-Election Proration Factor; or
(B) if the Shortfall Number exceeds the number of
Non-Election Shares, then:
(1) all Non-Election Shares shall be
converted into the right to receive the Stock Consideration; and
(2) each holder of Cash Election Shares shall
receive (a) the number of shares of FCCO Common Stock equal to the product
obtained by multiplying (x) the number of Cash Election Shares held by such
holder by (y) the Exchange Ratio by (z) a fraction the numerator of which is the
amount by which the Shortfall Number exceeds the number of Non-Election Shares
and the denominator of which is the total number of Cash Election Shares (the
"Cash Proration Factor") and (b) cash in an amount equal to the product obtained
by multiplying (x) the number of Cash Election Shares held by such holder by (y)
the Cash Consideration by (z) one minus the Cash Proration Factor.
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For purposes of the foregoing calculations, Excluded Shares shall be
deemed Cash Election Shares.
2.7 EXCHANGE PROCEDURES.
(a) Appropriate transmittal materials ("LETTER OF TRANSMITTAL") in a
form satisfactory to FCCO and DFBS shall be mailed as soon as practicable after
the Effective Time to each holder of record of DFBS Common Stock as of the
Effective Time who did not previously submit a completed Election Form. A Letter
of Transmittal will be deemed properly completed only if accompanied by
certificates representing all shares of DFBS Common Stock to be converted
thereby.
(b) At and after the Effective Time, each Certificate (except as
specifically set forth in SECTION 2.5) shall represent only the right to receive
the Merger Consideration.
(c) Prior to the Effective Time, FCCO shall (i) reserve for issuance
with its transfer agent and registrar a sufficient number of shares of FCCO
Common Stock to provide for the issuance of the aggregate Stock Consideration
and (ii) deposit, or cause to be deposited, with the Exchange Agent, for the
benefit of the holders of shares of DFBS Common Stock, for exchange in
accordance with this SECTION 2.7, an amount of cash sufficient to pay the
aggregate Cash Consideration.
(d) The Letter of Transmittal shall (i) specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent, (ii) be in a form and
contain any other provisions as FCCO may reasonably determine, and (iii) include
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon the proper surrender of the Certificates to
the Exchange Agent, together with a properly completed and duly executed Letter
of Transmittal, the holder of such Certificates shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of FCCO
Common Stock that such holder has the right to receive pursuant to SECTION 2.5,
if any, and a check in the amount equal to the cash that such holder has the
right to receive pursuant to SECTION 2.5, if any (including any cash in lieu of
fractional shares, if any, that such holder has the right to receive pursuant to
SECTION 2.5, and any dividends or other distributions to which such holder is
entitled pursuant to SECTION 2.5). Certificates so surrendered shall forthwith
be canceled. As soon as practicable following receipt of the properly completed
Letter of Transmittal and any necessary accompanying documentation, the Exchange
Agent shall distribute FCCO Common Stock and cash as provided herein. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the shares of FCCO Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto. If there is a transfer of ownership of any shares
of DFBS Common Stock not registered in the transfer records of DFBS, the Merger
Consideration shall be issued to the transferee thereof if the Certificates
representing such DFBS Common Stock are presented to the Exchange Agent,
accompanied by all documents required, in the reasonable judgment of FCCO and
the Exchange Agent, to evidence and effect such transfer and to evidence that
any applicable stock transfer taxes have been paid.
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(e) No dividends or other distributions declared or made after the
Effective Time with respect to FCCO Common Stock issued pursuant to this
Agreement shall be remitted to any person entitled to receive shares of FCCO
Common Stock hereunder until such person surrenders his or her Certificates in
accordance with this SECTION 2.7. Upon the surrender of such person's
Certificates, such person shall be entitled to receive any dividends or other
distributions, without interest thereon, which subsequent to the Effective Time
had become payable but not paid with respect to shares of FCCO Common Stock
represented by such person's Certificates.
(f) The stock transfer books of DFBS shall be closed immediately
upon the Effective Time and from and after the Effective Time there shall be no
transfers on the stock transfer records of DFBS of any shares of DFBS Common
Stock. If, after the Effective Time, Certificates are presented to FCCO, they
shall be canceled and exchanged for the Merger Consideration deliverable in
respect thereof pursuant to this Agreement in accordance with the procedures set
forth in this SECTION 2.7.
(g) Any portion of the aggregate amount of cash to be paid pursuant
to SECTION 2.5, any dividends or other distributions to be paid pursuant to this
SECTION 2.7, or any proceeds from any investments thereof that remains unclaimed
by the stockholders of DFBS for six months after the Effective Time shall be
repaid by the Exchange Agent to FCCO upon the written request of FCCO. After
such request is made, any stockholders of DFBS who have not theretofore complied
with this SECTION 2.7 shall look only to FCCO for the Merger Consideration
deliverable in respect of each share of DFBS Common Stock such stockholder
holds, as determined pursuant to SECTION 2.5 of this Agreement, without any
interest thereon. If outstanding Certificates are not surrendered prior to the
date on which such payments would otherwise escheat to or become the property of
any governmental unit or agency, the unclaimed items shall, to the extent
permitted by any abandoned property, escheat or other applicable laws, become
the property of FCCO (and, to the extent not in its possession, shall be paid
over to it), free and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, neither the Exchange
Agent nor any party to this Agreement (or any affiliate thereof) shall be liable
to any former holder of DFBS Common Stock for any amount delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(h) FCCO and the Exchange Agent shall be entitled to rely upon
DFBS's stock transfer books to establish the identity of those persons entitled
to receive the Merger Consideration, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, FCCO and the Exchange Agent shall be entitled to
deposit any Merger Consideration represented thereby in escrow with an
independent third party and thereafter be relieved with respect to any claims
thereto.
(i) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Exchange
Agent or FCCO, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange
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for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to SECTION 2.5.
2.8 EFFECT ON OUTSTANDING SHARES OF FCCO COMMON STOCK. At and after the
Effective Time, each share of FCCO Common Stock issued and outstanding
immediately prior to the Effective Time shall remain an issued and outstanding
share of common stock of the Surviving Corporation and shall not be affected by
the Merger.
2.9 DIRECTORS OF THE SURVIVING CORPORATION AFTER THE EFFECTIVE TIME.
Subject to SECTION 5.15, immediately after the Effective Time, until their
respective successors are duly elected or appointed and qualified, the directors
of the Surviving Corporation shall consist of the directors of FCCO serving
immediately prior to the Effective Time.
2.10 ARTICLES OF INCORPORATION AND BYLAWS. The articles of incorporation
of FCCO, as in effect immediately prior to the Effective Time, shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
in accordance with applicable law. The bylaws of FCCO, as in effect immediately
prior to the Effective Time, shall be the bylaws of the Surviving Corporation
until thereafter amended in accordance with applicable law.
2.11 TREATMENT OF STOCK OPTIONS.
(a) Each option to purchase shares of DFBS Common Stock issued by
DFBS and outstanding at the Effective Time ("DFBS OPTION") pursuant to DFBS's
2001 Stock-Based Incentive Plan shall be converted into an option to purchase
shares of FCCO Common Stock as follows:
(i) The aggregate number of shares of FCCO Common Stock
issuable upon the exercise of the converted DFBS Option after the Effective Time
shall be equal to the product of the Stock Consideration multiplied by the
number of shares of DFBS Common Stock issuable upon exercise of the DFBS Option
immediately prior to the Effective Time, such product to be rounded to the
nearest whole share of FCCO Common Stock; and
(ii) the exercise price per share of each converted DFBS
Option shall be equal to the quotient of the exercise price of such DFBS Option
immediately prior to the Effective Time divided by the Stock Consideration, such
quotient to be rounded to the nearest whole cent; PROVIDED, HOWEVER, that, in
the case of any DFBS Option that is intended to qualify as an incentive stock
option under Section 422 of the IRC, the number of shares of FCCO Common Stock
issuable upon exercise of and the exercise price per share for such converted
DFBS Option determined in the manner provided above shall be further adjusted in
such manner as FCCO may determine to be necessary to conform to the requirements
of Section 424(b) of the IRC.
Options to purchase shares of FCCO Common Stock that arise from the operation of
this SECTION 2.11 shall be referred to as "CONVERTED OPTIONS." All Converted
Options shall be exercisable for the same period and shall otherwise have the
same terms and conditions applicable to the DFBS Options that they replace.
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(b) Before the Effective Time, FCCO will take all corporate action
necessary to reserve for future issuance a sufficient additional number of
shares of FCCO Common Stock to provide for the satisfaction of its obligations
with respect to the Converted Options.
(c) Within five business days after the Effective Time, FCCO shall
file a registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of DFBS Common Stock subject to the options
referred to in paragraph (a) of this Section 2.11 and shall use its reasonable
best efforts to maintain the current status of the prospectus or prospectuses
contained therein for so long as such options remain outstanding.
2.12 DISSENTERS' RIGHTS. Notwithstanding any other provision of this
Agreement to the contrary, shares of DFBS Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who properly shall have demanded payment for such shares in accordance with the
DGCL (collectively, the "DISSENTERS' SHARES") shall not be converted into or
represent the right to receive the Merger Consideration. Such stockholders
instead shall be entitled to receive payment of the fair value of such shares
held by them in accordance with the provisions of the DGCL, except that all
Dissenters' Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or otherwise lost their rights to payment of
such shares under the DGCL shall thereupon be deemed to have been converted into
and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in SECTION 2.7 of the DFBS Certificate or DFBS
Certificates that, immediately prior to the Effective Time, evidenced such
shares. DFBS shall give FCCO (i) prompt notice of any written demands for
payment of any shares of DFBS Common Stock, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
DFBS relating to stockholders' rights of dissent, and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands under
the DGCL consistent with the obligations of DFBS thereunder. DFBS shall not,
except with the prior written consent of FCCO, (x) make any payment with respect
to such demand, (y) offer to settle or settle any demand for payment, or (z)
waive any failure to timely deliver a written demand for payment or timely take
any other action to perfect dissenters rights in accordance with the DGCL.
2.13 BANK MERGER. Concurrently with or as soon as practicable after the
execution and delivery of this Agreement, First Community Bank, National
Association ("FIRST COMMUNITY"), a wholly owned subsidiary of FCCO, and ▇▇▇▇▇▇▇▇
Federal ("▇▇▇▇▇▇▇▇ FEDERAL"), a wholly owned subsidiary of DFBS, shall enter
into the Plan of Bank Merger, in the form attached hereto as Exhibit C, pursuant
to which ▇▇▇▇▇▇▇▇ Federal will merge with and into First Community (the "BANK
MERGER"). The Plan of Bank Merger shall provide that the directors of First
Community as the surviving entity of the Bank Merger shall be (a) all the
directors of First Community serving immediately prior to the Bank Merger and
(b) two additional persons who shall become directors of First Community in
accordance with Section 5.15. The parties intend that the Bank Merger will
become effective simultaneously with or immediately following the Effective
Time.
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2.14 ALTERNATIVE STRUCTURE. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, FCCO may specify that
the structure of the transactions contemplated by this Agreement be revised and
the parties shall enter into such alternative transactions as FCCO may determine
to effect the purposes of this Agreement; PROVIDED, HOWEVER, that such revised
structure shall not (i) alter or change the amount or kind of the Merger
Consideration, (ii) change the intended federal income tax consequences of the
transactions contemplated by this Agreement, or (iii) materially impede or delay
the receipt of any regulatory approval referred to in, or the consummation of
the transactions contemplated by, this Agreement. In the event that FCCO elects
to make such a revision, the parties agree to execute appropriate documents to
reflect the revised structure.
2.15 COMPANY RESTRICTED SHARES. At the Effective Time, each unvested
restricted share of DFBS Common Stock granted under the DFBS 2001 Stock-Based
Incentive Plan (each a "DFBS Restricted Share"), which is outstanding
immediately prior to the Effective Time, shall vest and become free of
restrictions to the extent provided by the terms thereof. Each holder of a DFBS
Restricted Share shall have the same rights to receive the Merger Consideration
as are provided to other holders of DFBS Common Stock as provided in this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 DISCLOSURE LETTER. Prior to the execution and delivery of this
Agreement, FCCO and DFBS have each delivered to the other a letter (each, its
"DISCLOSURE LETTER") setting forth in reasonable detail, among other things,
facts, circumstances and events the disclosure of which is required or
appropriate in relation to any or all of their respective representations and
warranties (and making specific reference to the Section of this Agreement to
which they relate). Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself). The mere inclusion of a fact, circumstance or
event in a Disclosure Letter shall not be deemed an admission by a party that
such item represents a material exception or that it is reasonably likely to
result in a Material Adverse Effect.
3.2 REPRESENTATIONS AND WARRANTIES OF DFBS. DFBS represents and warrants
to FCCO that, except as disclosed in DFBS's Disclosure Letter:
(a) ORGANIZATION AND QUALIFICATION. DFBS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is registered as a savings and loan holding company under the HOLA.
DFBS has all requisite corporate power and authority to own, lease and operate
its properties and to conduct the business currently being conducted by it. DFBS
is duly qualified or licensed as a foreign corporation to transact business and
is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing would not have a Material Adverse
Affect on DFBS.
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(b) SUBSIDIARIES.
(i) DFBS's Disclosure Letter sets forth with respect to each
of DFBS's Subsidiaries its name, its jurisdiction of incorporation, DFBS's
percentage ownership, the number of shares of stock owned or controlled by DFBS
and the name and number of shares held by any other person who owns any stock of
the Subsidiary. DFBS owns of record and beneficially all the capital stock of
each of its Subsidiaries free and clear of any Liens. There are no contracts,
commitments, agreements or understandings relating to DFBS's right to vote or
dispose of any equity securities of its Subsidiaries. DFBS's ownership interest
in each of its Subsidiaries is in compliance with all applicable laws, rules and
regulations relating to equity investments by savings and loan holding companies
or federally-chartered savings associations.
(ii) Each of DFBS's Subsidiaries is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease and
operate its properties and to conduct the business currently being conducted by
it and is duly qualified or licensed as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed and in good standing would not have a Material
Adverse Affect on DFBS.
(iii) The outstanding shares of capital stock of each
Subsidiary have been validly authorized and are validly issued, fully paid and
nonassessable. No shares of capital stock of any Subsidiary of DFBS are or may
be required to be issued by virtue of any options, warrants or other rights, no
securities exist that are convertible into or exchangeable for shares of such
capital stock or any other debt or equity security of any Subsidiary, and there
are no contracts, commitments, agreements or understandings of any kind for the
issuance of additional shares of capital stock or other debt or equity security
of any Subsidiary or options, warrants or other rights with respect to such
securities.
(iv) No Subsidiary of DFBS other than ▇▇▇▇▇▇▇▇ Federal is an
"insured depository institution" as defined in the FDIA and the applicable
regulations thereunder. The deposits of ▇▇▇▇▇▇▇▇ Federal are insured by the FDIC
through the Savings Association Insurance Fund to the fullest extent permitted
by law. ▇▇▇▇▇▇▇▇ Federal is a member in good standing of the Federal Home Loan
Bank of Atlanta.
(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of DFBS consists of:
(A) 4,000,000 shares of DFBS Common Stock, par value
$.01 per share; and
(B) 500,000 shares of preferred stock, par value $.01
per share.
(ii) As of the date of this Agreement:
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(A) 1,125,981 shares of DFBS Common Stock are
issued and outstanding (i.e. including Ungranted Restricted Shares but excluding
shares held in treasury), all of which are validly issued, fully paid and
nonassessable and were issued in full compliance with all applicable laws;
(B) no shares of DFBS preferred stock are issued
and outstanding; and
(C) 101,437 shares of DFBS Common Stock are
reserved for issuance pursuant to outstanding DFBS Options.
(iii) Set forth in DFBS's Disclosure Letter is a complete and
accurate list of all outstanding DFBS Options and DFBS Restricted Shares,
including the names of the optionees/awardees, dates of grant, exercise prices,
dates of vesting, dates of termination, shares subject to each grant and whether
stock appreciation, limited or other similar rights were granted in connection
with such options.
(iv) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders of DFBS may vote are
issued or outstanding.
(v) Except as set forth in this SECTION 3.2(C), as of the date
of this Agreement, (A) no shares of capital stock or other voting securities of
DFBS are issued, reserved for issuance or outstanding and (B) neither DFBS nor
any of its Subsidiaries has or is bound by any outstanding subscriptions,
options, warrants, calls, rights, convertible securities, commitments or
agreements of any character obligating DFBS or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, any additional shares
of capital stock of DFBS or obligating DFBS or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, convertible
security, commitment or agreement. As of the date hereof, there are no
outstanding contractual obligations of DFBS or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of DFBS or
any of its Subsidiaries.
(d) AUTHORITY. DFBS has all requisite corporate power and authority
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate actions
on the part of DFBS's Board of Directors, and no other corporate proceedings on
the part of DFBS are necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement other than the approval and adoption
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of DFBS Common Stock. This Agreement has been duly and
validly executed and delivered by DFBS and constitutes a valid and binding
obligation of DFBS, enforceable against DFBS in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and to general principles of equity,
whether applied in a court of law or a court of equity.
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(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement by DFBS do not, and the consummation of the transactions contemplated
by this Agreement will not, (i) assuming all required governmental approvals
have been obtained and the applicable waiting periods have expired, violate any
law, rule or regulation or any judgment, decree, order, governmental permit or
license to which DFBS or any of its Subsidiaries (or any of their respective
properties) is subject, (ii) violate the certificate of incorporation or bylaws
of DFBS or the similar organizational documents of any of its Subsidiaries, or
(iii) constitute a breach or violation of, or a default under (or an event
which, with due notice or lapse of time or both, would constitute a default
under), or result in the termination of, accelerate the performance required by,
or result in the creation of any Lien upon any of the properties or assets of
DFBS or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which DFBS or any of its Subsidiaries is
a party, or to which any of their respective properties or assets may be subject
except, in the case of (iii), for any such breaches, violations or defaults that
would not, individually or in the aggregate, have a Material Adverse Effect on
DFBS.
(f) CONSENTS AND APPROVALS. No consents or approvals of, or filings
or registrations with, any Governmental Entity or any third party are required
to be made or obtained in connection with the execution and delivery by DFBS of
this Agreement or the consummation by DFBS of the Merger and the other
transactions contemplated by this Agreement, including the Bank Merger, except
for (i) filings of applications and notices with, receipt of approvals or
nonobjections from, and expiration of the related waiting period required by,
federal and state banking authorities, (ii) filing of the Registration Statement
with the SEC and declaration by the SEC of the Registration Statement's
effectiveness under the Securities Act, (iii) the registration or qualification
under state securities or "blue sky" laws of the shares of FCCO Common Stock to
be issued in exchange for shares of DFBS Common Stock, and (iv) the listing on
the NASDAQ SmallCap Market of the shares of FCCO Common Stock to be issued in
exchange for shares of DFBS Common Stock. As of the date hereof, DFBS knows of
no reason pertaining to DFBS why any of the approvals referred to in this
SECTION 3.2(F) should not be obtained without the imposition of any material
condition or restriction described in SECTION 6.1(B).
(g) SECURITIES AND REGULATORY FILINGS. DFBS has filed with the SEC
all reports, schedules, registration statements, definitive proxy statements and
other documents that it has been required to file under the Securities Act or
the Exchange Act since March 8, 2000 and ▇▇▇▇▇▇▇▇ Federal has filed all such
reports with its applicable Government Regulator from December 31, 1998 through
March 8, 2000 (collectively, "DFBS'S REPORTS"). DFBS has made available to FCCO
an accurate and complete copy of (i) each of DFBS's Reports and (ii) each
communication mailed by DFBS to its stockholders since July 5, 2000. None of
DFBS's Reports or such communications contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. As of their respective dates, all of
DFBS's Reports complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be, or
the laws, rules, and regulations of the Government Regulator with which they
were filed. Each of the financial statements (including, in each case, any notes
thereto) of DFBS included in DFBS's Reports
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complied as to form, as of their respective dates of filing with the SEC or any
Government Regulator, in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC or
applicable Government Regulator with respect thereto.
(h) FINANCIAL STATEMENTS. DFBS has previously made available to FCCO
copies of (i) the consolidated balance sheets of DFBS and its Subsidiaries as of
September 30, 2003 and 2002 and related consolidated statements of income, cash
flows and changes in stockholders' equity for each of the three years in the
three-year period ended September 30, 2003, together with the notes thereto,
accompanied by the audit report of DFBS's independent public auditors, as
reported in DFBS's Annual Report on Form 10-KSB for the year ended September 30,
2003 filed with the SEC and (ii) the unaudited consolidated balance sheet of
DFBS and its Subsidiaries as of December 31, 2003 and the related consolidated
statements of income, cash flows and changes in stockholders' equity for the
three months ended December 31, 2003 and 2002, as reported in DFBS's Quarterly
Report on Form 10-QSB for the period ended December 31, 2003 filed with the SEC.
Such financial statements were prepared from the books and records of DFBS and
its Subsidiaries, fairly present the consolidated financial position of DFBS and
its Subsidiaries in each case at and as of the dates indicated and the
consolidated results of operations, changes in stockholders' equity and cash
flows of DFBS and its Subsidiaries for the periods indicated, and, except as
otherwise set forth in the notes thereto, were prepared in accordance with GAAP
consistently applied throughout the periods covered thereby; PROVIDED, HOWEVER,
that the unaudited financial statements for interim periods are subject to
normal year-end adjustments (which will not be material individually or in the
aggregate) and lack footnotes to the extent permitted under applicable
regulations. The books and records of DFBS and its Subsidiaries have been, and
are being, maintained in all respects in accordance with GAAP and any other
legal and accounting requirements and reflect only actual transactions.
(i) UNDISCLOSED LIABILITIES. Neither DFBS nor any of its
Subsidiaries has incurred any debt, liability or obligation of any nature
whatsoever (whether accrued, contingent, absolute or otherwise and whether due
or to become due) other than liabilities reflected on or reserved against in the
consolidated balance sheet of DFBS as of December 31, 2003 as included in DFBS's
Quarterly Report on Form 10-QSB for the period ended December 31, 2003, except
for (i) liabilities incurred since December 31, 2003 in the ordinary course of
business consistent with past practice that, either alone or when combined with
all similar liabilities, have not had, and would not reasonably be expected to
have, a Material Adverse Effect on DFBS and (ii) liabilities incurred for legal,
accounting, financial advising fees and out-of-pocket expenses in connection
with the transactions contemplated by this Agreement.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
DFBS's Reports filed with the SEC prior to the date of this Agreement, since
December 31, 2003, (i) DFBS and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of such businesses consistent
with their past practices, (ii) there has not been any event or occurrence that
has had, or is reasonably expected to have, a Material Adverse Effect on DFBS,
(iii) there has been no increase in the salary, compensation, pension or other
benefits payable or to become payable by DFBS or any of its Subsidiaries to any
of their respective
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directors, officers, or employees, other than to non-executive employees in
conformity with the policies and practices of such entity in the usual and
ordinary course of its business, (iv) neither DFBS nor any of its Subsidiaries
has paid or made any accrual or arrangement for payment of bonuses or special
compensation of any kind or any severance or termination pay to any of their
directors, officers or employees, and (v) there has been no change in any
accounting principles, practices or methods of DFBS or any of its Subsidiaries
other than as required by GAAP.
(k) LITIGATION. There are no suits, actions or legal, administrative
or arbitration proceedings pending or, to the knowledge of DFBS, threatened
against or affecting DFBS or any of its Subsidiaries or any property or asset of
DFBS or any of its Subsidiaries that (i) individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on DFBS or (ii)
challenge the validity or propriety of the transactions contemplated by this
Agreement. To the knowledge of DFBS, there are no investigations, reviews or
inquiries by any court or Governmental Entity pending or threatened against DFBS
or any of its Subsidiaries. There are no judgments, decrees, injunctions, orders
or rulings of any Governmental Entity or arbitrator outstanding against DFBS or
any of its Subsidiaries that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on DFBS.
(l) ABSENCE OF REGULATORY ACTIONS. Since December 31, 1998, neither
DFBS nor any of its Subsidiaries has been a party to any cease and desist order,
written agreement or memorandum of understanding with, or any commitment letter
or similar undertaking to, or has been subject to any action, proceeding, order
or directive by, or has been a recipient of any extraordinary supervisory letter
from any Government Regulator, or has adopted any board resolutions at the
request of any Government Regulator, or has been advised by any Government
Regulator that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such action, proceeding, order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolutions or similar undertaking.
There are no unresolved violations, criticisms or exceptions by any Government
Regulator with respect to any report or statement relating to any examinations
of DFBS or its Subsidiaries.
(m) COMPLIANCE WITH LAWS. DFBS and each of its Subsidiaries conducts
its business in compliance in all material respects with all statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable to it or
the employees conducting such business. DFBS and each of its Subsidiaries has
all permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, all Governmental
Entities that are required in order to permit it to carry on its business as it
is presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and no suspension or
cancellation of any of them is threatened. Neither DFBS nor any of its
Subsidiaries has been given notice or been charged with any violation of, any
law, ordinance, regulation, order, writ, rule, decree or condition to approval
of any Governmental Entity which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on DFBS.
(n) TAXES. All federal, state, local and foreign tax returns
required to be filed by or on behalf of DFBS or any of its Subsidiaries have
been timely filed or requests for
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extensions have been timely filed and any such extension shall have been granted
and not have expired, and all such filed returns are complete and accurate in
all material respects. All taxes shown on such returns, all taxes required to be
shown on returns for which extensions have been granted and all other taxes
required to be paid by DFBS or any of its Subsidiaries have been paid in full or
adequate provision has been made for any such taxes on DFBS's balance sheet (in
accordance with GAAP). There is no audit examination, deficiency assessment, tax
investigation or refund litigation with respect to any taxes of DFBS or any of
its Subsidiaries, and no claim has been made by any authority in a jurisdiction
where DFBS or any of its Subsidiaries do not file tax returns that DFBS or any
such Subsidiary is subject to taxation in that jurisdiction. All taxes,
interest, additions and penalties due with respect to completed and settled
examinations or concluded litigation relating to DFBS or any of its Subsidiaries
have been paid in full or adequate provision has been made for any such taxes on
DFBS's balance sheet (in accordance with GAAP). DFBS and its Subsidiaries have
not executed an extension or waiver of any statute of limitations on the
assessment or collection of any tax due that is currently in effect. DFBS and
each of its Subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and DFBS and
each of its Subsidiaries has timely complied with all applicable information
reporting requirements under Part III, Subchapter A of Chapter 61 of the IRC and
similar applicable state and local information reporting requirements. Neither
DFBS nor any of its Subsidiaries is a party to any agreement, contract,
arrangement or plan that has resulted or would result, individually or in the
aggregate, in connection with this Agreement in the payment of any "excess
parachute payments" within the meaning of Section 280G of the IRC and neither
DFBS nor any of its Subsidiaries has made any payments and is not a party to any
agreement, and does not maintain any plan, program or arrangement, that could
require it to make any payments (including any deemed payment of compensation
upon the exercise of a DFBS Option or upon the issuance of any DFBS Common
Stock), that would not be fully deductible by reason of Section 162(m) of the
IRC.
(o) AGREEMENTS.
(i) DFBS and its Subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-B promulgated by the
SEC), to be performed after the date hereof that has not been filed with DFBS's
Reports.
(ii) DFBS's Disclosure Letter lists any contract, arrangement,
commitment or understanding (whether written or oral) to which DFBS or any of
its Subsidiaries is a party or is bound:
(A) with any executive officer or other key
employee of DFBS or any of its Subsidiaries the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving DFBS or any of its Subsidiaries of the nature
contemplated by this Agreement;
(B) with respect to the employment of any
directors, officers, employees or consultants;
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(C) any of the benefits of which will be increased,
or the vesting or payment of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement (including any stock option
plan, phantom stock or stock appreciation rights plan, restricted stock plan or
stock purchase plan);
(D) containing covenants that limit the ability of
DFBS or any of its Subsidiaries to compete in any line of business or with any
person, or that involve any restriction on the geographic area in which, or
method by which, DFBS (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any regulatory agency);
(E) pursuant to which DFBS or any of its
Subsidiaries may become obligated to invest in or contribute capital to any
entity;
(F) that relates to borrowings of money (or
guarantees thereof) by DFBS or any of its Subsidiaries in excess of $50,000;
or
(G) which is a lease or license with respect to any
property, real or personal, whether as landlord, tenant, licensor or licensee,
involving a liability or obligation as obligor in excess of $25,000 on an annual
basis.
(iii) Neither DFBS nor any of its Subsidiaries is in default
under (and, to the knowledge of DFBS, no event has occurred which, with due
notice or lapse of time or both, would constitute a default under) or is in
violation of any provision of any note, bond, indenture, mortgage, deed of
trust, loan agreement, lease or other agreement to which it is a party or by
which it is bound or to which any of its respective properties or assets is
subject and, to the knowledge of DFBS, no other party to any such agreement
(excluding any loan or extension of credit made by DFBS or any of its
Subsidiaries) is in default in any respect thereunder, except for such defaults
or violations that would not, individually or in the aggregate, have a Material
Adverse Effect on DFBS.
(p) INTELLECTUAL PROPERTY. DFBS and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment all
patents, copyrights, trade secrets, trade names, service marks and trademarks
material to its businesses, and neither DFBS nor any of its Subsidiaries has
received any notice of conflict with respect thereto that asserts the right of
others. Each of DFBS and its Subsidiaries has performed all the obligations
required to be performed by it and are not in default under any contact,
agreement, arrangement or commitment relating to any of the foregoing, except
for such non-performance or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect on DFBS.
(q) LABOR MATTERS. DFBS and its Subsidiaries are in material
compliance with all applicable laws respecting employment, retention of
independent contractors, employment practices, terms and conditions of
employment, and wages and hours. Neither DFBS nor any of
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its Subsidiaries is or has ever been a party to, or is or has ever been bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization with respect to its
employees, nor is DFBS or any of its Subsidiaries the subject of any proceeding
asserting that it has committed an unfair labor practice or seeking to compel it
or any such Subsidiary to bargain with any labor organization as to wages and
conditions of employment nor has any such proceeding been threatened, nor is
there any strike, other labor dispute or organizational effort involving DFBS or
any of its Subsidiaries pending or, to the knowledge of DFBS, threatened.
(r) EMPLOYEE BENEFIT PLANS.
(i) DFBS's Disclosure Letter contains a complete and accurate
list of all pension, retirement, stock option, stock purchase, stock ownership,
savings, stock appreciation right, profit sharing, deferred compensation,
consulting, bonus, group insurance, health, accident, life insurance, death
benefit, cafeteria, flexible benefits, medical reimbursement, dependent care
reimbursement, severance and other benefit plans, contracts, and other
agreements and arrangements, including, but not limited to, "employee benefit
plans," as defined in Section 3(3) of ERISA, incentive and welfare policies,
contracts, plans and arrangements and all trust agreements related thereto with
respect to any present or former directors, officers or other employees of DFBS
or any of its Subsidiaries (hereinafter referred to collectively as the "DFBS
EMPLOYEE PLANS"). DFBS has previously delivered or made available to FCCO true
and complete copies of each agreement, plan and other documents referenced in
DFBS's Disclosure Letter. There has been no announcement or commitment by DFBS
or any of its Subsidiaries to create an additional DFBS Employee Plan, or to
amend any DFBS Employee Plan, except for amendments set forth herein or
otherwise required by applicable law which do not materially increase the cost
of such DFBS Employee Plan.
(ii) DFBS has previously made available to FCCO all financial
contributions, actuarial statements or valuations, fidelity bonds, fiduciary
liability policies, investment manager or advisory contracts, corporate
resolutions, memoranda, administrative committee minutes or memoranda or
records, and all amendments (if any) thereto. DFBS' Disclosure Letter lists,
with respect to DFBS Employee Plans, (A) all trust agreements or other funding
arrangements, including insurance contracts, and all annuity contracts (B) where
applicable, with respect to any such plan or plans or plan amendments, the most
recent determination letters issued by the IRS, (C) all communications or other
correspondence issued within the last six years by the Internal Revenue Service,
United States Department of Labor or the Pension Benefit Guaranty Corporation
with respect to any such plan, (D) annual reports or returns in audited or
unaudited financial statements for the most recent three plan years and any
amendments thereto, and (E) the most recent summary plan descriptions, any
material modifications thereto, and all material and employee communications
with respect to any such plans. DFBS has previously delivered or made available
to FCCO true and complete copies of all such writings.
(iii) There is no pending or, to the knowledge of DFBS,
threatened litigation, administrative action or proceeding relating to any DFBS
Employee Plan. All of the DFBS Employee Plans and the operation and terms
thereof comply in all material respects with
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all applicable requirements of ERISA, the IRC and other applicable laws. No
event has occurred which is likely to give rise to a failure of any DFBS
Employee Plan to obtain or maintain intended tax benefits, including, where
applicable, qualification under IRC section 401(a), and the avoidance of tax
under IRC section 511. There has occurred no material "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the IRC) with respect to
the DFBS Employee Plans which is likely to result in the imposition of any
penalties or taxes upon DFBS or any of its Subsidiaries under Section 502(i)
of ERISA or Section 4975 of the IRC.
(iv) No oral or written representation or communication with
respect to any of the DFBS Employee Plans has been or will be made to anyone
prior to the Closing that is not in accordance with the written terms and
provisions of such applicable plan in effect immediately prior to the Closing,
except for any amendments or other action required by the terms of this
Agreement.
(v) All annual reports or returns, audited or unaudited
financial statements, actuarial valuations, summary annual reports and summary
plan descriptions issued with respect to the DFBS Employee Plans are correct and
accurate in all material respects as of the dates thereof; and there have been
no amendments filed to any such reports, returns, statements, valuations or
descriptions are required to make the information therein true and accurate in
all material respects.
(vi) No liability to the Pension Benefit Guarantee Corporation
has been or is expected by DFBS or any of its Subsidiaries to be incurred with
respect to any DFBS Employee Plan which is subject to Title IV of ERISA ("DFBS
PENSION PLAN"), or with respect to any "single-employer plan" (as defined in
Section 4001(a) of ERISA) currently or formerly maintained by DFBS or any ERISA
Affiliate. No DFBS Pension Plan had an "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, as of the last day of
the end of the most recent plan year ending prior to the date hereof; the fair
market value of the assets of each DFBS Pension Plan is at least equal to the
present value of the "benefit liabilities" (as defined in Section 4001(a)(16) of
ERISA) (whether or not vested) under such DFBS Pension Plan as of the end of the
most recent plan year with respect to the respective DFBS Pension Plan ending
prior to the date hereof, calculated on the basis of the actuarial assumptions
used in the most recent actuarial valuation for such DFBS Pension Plan as of the
date hereof; and no notice of a "reportable event" (as defined in Section 4043
of ERISA) for which the 30-day reporting requirement has not been waived has
been required to be filed for any DFBS Pension Plan within the 12-month period
ending on the date hereof. Neither DFBS nor any of its ERISA Affiliates has
provided, or is required to provide, security to any DFBS Pension Plan or to any
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the IRC.
(vii) As of the Closing Date, full payment will have been made
of all amounts which DFBS or any of its Subsidiaries will be required to have
made at or prior to the Closing Date, under any DFBS Employee Plan or applicable
law, as a contribution to any applicable DFBS Employee Plan (and, for this
purpose, any such contribution which shall not have been required to have been
made on or prior to the Closing Date due to applicable accrual or other
requirements which have not been met for the plan year which includes the
Closing Date shall be considered required to be made as of the Closing Date on a
prorated basis as of the
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Closing Date); and no accumulated funding deficiency (as defined in ERISA
section 302 or IRC section 412), whether or not waived, will exist with respect
to any DFBS Pension Plan.
(viii) DFBS does not maintain any plan or other arrangement
providing deferred or stock-based compensation which is not reflected in DFBS'
Disclosure Letter.
(ix) Each DFBS Employee Plan that is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC (a "DFBS QUALIFIED PLAN") has received
a favorable determination letter from the IRS, and DFBS and its Subsidiaries are
not aware of any circumstances likely to result in revocation of any such
favorable determination letter.
(x) Neither DFBS nor any of its Subsidiaries has any
obligations for post-retirement or post-employment benefits under any DFBS
Employee Plan that cannot be amended or completely terminated upon 60 days'
notice or less (and without the consent of any person) without incurring any
liability thereunder, except for coverage required by Part 6 of Title I of ERISA
or Section 4980B of the IRC, or similar state laws, the cost of which is borne
solely by the covered individuals.
(xi) All DFBS Employee Plans which are subject to IRC section
4980B or Part VI of Title I of ERISA or both have been maintained in compliance
with the requirements of such laws and any regulation (proposed or otherwise)
issued thereunder.
(xii) No liability to the PBGC will have been incurred as of
the Closing Date by DFBS or any ERISA affiliate of DFBS, except for PBGC
insurance premiums, and all such insurance premiums incurred up to and including
the Closing Date have been or will have been timely paid.
(xiii) Neither DFBS nor any ERISA affiliate of DFBS maintains,
has maintained, has contributed to or has been required to contribute to a
multi-employer plan (as defined in ERISA section 3(37)); and no amount is due or
owing from DFBS on account of any withdrawal from any such multi-employer plan.
(xiv) All annual reports (as described in ERISA section 103)
and Treasury Forms 5300 relating to the applicable provisions of the IRC
required to be filed in connection with one or more of the DFBS Employee Plans
have been timely and properly filed in accordance with applicable law.
(xv) No violation of ERISA, the IRC or other applicable law
will arise in respect of any DFBS Employee Plan as a result of or in connection
with the transactions contemplated by this Agreement.
(s) PROPERTIES.
(i) A description of each parcel of real property owned by
DFBS or a Subsidiary of DFBS is set forth in DFBS's Disclosure Letter. DFBS and
each of its Subsidiaries
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has good and marketable title to all real property owned by it (including any
property acquired in a judicial foreclosure proceeding or by way of a deed in
lieu of foreclosure or similar transfer), in each case free and clear of any
Liens except (i) liens for taxes not yet due and payable and (ii) such
easements, restrictions and encumbrances, if any, as are not material in
character, amount or extent, and do not materially detract from the value, or
materially interfere with the present use of the properties subject thereto or
affected thereby. All real property and fixtures of DFBS and each of its
Subsidiaries are in a good state of maintenance and repair (normal wear and tear
excepted), conform with all applicable ordinances, regulations and zoning laws
and are considered by DFBS to be adequate for the current business of DFBS and
its Subsidiaries. To the knowledge of DFBS, none of the buildings, structures or
other improvements located on its real property encroaches upon or over any
adjoining parcel or real estate or any easement or right-of-way.
(ii) DFBS and each of its Subsidiaries has good and marketable
title to all tangible personal property owned by it, free and clear of all Liens
except such encumbrances, if any, as are not material in character, amount or
extent, and do not materially detract from the value, or materially interfere
with the present use of the properties subject thereto or affected thereby. With
respect to personal property used in the business of DFBS and its Subsidiaries
that is leased rather than owned, neither DFBS nor any of its Subsidiaries is in
default in any material respect under the terms of any such lease.
(iii) A description of all real property leased by DFBS or a
Subsidiary of DFBS is set forth in DFBS's Disclosure Letter. Each lease pursuant
to which DFBS or any of its Subsidiaries as lessee, leases real or personal
property, is valid and in full force and effect and neither DFBS nor any of its
Subsidiaries, nor, to DFBS's knowledge, any other party to any such lease, is in
default or in violation of any material provisions of any such lease.
(t) FAIRNESS OPINION. DFBS has received the opinion of Sandler
▇'▇▇▇▇▇ & Partners, L.P. to the effect that, as of the date hereof, the Merger
Consideration is fair, from a financial point of view, to DFBS's stockholders.
(u) FEES. Other than financial advisory services performed for DFBS
by Sandler ▇'▇▇▇▇▇ & Partners, L.P. pursuant to an agreement dated September 16,
2003, a true and complete copy of which has been previously delivered to FCCO,
neither DFBS nor any of its Subsidiaries, nor any of their respective officers,
directors, employees or agents, has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for DFBS
or any of its Subsidiaries in connection with this Agreement or the transactions
contemplated hereby.
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(v) ENVIRONMENTAL MATTERS.
(i) To the knowledge of DFBS, each of DFBS and its
Subsidiaries, the Participation Facilities and the Loan Properties are, and have
been, in substantial compliance with all Environmental Laws.
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
knowledge of DFBS, threatened, before any court, governmental agency or board or
other forum against DFBS or any of its Subsidiaries or any Participation
Facility (A) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at or on a site owned, leased or operated by DFBS or any of its Subsidiaries or
any Participation Facility.
(iii) To the knowledge of DFBS, there is no suit, claim,
action, demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or board
or other forum relating to or against any Loan Property (or DFBS or any of its
Subsidiaries in respect of such Loan Property) (A) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at a Loan
Property.
(iv) Neither DFBS nor any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or request
for information from any Governmental Entity or any third party indicating that
it may be in violation of, or liable under, any Environmental Law.
(v) There are no underground storage tanks at any properties
owned or operated by DFBS or any of its Subsidiaries or, to the knowledge of
DFBS, at any Participation Facility and no underground storage tanks have been
closed or removed from any properties owned or operated by DFBS or, to the
knowledge of DFBS, any of its Subsidiaries or any Participation Facility.
(vi) During the period of (A) DFBS's or its Subsidiary's
ownership or operation of any of their respective current properties or (B)
DFBS's or its Subsidiary's participation in the management of any Participation
Facility, there has been no release of Hazardous Materials in, on, under or
affecting such properties. To the knowledge of DFBS, prior to the period of (A)
DFBS's or its Subsidiary's ownership or operation of any of their respective
current properties or (B) DFBS's or its Subsidiary's participation in the
management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such properties.
(w) LOAN PORTFOLIO; ALLOWANCE FOR LOAN LOSSES.
(i) With respect to each Loan owned by DFBS or its
Subsidiaries in whole or in part:
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(A) The note and the related security documents are
each legal, valid and binding obligations of the maker or obligor thereof,
enforceable against such maker or obligor in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(B) neither DFBS nor any of its Subsidiaries, nor
any prior holder of a Loan, has modified the note or any of the related security
documents in any material respect or satisfied, canceled or subordinated the
note or any of the related security documents except as otherwise disclosed by
documents in the applicable Loan file;
(C) DFBS or a Subsidiary of DFBS is the sole holder
of legal and beneficial title to each Loan (or DFBS's or its Subsidiary's
applicable participation interest, as applicable), except as otherwise
referenced on the books and records of DFBS or a Subsidiary of DFBS;
(D) the original note and the related security
documents are included in the Loan files, and copies of any documents in the
Loan files are true and correct copies of the documents they purport to be and
have not been suspended, amended, modified, canceled or otherwise changed except
as otherwise disclosed by documents in the applicable Loan file; and
(E) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(ii) Neither the terms of any Loan, any of the documentation
for any Loan, the manner in which any Loans have been administered and serviced,
nor DFBS's practices of approving or rejecting Loan applications, violate in any
material respect any federal, state, or local law, rule or regulation applicable
thereto, including, without limitation, the Truth In Lending Act, Regulations O
and Z of the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act,
and any state laws, rules and regulations relating to consumer protection,
installment sales and usury.
(iii) The allowance for loan losses reflected in DFBS's
audited balance sheet at September 30, 2003 was, and the allowance for loan
losses shown on the balance sheets in DFBS's Reports for periods ending after
September 30, 2003, in the opinion of management, was or will be adequate, as of
the dates thereof, under GAAP.
(x) ANTI-TAKEOVER PROVISIONS INAPPLICABLE. DFBS and its Subsidiaries
have taken all actions required to exempt FCCO, the Agreement, the Plan of Bank
Merger, the Merger and the Bank Merger from any provisions of an antitakeover
nature contained in their organizational documents, and the provisions of any
federal or state "anti-takeover," "fair price," "moratorium," "control share
acquisition" or similar laws or regulations.
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(y) MATERIAL INTERESTS OF CERTAIN PERSONS. No officer or director of
DFBS, or any "associate" (as such term is defined in Rule 12b-2 under the
Exchange Act) of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of DFBS or any of its Subsidiaries, other than
banking relationships in the ordinary course of business.
(z) INSURANCE. In the opinion of management, DFBS and its
Subsidiaries are presently insured for amounts deemed reasonable by management
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. All of the
insurance policies and bonds maintained by DFBS and its Subsidiaries are in full
force and effect, DFBS and its Subsidiaries are not in default thereunder and
all material claims thereunder have been filed in due and timely fashion.
(aa) INVESTMENT SECURITIES; DERIVATIVES.
(i) Except for restrictions that exist for securities that are
classified as "held to maturity," none of the investment securities held by DFBS
or any of its Subsidiaries is subject to any restriction (contractual or
statutory) that would materially impair the ability of the entity holding such
investment freely to dispose of such investment at any time.
(ii) Neither DFBS nor any of its Subsidiaries is a party to or
has agreed to enter into an exchange-traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future, option, cap, floor or
collar or any other contract that is a derivative contract (including various
combinations thereof) or owns securities that (A) are referred to generically as
"structured notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives" or (B) are likely to have
changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or
exchange rate changes.
(bb) INDEMNIFICATION. Except as provided in the certificate of
incorporation or bylaws of DFBS and the similar organizational documents of its
Subsidiaries and except as set forth in DFBS's Disclosure Letter, neither DFBS
nor any of its Subsidiaries is a party to any agreement that provides for the
indemnification of any of its present or former directors, officers or
employees, or other persons who serve or served as a director, officer or
employee of another corporation, partnership or other enterprise at the request
of DFBS and, to the knowledge of DFBS, there are no claims for which any such
person would be entitled to indemnification under the certificate of
incorporation or bylaws of DFBS or the similar organizational documents of any
of its Subsidiaries, under any applicable law or regulation or under any
indemnification agreement.
(cc) CORPORATE DOCUMENTS. DFBS has previously furnished or made
available to FCCO a complete and correct copy of the certificate of
incorporation, bylaws and similar organizational documents of DFBS and each of
DFBS's Subsidiaries, as in effect as of the date of this Agreement. Neither DFBS
nor any of DFBS's Subsidiaries is in violation of its certificate of
incorporation, bylaws or similar organizational documents. The minute books of
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DFBS and each of DFBS's Subsidiaries constitute a complete and correct record of
all actions taken by their respective boards of directors (and each committee
thereof) and their stockholders.
(dd) DFBS INFORMATION. The information regarding DFBS and its
Subsidiaries to be supplied by DFBS for inclusion in the Registration Statement,
any filings or approvals under applicable state securities laws, or any filing
pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under
the Exchange Act will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(ee) COMMUNITY REINVESTMENT ACT COMPLIANCE. ▇▇▇▇▇▇▇▇ Federal is in
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and ▇▇▇▇▇▇▇▇ Federal currently has a CRA
rating of satisfactory or better. To the knowledge of DFBS, there is no fact or
circumstance or set of facts or circumstances that would cause ▇▇▇▇▇▇▇▇ Federal
to fail to comply with such provisions or cause the CRA rating of ▇▇▇▇▇▇▇▇
Federal to fall below satisfactory.
(ff) TAX TREATMENT OF THE MERGER. DFBS has no knowledge of any fact
or circumstance relating to it that would prevent the transactions contemplated
by this Agreement from qualifying as a reorganization under the IRC.
3.3 REPRESENTATIONS AND WARRANTIES OF FCCO. FCCO represents and warrants
to DFBS that, except as set forth in FCCO's Disclosure Letter:
(a) ORGANIZATION AND QUALIFICATION. FCCO is a corporation duly
organized, validly existing and in good standing under the laws of the State of
South Carolina and is registered as a bank holding company under the BHC Act.
FCCO has all requisite corporate power and authority to own, lease and operate
its properties and to conduct the business currently being conducted by it. FCCO
is duly qualified or licensed as a foreign corporation to transact business and
is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing would not have a Material Adverse
Affect on FCCO.
(b) SUBSIDIARIES.
(i) FCCO owns of record and beneficially all the capital stock
of each of its Subsidiaries free and clear of any Liens. There are no contracts,
commitments, agreements or understandings relating to FCCO's right to vote or
dispose of any equity securities of its Subsidiaries. FCCO's ownership interest
in each of its Subsidiaries is in compliance with all applicable laws, rules and
regulations relating to equity investments by bank holding companies or national
banking associations.
(ii) Each of FCCO's Subsidiaries is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease and
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operate its properties and to conduct the business currently being conducted by
it and is duly qualified or licensed as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed and in good standing would not have a Material
Adverse Affect on FCCO.
(iii) The outstanding shares of capital stock of each
Subsidiary have been validly authorized and are validly issued, fully paid and
nonassessable. No shares of capital stock of any Subsidiary of FCCO are or may
be required to be issued by virtue of any options, warrants or other rights, no
securities exist that are convertible into or exchangeable for shares of such
capital stock or any other debt or equity security of any Subsidiary, and there
are no contracts, commitments, agreements or understandings of any kind for the
issuance of additional shares of capital stock or other debt or equity security
of any Subsidiary or options, warrants or other rights with respect to such
securities.
(iv) No Subsidiary of FCCO other than First Community is an
"insured depository institution" as defined in the FDIA and the applicable
regulations thereunder. The deposits of First Community are insured by the FDIC
through the Bank Insurance Fund to the fullest extent permitted by law. First
Community is a member in good standing of the Federal Home Loan Bank of Atlanta.
(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of FCCO consists of:
(A) 10,000,000 shares of FCCO Common Stock, par value
$1.00 per share; and
(B) 10,000,000 shares of preferred stock, par value
$1.00 per share.
(ii) As of the date of this Agreement:
(A) 1,598,401 shares of FCCO Common Stock are
issued and outstanding, all of which are validly issued, fully paid and
nonassessable and were issued in full compliance with all applicable laws;
(B) no shares of FCCO preferred stock are issued
and outstanding; and
(C) 150,763 shares of FCCO Common Stock are
reserved for issuance pursuant to outstanding grants or awards under FCCO's
stock-based benefit plans.
(iii) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders of FCCO may vote are
issued or outstanding.
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(iv) Except as set forth in this SECTION 3.3(C) or in FCCO's
Disclosure Letter, as of the date of this Agreement, (A) no shares of capital
stock or other voting securities of FCCO are issued, reserved for issuance or
outstanding and (B) neither FCCO nor any of its Subsidiaries has or is bound by
any outstanding subscriptions, options, warrants, calls, rights, convertible
securities, commitments or agreements of any character obligating FCCO or any of
its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, any additional shares of capital stock of FCCO or obligating FCCO or any
of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, right, convertible security, commitment or agreement. As of the date
hereof, there are no outstanding contractual obligations of FCCO or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of FCCO or any of its Subsidiaries.
(v) The shares of FCCO Common Stock to be issued in exchange
for shares of DFBS Common Stock upon consummation of the Merger in accordance
with this Agreement will be duly authorized and, when issued in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable and subject to no preemptive rights.
(d) AUTHORITY. FCCO has all requisite corporate power and authority
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate actions
on the part of FCCO's Board of Directors, and no other corporate proceedings on
the part of FCCO are necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement other than the approval and adoption
of this Agreement by the affirmative vote of the holders of two-thirds of the
outstanding shares of FCCO Common Stock. This Agreement has been duly and
validly executed and delivered by FCCO and constitutes a valid and binding
obligation of FCCO, enforceable against FCCO in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and to general principles of equity,
whether applied in a court of law or a court of equity.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement by FCCO do not, and the consummation of the transactions contemplated
by this Agreement will not, (i) assuming all required governmental approvals
have been obtained and the applicable waiting periods have expired, violate any
law, rule or regulation or any judgment, decree, order, governmental permit or
license to which FCCO or any of its Subsidiaries (or any of their respective
properties) is subject, (ii) assuming approval by the stockholders of FCCO of
the Agreement, violate the articles of incorporation or bylaws of FCCO or the
similar organizational documents of any of its Subsidiaries or (iii) constitute
a breach or violation of, or a default under (or an event which, with due notice
or lapse of time or both, would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any Lien upon any of the properties or assets of FCCO or any of its
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, indenture, deed of trust, loan agreement or other agreement, instrument or
obligation to which FCCO or any of its Subsidiaries is a party, or to which any
of their respective properties or assets may be subject except, in the case of
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(iii), for any such breaches, violations or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect on FCCO.
(f) CONSENTS AND APPROVALS. No consents or approvals of, or filings
or registrations with, any Governmental Entity or any third party are required
to be made or obtained in connection with the execution and delivery by FCCO of
this Agreement or the consummation by FCCO of the Merger and the other
transactions contemplated by this Agreement, including the Bank Merger, except
for (i) filings of applications and notices with, receipt of approvals or
nonobjections from, and expiration of the related waiting period required by,
federal and state banking authorities, (ii) filing of the Registration Statement
with the SEC and declaration by the SEC of the Registration Statement's
effectiveness under the Securities Act, (iii) the registration or qualification
under state securities or "blue sky" laws of the shares of FCCO Common Stock to
be issued in exchange for shares of DFBS Common Stock, and (iv) the listing on
the NASDAQ SmallCap Market of the shares of FCCO Common Stock to be issued in
exchange for shares of DFBS Common Stock. As of the date hereof, FCCO knows of
no reason pertaining to FCCO why any of the approvals referred to in this
SECTION 3.3(F) should not be obtained without the imposition of any material
condition or restriction described in SECTION 6.1(B).
(g) SECURITIES AND REGULATORY FILINGS. FCCO has filed with the SEC
all reports, schedules, registration statements, definitive proxy statements and
other documents that it has been required to file under the Securities Act or
the Exchange Act since December 31, 1998 and First Community has filed all such
reports with its applicable Government Regulator (collectively, "FCCO'S
REPORTS"). FCCO has made available to DFBS an accurate and complete copy of (i)
each of FCCO's Reports and (ii) each communication mailed by FCCO to its
stockholders since December 31, 1998. None of FCCO's Reports or such
communications contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, all of FCCO's Reports
complied in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as the case may be, or the laws, rules, and
regulations of the Government Regulator with which they were filed. Each of the
financial statements (including, in each case, any notes thereto) of FCCO
included in FCCO's Reports complied as to form, as of their respective dates of
filing with the SEC or any Government Regulator, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC or applicable Government Regulator with respect thereto.
(h) FINANCIAL STATEMENTS. FCCO has previously made available to DFBS
copies of (i) the consolidated balance sheets of FCCO and its Subsidiaries as of
December 31, 2003 and 2002 and related consolidated statements of income, cash
flows and changes in stockholders' equity for each of the three years in the
three-year period ended December 31, 2003, together with the notes thereto,
accompanied by the audit report of FCCO's independent public auditors, as
reported in FCCO's Annual Report on Form 10-KSB for the year ended December 31,
2003 filed with the SEC. Such financial statements were prepared from the books
and records of FCCO and its Subsidiaries, fairly present the consolidated
financial position of FCCO and its Subsidiaries in each case at and as of the
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dates indicated and the consolidated results of operations, changes in
stockholders' equity and cash flows of FCCO and its Subsidiaries for the periods
indicated, and, except as otherwise set forth in the notes thereto, were
prepared in accordance with GAAP consistently applied throughout the periods
covered thereby. The books and records of FCCO and its Subsidiaries have been,
and are being, maintained in all respects in accordance with GAAP and any other
legal and accounting requirements and reflect only actual transactions.
(i) UNDISCLOSED LIABILITIES. Neither FCCO nor any of its
Subsidiaries has incurred any debt, liability or obligation of any nature
whatsoever (whether accrued, contingent, absolute or otherwise and whether due
or to become due) other than liabilities reflected on or reserved against in the
consolidated balance sheet of FCCO as of December 31, 2003 as included in FCCO's
Annual Report on Form 10-KSB for the period ended December 31, 2003, except for
(i) liabilities incurred since December 31, 2003 in the ordinary course of
business consistent with past practice that, either alone or when combined with
all similar liabilities, have not had, and would not reasonably be expected to
have, a Material Adverse Effect on FCCO and (ii) liabilities incurred for legal,
accounting, financial advising fees and out-of-pocket expenses in connection
with the transactions contemplated by this Agreement.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
FCCO's Reports filed with the SEC prior to the date of this Agreement, since
December 31, 2003, (i) FCCO and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of such businesses consistent
with their past practices and (ii) there has not been any event or occurrence
that has had, or is reasonably expected to have, a Material Adverse Effect on
FCCO.
(k) LITIGATION. There are no suits, actions or legal, administrative
or arbitration proceedings pending or, to the knowledge of FCCO, threatened
against or affecting FCCO or any of its Subsidiaries or any property or asset of
FCCO or any of its Subsidiaries that (i) individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on FCCO or (ii)
challenge the validity or propriety of the transactions contemplated by this
Agreement. To the knowledge of FCCO, there are no investigations, reviews or
inquiries by any court or Governmental Entity pending or threatened against FCCO
or any of its Subsidiaries. There are no judgments, decrees, injunctions, orders
or rulings of any Governmental Entity or arbitrator outstanding against FCCO or
any of its Subsidiaries that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on FCCO.
(l) ABSENCE OF REGULATORY ACTIONS. Since December 31, 1998, neither
FCCO nor any of its Subsidiaries has been a party to any cease and desist order,
written agreement or memorandum of understanding with, or any commitment letter
or similar undertaking to, or has been subject to any action, proceeding, order
or directive by, or has been a recipient of any extraordinary supervisory letter
from any Government Regulator, or has adopted any board resolutions at the
request of any Government Regulator, or has been advised by any Government
Regulator that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such action, proceeding, order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolutions or similar undertaking.
There are no unresolved violations, criticisms or exceptions by any Government
Regulator with respect to any report or statement relating to any examinations
of FCCO or its Subsidiaries.
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(m) COMPLIANCE WITH LAWS. FCCO and each of its Subsidiaries conducts
its business in compliance in all material respects with all statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable to it or
the employees conducting such business. FCCO and each of its Subsidiaries has
all permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, all Governmental
Entities that are required in order to permit it to carry on its business as it
is presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and no suspension or
cancellation of any of them is threatened. Neither FCCO nor any of its
Subsidiaries has been given notice or been charged with any violation of, any
law, ordinance, regulation, order, writ, rule, decree or condition to approval
of any Governmental Entity which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on FCCO.
(n) TAXES. All federal, state, local and foreign tax returns
required to be filed by or on behalf of FCCO or any of its Subsidiaries have
been timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by FCCO or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on FCCO's balance sheet (in accordance with GAAP). There is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of FCCO or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where FCCO or any of its Subsidiaries do
not file tax returns that FCCO or any such Subsidiary is subject to taxation in
that jurisdiction. All taxes, interest, additions and penalties due with respect
to completed and settled examinations or concluded litigation relating to FCCO
or any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on FCCO's balance sheet (in accordance with GAAP). FCCO
and its Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any tax due that is currently in
effect. FCCO and each of its Subsidiaries has withheld and paid all taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other third
party, and FCCO and each of its Subsidiaries has timely complied with all
applicable information reporting requirements under Part III, Subchapter A of
Chapter 61 of the IRC and similar applicable state and local information
reporting requirements.
(o) AGREEMENTS.
(i) FCCO and its Subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-B promulgated by the
SEC), to be performed after the date hereof that has not been filed with FCCO's
Reports.
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(ii) FCCO's Disclosure Letter lists any contract, arrangement,
commitment or understanding (whether written or oral) to which FCCO or any of
its Subsidiaries is a party or is bound containing covenants that limit the
ability of FCCO or any of its Subsidiaries to compete in any line of business or
with any person, or that involve any restriction on the geographic area in
which, or method by which, FCCO (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any regulatory agency);
(iii) Neither FCCO nor any of its Subsidiaries is in default
under (and, to the knowledge of FCCO, no event has occurred which, with due
notice or lapse of time or both, would constitute a default under) or is in
violation of any provision of any note, bond, indenture, mortgage, deed of
trust, loan agreement, lease or other agreement to which it is a party or by
which it is bound or to which any of its respective properties or assets is
subject and, to the knowledge of FCCO, no other party to any such agreement
(excluding any loan or extension of credit made by FCCO or any of its
Subsidiaries) is in default in any respect thereunder, except for such defaults
or violations that would not, individually or in the aggregate, have a Material
Adverse Effect on FCCO.
(p) INTELLECTUAL PROPERTY. FCCO and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment all
patents, copyrights, trade secrets, trade names, service marks and trademarks
material to its businesses, and neither FCCO nor any of its Subsidiaries has
received any notice of conflict with respect thereto that asserts the right of
others. Each of FCCO and its Subsidiaries has performed all the obligations
required to be performed by it and are not in default under any contact,
agreement, arrangement or commitment relating to any of the foregoing, except
for such non-performance and defaults that would not, individually or in the
aggregate, have a Material Adverse Effect on FCCO.
(q) LABOR MATTERS. FCCO and its Subsidiaries are in material
compliance with all applicable laws respecting employment, retention of
independent contractors, employment practices, terms and conditions of
employment, and wages and hours. Neither FCCO nor any of its Subsidiaries is or
has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is FCCO or any of
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel it or any such Subsidiary to
bargain with any labor organization as to wages and conditions of employment nor
has any such proceeding been threatened, nor is there any strike, other labor
dispute or organizational effort involving FCCO or any of its Subsidiaries
pending or, to the knowledge of FCCO, threatened.
(r) EMPLOYEE BENEFIT PLANS.
(i) FCCO's Disclosure Letter contains a complete and accurate
list of all pension, retirement, stock option, stock purchase, stock ownership,
savings, stock appreciation right, profit sharing, deferred compensation,
consulting, bonus, group insurance, health, accident, life insurance, death
benefit, cafeteria, flexible benefits, medical reimbursement, dependent care
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reimbursement, severance and other benefit plans, contracts, and other
agreements and arrangements, including, but not limited to, "employee benefit
plans," as defined in Section 3(3) of ERISA, incentive and welfare policies,
contracts, plans and arrangements and all trust agreements related thereto with
respect to any present or former directors, officers or other employees of DFBS
or any of its Subsidiaries (hereinafter referred to collectively as the "FCCO
EMPLOYEE PLANS"). FCCO has previously delivered or made available to DFBS true
and complete copies of each agreement, plan and other documents referenced in
FCCO's Disclosure Letter. There has been no announcement or commitment by FCCO
or any of its Subsidiaries to create an additional FCCO Employee Plan, or to
amend any FCCO Employee Plan, except for amendments required by applicable law
which do not materially increase the cost of such FCCO Employee Plan.
(ii) FCCO has previously made available to DFBS all financial
contributions, actuarial statements or valuations, fidelity bonds, fiduciary
liability policies, investment manager or advisory contracts, corporate
resolutions, memoranda, administrative committee minutes or memoranda or
records, and all amendments (if any) thereto. FCCO's Disclosure Letter lists,
with respect to FCCO Employee Plans, (A) all trust agreements or other funding
arrangements, including insurance contracts, and all annuity contracts (B) where
applicable, with respect to any such plan or plans or plan amendments, the most
recent determination letters issued by the IRS, (C) all communications or other
correspondence issued within the last six years by the Internal Revenue Service,
United States Department of Labor or the Pension Benefit Guaranty Corporation
with respect to any such plan, (D) annual reports or returns in audited or
unaudited financial statements for the most recent three plan years and any
amendments thereto, and (E) the most recent summary plan descriptions, any
material modifications thereto, and all material and employee communications
with respect to any such plans. FCCO has previously delivered or made available
to DFBS true and complete copies of all such writings.
(iii) There is no pending or, to the knowledge of FCCO,
threatened litigation, administrative action or proceeding relating to any FCCO
Employee Plan. All of the FCCO Employee Plans and the operation and terms
thereof comply in all material respects with all applicable requirements of
ERISA, the IRC and other applicable laws. No event has occurred which is likely
to give rise to a failure of any FCCO Employee Plan to obtain or maintain
intended tax benefits, including, where applicable, qualification under IRC
section 401(a), and the avoidance of tax under IRC section 511. There has
occurred no "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the IRC) with respect to the FCCO Employee Plans which is likely
to result in the imposition of any penalties or taxes upon FCCO or any of its
Subsidiaries under Section 502(i) of ERISA or Section 4975 of the IRC.
(iv) No liability to the Pension Benefit Guarantee Corporation
has been or is expected by FCCO or any of its Subsidiaries to be incurred with
respect to any FCCO Employee Plan which is subject to Title IV of ERISA ("FCCO
PENSION PLAN"), or with respect to any "single-employer plan" (as defined in
Section 4001(a) of ERISA) currently or formerly maintained by FCCO or any ERISA
Affiliate. No FCCO Pension Plan had an "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, as of the last day of
the end of the most recent plan year ending prior to the date hereof; the fair
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market value of the assets of each FCCO Pension Plan is at least equal to the
present value of the "benefit liabilities" (as defined in Section 4001(a)(16) of
ERISA) (whether or not vested) under such FCCO Pension Plan as of the end of the
most recent plan year with respect to the respective FCCO Pension Plan ending
prior to the date hereof, calculated on the basis of the actuarial assumptions
used in the most recent actuarial valuation for such FCCO Pension Plan as of the
date hereof; and no notice of a "reportable event" (as defined in Section 4043
of ERISA) for which the 30-day reporting requirement has not been waived has
been required to be filed for any FCCO Pension Plan within the 12-month period
ending on the date hereof. Neither FCCO nor any of its ERISA Affiliates has
provided, or is required to provide, security to any FCCO Pension Plan or to any
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the IRC.
(v) FCCO does not maintain any plan or other arrangement
providing deferred or stock-based compensation which is not reflected in FCCO's
Disclosure Letter.
(vi) Each FCCO Employee Plan that is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC (a "FCCO QUALIFIED PLAN") has received
a favorable determination letter from the IRS, and FCCO and its Subsidiaries are
not aware of any circumstances likely to result in revocation of any such
favorable determination letter. No FCCO Qualified Plan is an "employee stock
ownership plan" (as defined in Section 4975(e)(7) of the IRC).
(vii) Neither FCCO nor any of its Subsidiaries has any
obligations for post-retirement or post-employment benefits under any FCCO
Employee Plan that cannot be amended or completely terminated upon 60 days'
notice or less (and without the consent of any person) without incurring any
liability thereunder, except for coverage required by Part 6 of Title I of ERISA
or Section 4980B of the IRC, or similar state laws, the cost of which is borne
solely by the covered individuals.
(viii) All FCCO Employee Plans which are subject to IRC
section 4980B or Part VI of Title I of ERISA or both have been maintained in
compliance with the requirements of such laws and any regulation (proposed or
otherwise) issued thereunder.
(ix) All annual reports (as described in ERISA section 103)
and Treasury Forms 5300 relating to the applicable provisions of the IRC
required to be filed in connection with one or more of the FCCO Employee Plans
have been timely and properly filed in accordance with applicable law.
(s) FEES. Other than financial advisory services performed for FCCO
by The ▇▇▇ Group, neither FCCO nor any of its Subsidiaries, nor any of their
respective officers, directors, employees or agents, has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for FCCO or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
(t) ENVIRONMENTAL MATTERS.
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(i) To the knowledge of FCCO, each of FCCO and its
Subsidiaries, the Participation Facilities and the Loan Properties are, and have
been, in substantial compliance with all Environmental Laws.
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
knowledge of FCCO, threatened, before any court, governmental agency or board or
other forum against FCCO or any of its Subsidiaries or any Participation
Facility (A) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at or on a site owned, leased or operated by FCCO or any of its Subsidiaries or
any Participation Facility.
(iii) To the knowledge of FCCO, there is no suit, claim,
action, demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or board
or other forum relating to or against any Loan Property (or FCCO or any of its
Subsidiaries in respect of such Loan Property) (A) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at a Loan
Property.
(iv) Neither FCCO nor any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or request
for information from any Governmental Entity or any third party indicating that
it may be in violation of, or liable under, any Environmental Law.
(v) There are no underground storage tanks at any properties
owned or operated by FCCO or any of its Subsidiaries or, to the knowledge of
FCCO, at any Participation Facility and no underground storage tanks have been
closed or removed from any properties owned or operated by FCCO or, to the
knowledge of FCCO, any of its Subsidiaries or any Participation Facility.
(vi) During the period of (A) FCCO's or its Subsidiary's
ownership or operation of any of their respective current properties or (B)
FCCO's or its Subsidiary's participation in the management of any Participation
Facility, there has been no release of Hazardous Materials in, on, under or
affecting such properties. To the knowledge of FCCO, prior to the period of (A)
FCCO's or its Subsidiary's ownership or operation of any of their respective
current properties or (B) FCCO's or its Subsidiary's participation in the
management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such properties.
(u) LOAN PORTFOLIO; ALLOWANCE FOR LOAN LOSSES.
(i) With respect to each Loan owned by FCCO or its
Subsidiaries in whole or in part:
(A) The note and the related security documents are
each legal, valid and binding obligations of the maker or obligor thereof,
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enforceable against such maker or obligor in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(B) neither FCCO nor any of its Subsidiaries, nor
any prior holder of a Loan, has modified the note or any of the related security
documents in any material respect or satisfied, canceled or subordinated the
note or any of the related security documents except as otherwise disclosed by
documents in the applicable Loan file;
(C) FCCO or a Subsidiary of FCCO is the sole holder
of legal and beneficial title to each Loan (or FCCO's or its Subsidiary's
applicable participation interest, as applicable), except as otherwise
referenced on the books and records of FCCO or a Subsidiary of FCCO;
(D) the original note and the related security
documents are included in the Loan files, and copies of any documents in the
Loan files are true and correct copies of the documents they purport to be and
have not been suspended, amended, modified, canceled or otherwise changed except
as otherwise disclosed by documents in the applicable Loan file; and
(E) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(ii) Neither the terms of any Loan, any of the documentation
for any Loan, the manner in which any Loans have been administered and serviced,
nor FCCO's practices of approving or rejecting Loan applications, violate in any
material respect any federal, state, or local law, rule or regulation applicable
thereto, including, without limitation, the Truth In Lending Act, Regulations O
and Z of the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act,
and any state laws, rules and regulations relating to consumer protection,
installment sales and usury.
(iii) The allowance for loan losses reflected in FCCO's
audited balance sheet at December 31, 2003 was, and the allowance for loan
losses shown on the balance sheets in FCCO's Reports for periods ending after
December 31, 2003, in the opinion of management, was or will be adequate, as of
the dates thereof, under GAAP.
(V) INSURANCE. In the opinion of management, FCCO and its
Subsidiaries are presently insured for amounts deemed reasonable by management
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. All of the
insurance policies and bonds maintained by FCCO and its Subsidiaries are in full
force and effect, FCCO and its Subsidiaries are not in default thereunder and
all material claims thereunder have been filed in due and timely fashion.
(w) INVESTMENT SECURITIES; DERIVATIVES.
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(i) Except for restrictions that exist for securities that are
classified as "held to maturity," none of the investment securities held by FCCO
or any of its Subsidiaries is subject to any restriction (contractual or
statutory) that would materially impair the ability of the entity holding such
investment freely to dispose of such investment at any time.
(ii) Neither FCCO nor any of its Subsidiaries is a party to or
has agreed to enter into an exchange-traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future, option, cap, floor or
collar or any other contract that is a derivative contract (including various
combinations thereof) or owns securities that (A) are referred to generically as
"structured notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives" or (B) are likely to have
changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or
exchange rate changes.
(X) CORPORATE DOCUMENTS. FCCO has previously furnished or made
available to DFBS a complete and correct copy of the articles of incorporation,
bylaws and similar organizational documents of FCCO and each of FCCO's
Subsidiaries, as in effect as of the date of this Agreement. Neither FCCO nor
any of FCCO's Subsidiaries is in violation of its articles of incorporation,
bylaws or similar organizational documents. The minute books of FCCO and each of
FCCO's Subsidiaries constitute a complete and correct record of all actions
taken by their respective boards of directors (and each committee thereof) and
their stockholders.
(y) FCCO INFORMATION. The information regarding FCCO and its
Subsidiaries to be supplied by FCCO for inclusion in the Registration Statement,
any filings or approvals under applicable state securities laws, or any filing
pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under
the Exchange Act will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(z) COMMUNITY REINVESTMENT ACT COMPLIANCE. First Community is in
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and First Community currently has a CRA
rating of satisfactory or better. To the knowledge of FCCO, there is no fact or
circumstance or set of facts or circumstances that would cause First Community
to fail to comply with such provisions or cause the CRA rating of First
Community to fall below satisfactory.
(aa) TAX TREATMENT OF THE MERGER. FCCO has no knowledge of any fact
or circumstance relating to it that would prevent the transactions contemplated
by this Agreement from qualifying as a reorganization under the IRC.
ARTICLE IV
CONDUCT PENDING THE MERGER
4.1 FORBEARANCES BY DFBS. Except as expressly contemplated or permitted by
this Agreement or as to the extent required by GAAP, law or regulation or any
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Governmental Entity, during the period from the date of this Agreement to the
Effective Time, DFBS shall not, nor shall DFBS permit any of its Subsidiaries
to, without the prior written consent of FCCO, which consent shall not be
unreasonably withheld:
(a) conduct its business other than in the regular, ordinary and
usual course consistent with past practice; fail to maintain and preserve intact
its business organization, properties, leases, employees and advantageous
business relationships and retain the services of its officers and key
employees; or take any action that would adversely affect or delay its ability
to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby;
(b) (i) incur, modify, extend or renegotiate any indebtedness for
borrowed money, or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual, corporation or
other entity, other than the creation of deposit liabilities in the ordinary
course of business consistent with past practice, borrowings from the Federal
Home Loan Bank that mature within one year, and entering into repurchase
agreements; or
(ii) prepay any indebtedness or other similar arrangements so
as to cause DFBS to incur any prepayment penalty thereunder;
(c) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other
distribution on its capital stock;
(iii) grant any stock appreciation rights or any limited
rights under the DFBS Employee Plans or grant any individual, corporation or
other entity any right to acquire any shares of its capital stock; or
(iv) issue any additional shares of capital stock or any
securities or obligations convertible or exercisable for any shares of its
capital stock except pursuant to the exercise of stock options outstanding as of
the date hereof;
(d) sell, transfer, mortgage, encumber or otherwise dispose of any
of its material properties or assets to any individual, corporation or other
entity other than a Subsidiary, or cancel, release or assign any indebtedness to
any such person or any claims held by any such person, except in the ordinary
course of business consistent with past practice or pursuant to contracts or
agreements in force at the date of this Agreement;
(e) except pursuant to contracts or agreements in force at the date
of or permitted by this Agreement, make any equity investment (except
investments in preferred stock in the ordinary course of business and consistent
with past practice), either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any other
individual, corporation or other entity;
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(f) enter into, renew, amend or terminate any contract or agreement,
or make any change in any of its leases or contracts, other than with respect to
those involving aggregate payments of less than, or the provision of goods or
services with a market value of less than, $10,000 per annum and other than
contracts or agreements covered by SECTION 4.1(G) or disclosed in DFBS's
Disclosure Letter;
(g) make, renegotiate, renew, increase, extend, modify or purchase
any loan, lease (credit equivalent), advance, credit enhancement or other
extension of credit, or make any commitment in respect of any of the foregoing,
except in conformity with existing lending policies and practices;
(h) except for loans or extensions of credit made on terms generally
available to the public, make or increase any loan or other extension of credit,
or commit to make or increase any such loan or extension of credit, to any
director or executive officer of DFBS or ▇▇▇▇▇▇▇▇ Federal, or any entity
controlled, directly or indirectly, by any of the foregoing, other than renewals
of existing loans or commitments to loan;
(i) (i) except as disclosed in DFBS's Disclosure Letter, increase in
any manner the compensation or fringe benefits of any of its employees or
directors other than for non-executive employees in the ordinary course of
business consistent with past practice and pursuant to policies currently in
effect, or pay any bonus, pension, retirement allowance or contribution not
required by any existing plan or agreement to any such employees or directors;
(ii) become a party to, amend or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee or director;
(iii) elect to any senior executive office any person who is
not a member of its senior executive officer team as of the date of this
Agreement or elect to its Board of Directors any person who is not a member of
its Board of Directors as of the date of this Agreement, or hire any employee
with annual compensation in excess of $25,000;
(j) settle any claim, action or proceeding involving payment by it
of money damages in excess of $25,000 or impose any material restriction on its
operations or the operations of any of its Subsidiaries;
(k) amend its certificate of incorporation or bylaws, or similar
governing documents;
(l) materially restructure or materially change its investment
securities portfolio or its interest rate risk position, through purchases,
sales or otherwise, or the manner in which the portfolio is classified or
reported;
(m) make any capital expenditures other than pursuant to binding
commitments existing on the date hereof and other than expenditures necessary to
maintain existing assets in good repair or to make payment of necessary taxes;
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(n) establish or commit to the establishment of any new branch or
other office facilities or file any application to relocate or terminate the
operation of any banking office;
(o) take any action that is intended or expected to result in any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VI not being satisfied
or in a violation of any provision of this Agreement;
(p) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines;
(q) knowingly take any action that would prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368 of
the IRC; or
(r) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this SECTION 4.1.
Any request by DFBS or response thereto by FCCO shall be made in
accordance with the notice provisions of SECTION 8.7 and shall note that it is a
request pursuant to this SECTION 4.1.
4.2 FORBEARANCES BY FCCO. Except as expressly contemplated or permitted by
this Agreement, during the period from the date of this Agreement to the
Effective Time, FCCO shall not, nor shall FCCO permit any of its Subsidiaries
to, without the prior written consent of DFBS:
(a) take any action that would adversely affect or delay its ability
to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby;
(b) take any action that is intended to or expected to result in any
of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time prior to the Effective Time,
or in any of the conditions to the Merger set forth in Article VI not being
satisfied or in a violation of any provision of this Agreement;
(c) knowingly take any action that would prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368 of
the IRC;
(d) solely in the case of FCCO, declare or pay any dividends on or
make any other distributions in respect of any of its capital stock other than
its current quarterly dividends;
(e) take any action or enter into any agreement that could
reasonably be expected to jeopardize or materially delay the receipt of the
regulatory approvals described in SECTION 6.1(B);
(f) change its methods of accounting in effect at December 31, 2003,
except in accordance with changes in GAAP or regulatory accounting principles as
concurred to by FCCO's independent auditors;
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(g) conduct its business other than in substantially the same manner
as heretofore conducted; or
(h) agree to take, make any commitment to take, or adopt any
resolutions of its Board of Directors in support of, any of the actions
prohibited by this SECTION 4.2.
ARTICLE V
COVENANTS
5.1 ACQUISITION PROPOSALS.
(a) Except as permitted by this Agreement, DFBS shall not, and shall not
authorize or permit any of its Subsidiaries or any of its or its Subsidiaries'
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by DFBS or any of its
Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing non-public information), or take any other
action to facilitate, any inquiries, discussions or the making of any proposal
that constitutes or could reasonably be expected to lead to an Acquisition
Proposal, (ii) participate in any discussions or negotiations, or otherwise
communicate in any way with any person (other than FCCO), regarding an
Acquisition Proposal, or (iii) enter into or consummate any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the transactions contemplated hereby. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in the
preceding sentence by any officer, director or employee of DFBS or of any of the
Subsidiaries or any investment banker, financial advisor, attorney, accountant
or other representative retained by DFBS or any of its Subsidiaries shall be
deemed to be a breach of this SECTION 5.1 by DFBS. Notwithstanding the
foregoing, DFBS may, in response to a Superior Proposal that has not been
withdrawn and that did not otherwise result from a breach of this SECTION 5.1,
(x) furnish non-public information with respect to DFBS to the person who made
such Superior Proposal pursuant to a confidentiality agreement on terms no more
favorable to such person than the confidentiality agreement between FCCO and
DFBS dated December 16, 2003 and (y) participate in discussions or negotiations
with such person regarding such Superior Proposal, if and so long as DFBS's
Board of Directors determines in good faith, after consultation with and based
upon the advice of its outside legal counsel, that failing to take such action
would constitute a breach of its fiduciary duties under applicable law.
(b) Nothing contained in this SECTION 5.1 shall prohibit DFBS from at
any time taking and disclosing to its stockholders a position contemplated by
Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or making any
disclosure required by Rule 14a-9 promulgated under the Exchange Act.
(c) DFBS will notify FCCO immediately orally (within one day) and in
writing (within two days) of any Acquisition Proposal, any request for non-
public information that could reasonably be expected to lead to an Acquisition
Proposal, or any inquiry with respect to or that could reasonably be expected to
lead to an Acquisition Proposal, including, in each case, the identity of the
person making such Acquisition Proposal, request or inquiry and the terms and
conditions thereof, and shall provide to FCCO any written materials received by
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DFBS, any of its Subsidiaries, or any of its attorneys or investment bankers in
connection therewith. DFBS will keep FCCO informed of any developments with
respect to any such Acquisition Proposal, request or inquiry immediately upon
the occurrence thereof. DFBS will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. DFBS will take the necessary
steps to inform the appropriate individuals or entities referred to in the first
sentence of SECTION 5.1(A) of the obligations undertaken in this SECTION 5.1.
DFBS will promptly request each person (other than FCCO) that has executed a
confidentiality agreement prior to the date hereof in connection with its
consideration of a business combination with DFBS or any of its Subsidiaries to
return or destroy all confidential information previously furnished to such
person by or on behalf of DFBS or any of its Subsidiaries. DFBS shall not
release any third party from, or waive my provisions of, any confidentiality
agreements or standstill agreement to which it or any of its Subsidiaries is a
party.
5.2 CERTAIN POLICIES AND ACTIONS OF DFBS. At the request of FCCO, DFBS
shall cause ▇▇▇▇▇▇▇▇ Federal to modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) and investment and asset/liability management policies and
practices so as to be consistent with those of First Community; PROVIDED,
HOWEVER, that DFBS shall not be required to take such action prior to the date
on which the conditions set forth in Sections 6.1(a), (b), and (e) have been
satisfied, and until after receipt of written confirmation from FCCO that it is
not aware of any fact or circumstance that would prevent completion of the
Merger, and PROVIDED FURTHER, that such policies and procedures are not
prohibited by GAAP or any applicable laws and regulations. DFBS's
representations, warranties and covenants contained in this Agreement shall not
be deemed to be untrue or breached in any respect for any purpose as a
consequence of any modifications or changes undertaken solely on account of this
SECTION 5.2.
5.3 ACCESS AND INFORMATION.
(a) Upon reasonable notice, FCCO and DFBS shall (and shall cause
their respective Subsidiaries to) afford the other and its representatives
(including, without limitation, directors, officers and employees of such party
and its affiliates and counsel, accountants and other professionals retained by
such party) such reasonable access during normal business hours throughout the
period prior to the Effective Time to its books, records (including, without
limitation, tax returns and work papers of independent auditors), contracts,
properties, personnel and such other information as either party may reasonably
request; PROVIDED, HOWEVER, that no investigation by any party pursuant to this
SECTION 5.3 shall affect or be deemed to modify any representation or warranty
made by the other party in this Agreement.
(b) From the date hereof until the Effective Time, DFBS shall, and
shall cause DFBS's Subsidiaries to, promptly provide FCCO with (i) a copy of
each report, schedule, registration statement and other document filed or
received by it pursuant to the requirements of the Securities Act or the
Exchange Act, (ii) a copy of each report filed with federal or state banking
regulators, and (iii) a copy of each press release made available to the public.
Notwithstanding the foregoing, neither DFBS nor its Subsidiaries shall be
required to provide access to or to disclose information where such access or
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disclosure would violate the rights of such entity's customers, jeopardize the
attorney-client privilege of the entity in possession or control of such
information, or contravene any law, rule, regulation, order, judgment, decree or
binding agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the previous sentence apply.
(c) Each of FCCO and DFBS will not, and will cause its
representatives not to, use any information obtained pursuant to this SECTION
5.3 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Subject to the requirements of applicable law,
FCCO and DFBS will keep confidential, and will cause its representatives to keep
confidential, all information and documents obtained pursuant to this SECTION
5.3 unless such information (i) was already known to such party or an affiliate
of such party, other than pursuant to a confidentiality agreement or other
confidential relationship, (ii) becomes available to such party or an affiliate
of such party from other sources not known by such party to be bound by a
confidentiality agreement or other obligation of secrecy, (iii) is disclosed
with the prior written approval of the other party, or (iv) is or becomes
readily ascertainable from published information or trade sources.
(d) From and after the date hereof, representatives FCCO and DFBS
shall meet on a regular basis to discuss and plan for the conversion of DFBS's
and its Subsidiaries' data processing and related electronic informational
systems to those used by FCCO and its Subsidiaries with the goal of conducting
such conversion simultaneously with the consummation of the Bank Merger.
5.4 APPLICATIONS; CONSENTS.
(a) The parties hereto shall cooperate with each other and shall use
their reasonable best efforts to prepare and file as soon as practicable after
the date hereof all necessary applications, notices and filings to obtain all
permits, consents, approvals and authorizations of all Governmental Entities
that are necessary or advisable to consummate the transactions contemplated by
this Agreement. DFBS and FCCO shall furnish each other with all information
concerning themselves, their respective Subsidiaries, and their and their
respective Subsidiaries' directors, officers and stockholders and such other
matters as may be reasonably necessary or advisable in connection with any
application, notice or filing made by or on behalf of FCCO, DFBS or any of their
respective Subsidiaries to any Governmental Entity in connection with the
transactions contemplated by this Agreement and the Plan of Bank Merger. FCCO
and DFBS shall have the right to review in advance, and to the extent
practicable each will consult with the other on, all the information relating to
FCCO and DFBS, as the case may be, and any of their respective subsidiaries,
that appears in any filing made with, or written materials submitted to, any
Governmental Entity pursuant to this SECTION 5.4(A).
(b) As soon as practicable after the date hereof, each of the
parties hereto shall, and they shall cause their respective subsidiaries to, use
its best efforts to obtain any consent, authorization or approval of any third
party that is required to be obtained in connection with the transactions
contemplated by this Agreement and the Plan of Bank Merger.
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5.5 ANTITAKEOVER PROVISIONS. DFBS and its Subsidiaries shall take all
steps required by any relevant federal or state law or regulation or under any
relevant agreement or other document to exempt or continue to exempt FCCO, First
Community, the Agreement, the Plan of Bank Merger and the Merger from any
provisions of an antitakeover nature in DFBS's or its Subsidiaries' certificate
of incorporation and bylaws, or similar organizational documents, and the
provisions of any federal or state antitakeover laws.
5.6 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take promptly, or cause to be taken promptly, all actions and to do promptly, or
cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as possible,
including using efforts to obtain all necessary actions or non-actions,
extensions, waivers, consents and approvals from all applicable Governmental
Entities, effecting all necessary registrations, applications and filings
(including, without limitation, filings under any applicable state securities
laws) and obtaining any required contractual consents and regulatory approvals.
5.7 PUBLICITY. The initial press release announcing this Agreement shall
be a joint press release and thereafter DFBS and FCCO shall consult with each
other prior to issuing any press releases or otherwise making public statements
with respect to the Merger and any other transaction contemplated hereby and in
making any filings with any Governmental Entity or with any national securities
exchange or market with respect thereto; PROVIDED, HOWEVER, that nothing in this
SECTION 5.7 shall be deemed to prohibit any party from making any disclosure
which its counsel deems necessary in order to satisfy such party's disclosure
obligations imposed by law.
5.8 STOCKHOLDER MEETINGS.
(a) DFBS will submit to its stockholders this Agreement and any
other matters required to be approved or adopted by stockholders in order to
carry out the intentions of this Agreement. In furtherance of that obligation,
DFBS will take, in accordance with applicable law and its certificate of
incorporation and bylaws, all action necessary to call, give notice of, convene
and hold a meeting of its stockholders (the "DFBS STOCKHOLDER MEETING") as
promptly as practicable for the purpose of considering and voting on approval
and adoption of this Agreement and the transactions provided for in this
Agreement. DFBS's Board of Directors will use all reasonable best efforts to
obtain from DFBS's stockholders a vote approving this Agreement. Except as
provided in this Agreement, (i) DFBS's Board of Directors shall recommend to
DFBS's stockholders approval of this Agreement, (ii) the Joint Proxy
Statement-Prospectus shall include a statement to the effect that DFBS's Board
of Directors has recommended that DFBS's stockholders vote in favor of the
approval of this Agreement, and (iii) neither DFBS's Board of Directors nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to FCCO, the recommendation of
DFBS's Board of Directors that DFBS's stockholders vote in favor of approval of
this Agreement or make any statement in connection with the DFBS Stockholder
Meeting inconsistent with such recommendation. Notwithstanding the foregoing, if
DFBS's Board of Directors, after consultation with and based on the advice of
counsel, determines in good faith that it would result in a violation of its
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fiduciary duties under applicable law to recommend this Agreement, then in
submitting the Agreement to stockholders at the DFBS Stockholder Meeting it may
submit the Agreement without recommendation and will no longer be under any
obligation to use its reasonable best efforts to obtain from DFBS's stockholders
a vote approving this Agreement, in which case the Board of Directors may
communicate the basis for its lack of a recommendation to the stockholders in
the Joint Proxy Statement-Prospectus or an appropriate amendment or supplement
thereto to the extent required by law.
(b) FCCO will submit to its stockholders this Agreement and any
other matters required to be approved or adopted by stockholders in order to
carry out the intentions of this Agreement. In furtherance of that obligation,
FCCO will take, in accordance with applicable law and its articles of
incorporation and bylaws, all action necessary to call, give notice of, convene
and hold a meeting of its stockholders (the "FCCO STOCKHOLDER MEETING") as
promptly as practicable for the purpose of considering and voting on approval
and adoption of this Agreement and the transactions provided for in this
Agreement. FCCO's Board of Directors will use all reasonable best efforts to
obtain from FCCO's stockholders a vote approving this Agreement. Except as
provided in this Agreement, (i) FCCO's Board of Directors shall recommend to
FCCO's stockholders approval of this Agreement, (ii) the Joint Proxy
Statement-Prospectus shall include a statement to the effect that FCCO's Board
of Directors has recommended that FCCO's stockholders vote in favor of the
approval of this Agreement, and (iii) neither FCCO's Board of Directors nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to DFBS, the recommendation of
FCCO's Board of Directors that Aquiror's stockholders vote in favor of approval
of this Agreement or make any statement in connection with the FCCO Stockholder
Meeting inconsistent with such recommendation. Notwithstanding the foregoing, if
FCCO's Board of Directors, after consultation with and based on the advice of
counsel, determines in good faith that it would result in a violation of its
fiduciary duties under applicable law to recommend this Agreement, then in
submitting the Agreement to stockholders at the FCCO Stockholder Meeting it may
submit the Agreement without recommendation, in which case the Board of
Directors may communicate the basis for its lack of a recommendation to the
stockholders in the Joint Proxy Statement-Prospectus or an appropriate amendment
or supplement thereto to the extent required by law.
5.9 REGISTRATION OF FCCO COMMON STOCK.
(a) As promptly as reasonably practicable following the date hereof,
FCCO shall prepare and file with the SEC a registration statement on Form S-4
with respect to the issuance of FCCO Common Stock in the Merger (such Form S-4,
and any amendments or supplements thereto, the "REGISTRATION STATEMENT"). The
Registration Statement shall contain proxy materials relating to the matters to
be submitted to the DFBS stockholders at the DFBS Stockholder Meeting and to the
matters to be submitted to the FCCO stockholders at the FCCO Stockholder
Meeting. Such proxy materials shall also constitute the prospectus relating to
the shares of FCCO Common Stock to be issued in the Merger (such proxy
statement-prospectus, and any amendments or supplements thereto, the "JOINT
PROXY STATEMENT-PROSPECTUS"). DFBS will furnish to FCCO the information required
to be included in the Registration Statement with respect to its business and
affairs and shall have the right to review and consult with FCCO on the form of,
and any characterizations of such information included in, the Registration
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Statement prior to its being filed with the SEC. FCCO shall use reasonable best
efforts to have the Registration Statement declared effective by the SEC and to
keep the Registration Statement effective as long as is necessary to consummate
the Merger and the transactions contemplated hereby. DFBS and FCCO will use
reasonable best efforts to cause the Joint Proxy Statement-Prospectus to be
mailed to their respective stockholders as promptly as practicable after the
Registration Statement is declared effective under the Securities Act. FCCO will
advise DFBS, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective, the issuance of any stop order, the
suspension of the qualification of the FCCO Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Joint Proxy Statement-Prospectus or the Registration
Statement. If at any time prior to the Effective Time any information relating
to FCCO or DFBS, or any of their respective affiliates, officers or directors,
should be discovered by FCCO or DFBS which should be set forth in an amendment
or supplement to any of the Registration Statement or the Joint Proxy
Statement-Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party that discovers such information shall promptly
notify the other party hereto and, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such information
shall be promptly filed by FCCO with the SEC and disseminated by FCCO to its
shareholders and by DFBS to its stockholders.
(b) FCCO shall also take any action required to be taken under any
applicable state securities laws in connection with the Merger and each of DFBS
and FCCO shall furnish all information concerning it and the holders of DFBS
Common Stock as may be reasonably requested in connection with any such action.
(c) Prior to the Effective Time, FCCO shall notify the Nasdaq Stock
Market of the additional shares of FCCO Common Stock to be issued by FCCO in
exchange for the shares of DFBS Common Stock.
5.10 AFFILIATE LETTERS. DFBS shall use its best efforts to cause each
director, executive officer and other person who is an "affiliate" of DFBS under
Rule 145 of the Securities Act to deliver to FCCO as soon as practicable and
prior to the mailing of the Joint Proxy Statement-Prospectus executed letter
agreements, each substantially in the form attached hereto as Exhibit D,
providing that such person will comply with Rule 145.
5.11 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the other of: (i) any event or notice of, or other communication relating to,
a default or event that, with notice or lapse of time or both, would become a
default, received by it or any of its Subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract material to
the financial condition, properties, businesses or results of operations of each
party and its Subsidiaries taken as a whole to which each party or any
Subsidiary is a party or is subject; and (ii) any event, condition, change or
occurrence which individually or in the aggregate has, or which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in a Material Adverse Effect. Each of DFBS and FCCO shall give prompt
notice to the other party of any notice or other communication from any third
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party alleging that the consent of such third party is or may be required in
connection with any of the transactions contemplated by this Agreement.
5.12 EMPLOYEES, DIRECTORS AND OFFICERS, AND EMPLOYEE BENEFIT PLANS.
(a) FCCO and First Community shall enter into an employment,
consulting, and non-compete agreement with ▇▇. ▇▇▇▇▇▇▇ which shall contain
substantially the same terms and conditions and be in substantially the same
form as attached as Exhibit E to this Agreement. ▇▇. ▇▇▇▇▇▇▇ shall terminate his
existing non-compete agreement listed in Section 3.2(o)(ii) of the DFBS
Disclosure Letter and all rights thereunder shall be waived and no payments made
therefor. Immediately prior to Closing and except as set forth in Section
5.12(c), ▇▇. ▇▇▇▇▇▇▇ shall terminate all his existing compensation agreements in
exchange for a payment from DFBS that shall not constitute a parachute payment
within the meaning of Section 280G of the Internal Revenue Code.
(b) FCCO and First Community shall enter into an employment,
consulting, and non-compete agreement with ▇▇. ▇▇▇▇▇ which shall contain
substantially the same terms and conditions and be in substantially the same
form as attached as Exhibit F to this Agreement. ▇▇. ▇▇▇▇▇ shall terminate his
existing non-compete agreement listed in Section 3.2(o)(ii) of the DFBS
Disclosure Letter and all rights thereunder shall be waived and no payments made
therefor. Immediately prior to Closing and except as set forth in Section
5.12(c), ▇▇. ▇▇▇▇▇ shall terminate all his existing compensation agreements in
exchange for a payment from DFBS that shall not constitute a parachute payment
within the meaning of Section 280G of the Internal Revenue Code.
(c) At the Effective Time, the executive benefit benefits plans for
Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ shall be modified as follows:
(i) FCCO shall assume and continue to maintain the salary
continuation agreements listed in Section 3.2(o)(ii) of the DFBS Disclosure
Letter; PROVIDED, HOWEVER, that such agreements shall be amended to provide that
a change of control (as defined in the agreements) shall not accelerate vesting
of benefits under those agreements, that no payments or other rights shall be
triggered solely by the execution of this Agreement and consummation of the
Merger, and that the executive's rights under such agreements shall continue to
vest so long as the executive is either an employee or serves as a consultant to
FCCO or First Community.
(ii) FCCO shall assume and continue to maintain the split
dollar life insurance arrangements listed in Section 3.2(o)(ii) of the DFBS
Disclosure Letter in accordance with the terms of such arrangements; PROVIDED,
HOWEVER, that as of the Effective Time, Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ agree to waive
the vesting rights under a change of control as set forth in those arrangements
and that no payments or other rights shall be triggered solely by the execution
of this Agreement and consummation of the Merger.
(iii) The supplemental executive retirement plan listed in
Section 3.2(o)(ii) of the DFBS Disclosure Letter shall be terminated and all
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rights thereunder shall be waived and each participant thereunder shall receive
a payment of all benefits to which he is entitled pursuant to the terms of the
plan and to the extent such benefits have been properly accrued in accordance
with past practice and methodology.
(d) All persons who are employees of ▇▇▇▇▇▇▇▇ Federal immediately
prior to the Effective Time and whose employment is not specifically terminated,
if any, at or prior to the Effective Time (a "CONTINUING EMPLOYEE") shall, at
the Effective Time, become employees of First Community; PROVIDED, HOWEVER, that
in no event shall any of ▇▇▇▇▇▇▇▇ Federal's employees be officers of First
Community, or have or exercise any power or duty conferred upon such an officer,
unless and until duly elected or appointed to such position by the board of
directors of First Community and in accordance with the bylaws of First
Community. All of the Continuing Employees shall be employed at the will of
First Community and no contractual right to employment shall inure to such
employees because of this Agreement except as otherwise set forth in this
Agreement. For those ▇▇▇▇▇▇▇▇ Employees terminated within one year following the
Effective Time, FCCO shall honor the terms of the Employee Severance Plan set
forth in Section 3.2(o)(ii) of the DFBS Disclosure Letter; PROVIDED, HOWEVER,
that as soon as practicable after the execution of this Agreement, DFBS shall
cause Section 4.2(c) of such plan to be amended to increase the radius
limitation from 35 miles to 60 miles. Notwithstanding the preceding, such
severance payment shall be reduced by any amount payable to such individual
under any other applicable severance plan, program or policy, employment
agreement or any other arrangement providing for severance payment to such
individual as a result of involuntary termination of employment.
(e) As of the Effective Time, each Continuing Employee shall be
eligible to participate in FCCO's 401(k) plan with full credit for prior service
with DFBS for purposes of eligibility and vesting.
(f) As of the Effective Time, FCCO shall make available
employer-provided health and other employee welfare benefit plans to each
Continuing Employee on the same basis as it provides such coverage to FCCO
employees except that any pre-existing condition, eligibility waiting period or
other limitations or exclusions otherwise applicable under such plans to new
employees shall not apply to a Continuing Employee or their covered dependents
who were covered under a similar DFBS plan at the Effective Time of the Merger.
(g) With respect to the DFBS employee stock ownership plan ("ESOP")
listed in Section 3.2(o)(ii) of the DFBS Disclosure Letter, prior to the
Effective Time, DFBS shall:
(i) take any and all actions to cause the ESOP to be
terminated and cause the ESOP participants' respective benefits and account
balances under the ESOP to become fully vested and nonforfeitable (in accordance
with the applicable requirements of ERISA and the IRC) as of the Effective Time;
(ii) notify the trustee of the ESOP to repay the loan in full
and allocate all remaining unallocated assets to the accounts of participants in
accordance with the terms of the plan documents;
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(h) As soon as practicable after the date hereof, DFBS shall file a
request for a determination letter from the IRS regarding the continued
qualified status of the ESOP upon its termination. Prior to the Effective Time,
DFBS and, following the Effective Time, FCCO shall use reasonable efforts to
obtain such favorable determination letter (including, but not limited to,
making such changes to the ESOP as may be requested by the IRS as a condition to
its issuance of a favorable determination letter).
(i) At the election of FCCO, notice of which shall be provided to
DFBS at least 45 calendar days prior to the Closing Date, DFBS shall cause the
Financial Institutions Retirement Funds' Comprehensive Retirement Plan as
sponsored by DFBS or its Subsidiary, listed in Section 3.2(r)(i) of the DFBS
Disclosure Letter, (i) to be terminated effective as of the Closing Date by
DFBS, or (ii) to be amended such that all benefit accruals thereunder shall
cease to be effective as of the Effective Time.
(j) FCCO shall assume and continue to maintain the survivor income
plan and split dollar agreements listed in Section 3.2(o)(ii) of the DFBS
Disclosure Letter; PROVIDED, HOWEVER, that the parties acknowledge and agree
that existing DFBS insurance coverage shall cover all payment obligations
triggered by the consummation of the transactions contemplated by this
Agreement.
(k) As of the Effective Time, the director salary continuation plan
listed in Section 3.2(o)(ii) of the DFBS Disclosure Letter shall be terminated
by DFBS and the plan participants shall enter into a Termination and Release
Agreement substantially in the form of Exhibit G hereto.
(l) At the election of FCCO, notice of which shall be provided to
DFBS at least 45 calendar days prior to the Closing Date, DFBS shall cause the
401(k) plan listed in Section 3.2(r)(i) of the DFBS Disclosure Letter to be
terminated effective as of the Closing Date. As soon as practicable after
receipt of notice of such election, DFBS shall file a request for a
determination letter from the IRS regarding the continued qualified status of
such 401(k) plan upon its termination. Prior to the Effective Time, DFBS and,
following the Effective Time, FCCO, shall use reasonable efforts to obtain such
favorable determination letter (including, but not limited to, making such
changes to such 401(k) plan as may be requested by the IRS as a condition to its
issuance of a favorable determination letter). DFBS shall timely issue notice
required under Section 306(b) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, which is codified in
ERISA section 101(i), to all 401(k) plan participants and beneficiaries with
respect to the cessation, until a favorable IRS determination letter is issued
with respect to the 401(k) plan's termination (and for a reasonable period of
time thereafter), of participant and beneficiary rights (as may be applicable)
to direct investment of their respective 401(k) plan account balances, obtain
loans in respect of those account balances and obtain distributions in respect
of those account balances.
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5.13 INDEMNIFICATION.
(a) From and after the Effective Time through the third anniversary
of the Effective Time, without releasing any insurance carrier and after
exhaustion of all applicable director and liability insurance coverage for DFBS
and its directors and officers, FCCO agrees to indemnify and hold harmless, each
present and former director and officer of DFBS and its Subsidiaries and each
officer or employee of DFBS and its Subsidiaries that is serving or has served
as a director or trustee of another entity expressly at DFBS's request or
direction (each, an "INDEMNIFIED PARTY"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, amounts paid in
settlement, losses, claims, damages or liabilities incurred in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative arising out of matters existing or occurring at
or prior to the Effective Time (including the transactions contemplated by this
Agreement), whether asserted or claimed prior to, at or after the Effective
Time, as they are from time to time incurred, in each case to the fullest extent
such person would have been indemnified or have the right to advancement of
expenses pursuant to the certificate of incorporation or charter and bylaws of
DFBS and its Subsidiaries, as applicable, as in effect on the date of this
Agreement and to the fullest extent permitted by applicable law; provided,
however, that (A) FCCO shall have the right to assume the defense thereof and
upon such assumption FCCO shall not be liable to any director or officer of DFBS
for any legal expenses of other counsel or any other expenses subsequently
incurred by such director or officer in connection with the defense thereof,
except that if FCCO elects not to assume such defense or counsel for such
director or officer reasonably advises such director or officer that there are
issues which raise conflicts of interest between FCCO and such director or
officer, such director or officer may retain counsel reasonably satisfactory to
him, and FCCO shall pay the reasonable fees and expenses of such counsel and (B)
FCCO shall not be liable for any settlement effected without its prior written
consent.
(b) Any Indemnified Party wishing to claim indemnification under
SECTION 5.13(A), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify FCCO thereof, but the failure to so notify
shall not relieve FCCO of any liability it may have hereunder to such
Indemnified Party if such failure does not materially and substantially
prejudice FCCO.
(c) Prior to the Effective Time, FCCO shall purchase, or shall
direct DFBS to purchase, an extended reporting period endorsement under DFBS's
existing directors' and officers' liability insurance coverage ("DFBS'S D&O
POLICY") for acts or omissions occurring prior to the Effective Time by such
directors and officers currently covered by DFBS's D&O Policy. The directors and
officers of DFBS shall take all reasonable actions required by the insurance
carrier necessary to procure such endorsement. Such endorsement shall provide
such directors and officers with coverage following the Effective Time for five
years or such lesser period of time as can be purchased for an aggregate amount
equal to three times the current annual premium for DFBS's D&O Policy (the
"PREMIUM MULTIPLE"). If FCCO is unable to obtain or maintain the insurance
coverage called for in this Section 5.13(c), then FCCO shall obtain the most
advantageous coverage that can be purchased for the Premium Multiple.
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(d) In the event FCCO or any of its successors or assigns (i)
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person or entity, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of FCCO assume
the obligations set forth in this SECTION 5.13.
(e) The provisions of this SECTION 5.13 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
representatives.
5.14 SECTION 16 MATTERS. Prior to the Effective Time, DFBS and FCCO shall
take all such steps as may be required to cause any dispositions of DFBS Common
Stock (including derivative securities with respect to DFBS Common Stock) or
acquisitions of FCCO Common Stock resulting from the transactions contemplated
by this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to DFBS to be
exempt under Rule 16b-3 promulgated under the Exchange Act. DFBS agrees to
promptly furnish FCCO with all requisite information necessary for FCCO to take
the actions contemplated by this SECTION 5.14.
5.15 BOARD OF DIRECTORS. FCCO and First Community shall take all action
necessary to appoint Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ to the Boards of Directors of
FCCO and First Community, effective immediately following the Effective Time.
The current three outside directors, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, III, and ▇▇▇▇▇▇ ▇. ▇▇▇▇, of the DFBS Board of Directors shall be
appointed to the ▇▇▇▇▇▇▇▇ Advisory Board. The amount of the board advisory fees
will be determined in good faith by the parties.
5.16 FINANCIAL ABILITY. On the Effective Date and through the date of
payment of the aggregate amount of cash payable pursuant to Article II hereof,
FCCO or First Community will have all funds necessary to consummate the Merger
and pay the aggregate amount of cash to be paid to the holders of DFBS Common
Stock pursuant to Article II hereof. Each of FCCO and First Community is, and
immediately following completion of the Merger and the Bank Merger will be, in
compliance with all capital requirements applicable to it.
ARTICLE VI
CONDITIONS TO CONSUMMATION
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the Merger shall be subject to the
satisfaction of the following conditions:
(a) BOARD AND STOCKHOLDER APPROVAL. This Agreement shall have been
approved by the Board of Directors of FCCO and DFBS, as well as the requisite
vote of the holders of DFBS Common Stock and FCCO Common Stock, in each case in
accordance with applicable laws and regulations.
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(b) REGULATORY APPROVALS. All approvals, consents or waivers of any
Governmental Entity required to permit consummation of the transactions
contemplated by this Agreement shall have been obtained and shall remain in full
force and effect, and all statutory waiting periods shall have expired;
PROVIDED, HOWEVER, that none of such approvals, consents or waivers shall
contain any condition or requirement that would so materially and adversely
impact the economic or business benefits to FCCO of the transactions
contemplated hereby that, had such condition or requirement been known, FCCO
would not, in its reasonable judgment, have entered into this Agreement.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No party hereto shall
be subject to any order, decree or injunction of a court or agency of competent
jurisdiction that enjoins or prohibits the consummation of the Merger or the
Bank Merger and no Governmental Entity shall have instituted any proceeding for
the purpose of enjoining or prohibiting the consummation of the Merger or the
Bank Merger or any transactions contemplated by this Agreement. No statute, rule
or regulation shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or makes illegal consummation of the Merger.
(d) REGISTRATION STATEMENT; BLUE SKY LAWS. The Registration
Statement shall have been declared effective by the SEC and no proceedings shall
be pending or threatened by the SEC to suspend the effectiveness of the
Registration Statement, and FCCO shall have received all required approvals by
state securities or "blue sky" authorities with respect to the transactions
contemplated by this Agreement.
(e) THIRD PARTY CONSENTS. FCCO and DFBS shall have obtained the
consent or approval of each person (other than the governmental approvals or
consents referred to in SECTION 6.1(B)) whose consent or approval shall be
required to consummate the transactions contemplated by this Agreement, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on FCCO (after
giving effect to the consummation of the transactions contemplated hereby).
(f) TAX OPINIONS. FCCO and DFBS shall have received the opinion of
Nelson, Mullins, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P., dated as of the Closing Date, in
form and substance customary in transactions of the type contemplated hereby,
and reasonably satisfactory to DFBS and FCCO, as the case may be, substantially
to the effect that on the basis of the facts, representations and assumptions
set forth in such opinion which are consistent with the state of facts existing
at the Effective Time, (i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the IRC,
(ii) FCCO and DFBS will each be a party to that reorganization within the
meaning of Section 368(b) of the IRC, and (iii) except to the extent of any cash
received in lieu of a fractional share interest in FCCO Common Stock, the
shareholders of DFBS will not recognize any gain or loss by exchanging their
shares of DFBS Common Stock for shares of FCCO Common Stock pursuant to the
Merger. Such opinion may be based on, in addition to the review of such matters
of fact and law as the opinion giver considers appropriate, representations
contained in certificates of officers of FCCO, DFBS and others.
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(g) EXCHANGE OF DFBS COMMON STOCK. Holders of DFBS Common Stock
shall exchange 100% of the outstanding DFBS Common Stock (except for Ungranted
Restricted Shares) for the aggregate Merger Consideration, except for the
dissent by holders of no more than 8% of the outstanding DFBS Common Stock.
(h) AGREEMENTS. The following agreements shall have been executed by
FCCO and the executive officers and directors of DFBS as the case may be:
(i) The voting agreements referred to in the introductory
statement;
(ii) The non-compete agreements referred to in the
introductory statements;
(iii) The affiliate letters referred to in Section 5.10 of the
Agreement;
(iv) The employment, consulting, and non-compete agreement
referred to in Section 5.12(a) of the Agreement;
(v) The employment, consulting, and non-compete agreement
referred to in Section 5.12(b) of the Agreement; and
(vi) The termination and release agreements referred to in
Section 5.12(k).
(i) LISTING. The shares of FCCO Common Stock to be issued in the
Merger shall have been approved for listing on the NASDAQ SmallCap Market.
6.2 CONDITIONS TO THE OBLIGATIONS OF FCCO. The obligations of FCCO to
effect the Merger shall be further subject to the satisfaction of the following
additional conditions, any one or more of which may be waived by FCCO:
(a) DFBS'S REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of DFBS contained in SECTIONS 3.2(A) (except as
relates to qualification), (B) (except as relates to qualification), (C), (D),
(E)(I) and (II), (X) and (FF) of this Agreement shall be true and correct
(except for inaccuracies that are de minimis) as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date, and
there shall not exist any inaccuracies in the representations and warranties of
DFBS contained in this Agreement (including the representations and warranties
set forth in the Sections designated above) such that the effect of such
inaccuracies individually or in the aggregate has, or is reasonably likely to
have, a Material Adverse Effect on DFBS.
(b) PERFORMANCE OF DFBS'S OBLIGATIONS. DFBS shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time.
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(c) OFFICERS' CERTIFICATE. FCCO shall have received a certificate
signed by the chief executive officer and the chief financial or principal
accounting officer of DFBS to the effect that the conditions set forth in
SECTIONS 6.2(A) and (B) have been satisfied.
(d) MATERIAL ADVERSE CHANGE. There shall not have been any Material
Adverse Effect, 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, is reasonably likely to cause, create, or result in any such
Material Adverse Effect.
6.3 CONDITIONS TO THE OBLIGATIONS OF DFBS. The obligations of DFBS to
effect the Merger shall be further subject to the satisfaction of the following
additional conditions, any one or more of which may be waived by DFBS:
(a) FCCO'S REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of FCCO contained in SECTIONS 3.3(A) (except as
relates to qualification), (B) (except as relates to qualification), (C), (D),
(E)(I) and (II), and (a)(a) of this Agreement shall be true and correct (except
for inaccuracies that are de minimis) as of the date of this Agreement and as of
the Closing Date as though made at and as of the Closing Date, and there shall
not exist any inaccuracies in the representations and warranties of FCCO
contained in this Agreement (including the representations and warranties set
forth in the Sections designated above) such that the effect of such
inaccuracies individually or in the aggregate has, or is reasonably likely to
have, a Material Adverse Effect on FCCO.
(b) PERFORMANCE OF FCCO'S OBLIGATIONS. FCCO shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time.
(c) OFFICERS' CERTIFICATE. DFBS shall have received a certificate
signed by the chief executive officer and the chief financial or principal
accounting officer of FCCO to the effect that the conditions set forth in
SECTIONS 6.3(A) and (B) have been satisfied.
(d) DEPOSIT MERGER CONSIDERATION. FCCO shall have deposited with the
Exchange Agent sufficient cash to pay the aggregate Cash Consideration.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time, by action taken or
authorized by the Board of Directors of the terminating party, either before or
after any requisite stockholder approval:
(a) by the mutual written consent of FCCO and DFBS; or
(b) by either FCCO or DFBS, in the event of the failure of DFBS's
stockholders to approve the Agreement at the DFBS Stockholder Meeting; PROVIDED,
HOWEVER, that DFBS shall only be entitled to terminate the Agreement pursuant to
this clause if it has complied in all material respects with its obligations
under SECTION 5.8; or
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(c) by either FCCO or DFBS, in the event of the failure of FCCO's
stockholders to approve the Agreement at the FCCO Stockholder Meeting; PROVIDED,
HOWEVER, that FCCO shall only be entitled to terminate the Agreement pursuant to
this clause if it has complied in all material respects with its obligations
under SECTION 5.8; or
(d) by either FCCO or DFBS, if either (i) any approval, consent or
waiver of a Governmental Entity required to permit consummation of the
transactions contemplated by this Agreement shall have been denied or (ii) any
Governmental Entity of competent jurisdiction shall have issued a final,
unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Agreement; or
(e) by either FCCO or DFBS, in the event that the Merger is not
consummated by December 31, 2004, unless the failure to so consummate by such
time is due to the breach of any representation, warranty or covenant contained
in this Agreement by the party seeking to terminate; or
(f) by either FCCO or DFBS (provided that the party seeking
termination is not then in material breach of any representation, warranty,
covenant or other agreement contained herein), in the event of a breach of any
covenant or agreement on the part of the other party set forth in this
Agreement, which breach cannot be or has not been cured within 30 calendar days
after the giving of written notice to the breaching party or parties of such
breach, or if any representation or warranty of the other party shall have
become untrue after the same opportunity to cure, in either case such that the
conditions set forth in SECTIONS 6.2(A) and (B) or SECTIONS 6.3(A) and (B), as
the case may be, would not be satisfied; or
(g) by FCCO, if the Board of Directors of DFBS does not publicly
recommend in the Joint Proxy Statement-Prospectus that stockholders approve and
adopt this Agreement or if, after recommending in the Joint Proxy
Statement-Prospectus that stockholders approve and adopt this Agreement, the
Board of Directors of DFBS withdraws, qualifies or revises such recommendation
in any respect materially adverse to FCCO; or
(h) by DFBS, in the event that the Board of Directors of DFBS
determines in good faith, after consultation with outside counsel, that in light
of a Superior Proposal it is necessary to terminate this Agreement in order to
comply with its fiduciary duties to DFBS and to DFBS's shareholders under
applicable law; provided, however, that the Board of Directors of DFBS may
terminate this Agreement pursuant to this SECTION 7.1(H) solely in order to
concurrently enter into a letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, an "Acquisition Agreement") related
to a Superior Proposal; provided further, however, that this Agreement may be
terminated pursuant to this SECTION 7.1(H) only after the fifth day following
FCCO's receipt of written notice advising FCCO that the Board of Directors of
DFBS is prepared to accept a Superior Proposal, and only if, during such
five-day period, if FCCO so elects, DFBS and its advisors shall have negotiated
in good faith with FCCO to make such adjustments in the terms and conditions of
this Agreement as would enable FCCO to proceed with the transactions
contemplated herein on such adjusted terms; or
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(i) by DFBS, at any time during the three business day period
commencing on the Determination Date, if the Final FCCO Stock Price is less than
$18.00, subject, however, to the following three sentences. If DFBS elects to
exercise its termination right pursuant to this SECTION 7.1(I), it shall give
prompt written notice to FCCO; PROVIDED, that such notice of election to
terminate may be withdrawn at any time within the aforementioned three business
day period. During the three business day period commencing with its receipt of
such notice, FCCO shall have the option to elect to increase the Exchange Ratio
such that the Stock Consideration is adjusted as if the Final FCCO Stock Price
equaled $18.00. If FCCO makes an election contemplated by the preceding
sentence, within such three business day period, it shall give prompt written
notice to DFBS of such election and the revised Exchange Ratio, whereupon no
termination shall be deemed to have occurred pursuant to this SECTION 7.1(I) and
this Agreement shall remain in effect in accordance with its terms (except as
the Exchange Ratio shall have been so modified), and any references in this
Agreement to the "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this SECTION 7.1(I); or
(j) by FCCO if at any time during the three business day period
commencing on the Determination Date, if the Final FCCO Stock Price is more than
$27.00, subject, however, to the following three sentences. If FCCO elects to
exercise its termination right pursuant to this SECTION 7.1(J), it shall give
prompt written notice to DFBS; PROVIDED, that such notice of election to
terminate may be withdrawn at any time within the aforementioned three business
day period. During the three business day period commencing with its receipt of
such notice, DFBS shall have the option to elect to decrease the Exchange Ratio
such that the Stock Consideration is adjusted as if the Final FCCO Stock Price
equaled $27.00; provided, however, that the Exchange Ratio shall not be
decreased in a manner that would cause the failure of the condition set forth in
SECTION 6.1(F) hereof. If DFBS makes an election contemplated by the preceding
sentence, within such three business day period, it shall give prompt written
notice to FCCO of such election and the revised Exchange Ratio, whereupon no
termination shall be deemed to have occurred pursuant to this SECTION 7.1(J) and
this Agreement shall remain in effect in accordance with its terms (except as
the Exchange Ratio shall have been so modified), and any references in this
Agreement to the "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this SECTION 7.1(J).
7.2 DFBS TERMINATION FEE.
(a) If FCCO terminates this Agreement pursuant to SECTION 7.1(G),
then DFBS shall make payment to FCCO of a termination fee in the amount of
$1,000,000. Such amount shall be paid by wire transfer of immediately available
funds within two business days following such termination. If within 12 months
after such termination, DFBS shall consummate or enter into an agreement with
respect to an Acquisition Proposal, then DFBS shall make payment to FCCO of an
additional termination fee in the amount of $1,000,000. Such amount shall be
paid by wire transfer of immediately available funds on the date of such
consummation or execution.
(b) If this Agreement is terminated by (i) FCCO pursuant to SECTION
7.1(F) where the breach giving rise to such termination was willful or (ii)
either party pursuant to SECTION 7.1(B), and in any such case an Acquisition
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Proposal has been publicly announced, disclosed or communicated or made known to
the senior management or Board of Directors of DFBS at any time after the date
of this Agreement and prior to the date of the DFBS Stockholders Meeting, in the
case of clause (ii), or the date of termination, in the case of clause (i), then
DFBS shall make payment to FCCO of a termination fee in the amount of $2,000,000
if within 12 months after such termination, DFBS shall consummate or enter into
any agreement with respect to an Acquisition Proposal. Such amount shall be paid
by wire transfer of immediately available funds on the date of such consummation
or execution.
(c) If DFBS terminates this Agreement pursuant to SECTION 7.1(H),
then DFBS shall make payment to FCCO of a termination in the amount of
$2,000,000. Such amount shall be paid by wire transfer of immediately available
funds within two business days following such termination.
(d) Notwithstanding anything herein to the contrary, in no event
shall the aggregate amount that DFBS must pay to FCCO pursuant to SECTIONS
7.2(A), (B), AND (C) exceed $2,000,000.
7.3 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either FCCO or DFBS as provided in SECTION 7.1, this Agreement shall
forthwith become void and, subject to SECTION 7.2, have no effect, and there
shall be no liability on the part of any party hereto or their respective
officers and directors, except that (i) SECTIONS 5.3(C), 7.2 AND 8.6 shall
survive any termination of this Agreement, and (ii) notwithstanding anything to
the contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
ARTICLE VIII
CERTAIN OTHER MATTERS
8.1 INTERPRETATION. When a reference is made in this Agreement to Sections
or Exhibits such reference shall be to a Section of, or Exhibit to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
8.2 SURVIVAL. Only those agreements and covenants of the parties that are
by their terms applicable in whole or in part after the Effective Time,
including SECTION 5.13 of this Agreement, shall survive the Effective Time. All
other representations, warranties, agreements and covenants shall be deemed to
be conditions of the Agreement and shall not survive the Effective Time.
8.3 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be: (i) waived in writing by the party benefited by the provision
or (ii) amended or modified at any time (including the structure of the
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transaction) by an agreement in writing between the parties hereto except that,
after the vote by the stockholders of DFBS, no amendment or modification may be
made that would reduce the amount or alter or change the kind of consideration
to be received by holders of DFBS Common Stock, or that would contravene any
provision of the SCBCA, the DGCL or the federal banking laws, rules and
regulations.
8.4 COUNTERPARTS. This Agreement may be executed in counterparts each of
which shall be deemed to constitute an original, but all of which together shall
constitute one and the same instrument.
8.5 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of South Carolina, without regard to
conflicts of laws principles.
8.6 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby.
8.7 NOTICES. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, overnight courier or facsimile
transmission (confirmed in writing) to such party at its address or facsimile
number set forth below or such other address or facsimile transmission as such
party may specify by notice (in accordance with this provision) to the other
party hereto.
If to FCCO, to:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to DFBS, to:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
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With copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
8.8 ENTIRE AGREEMENT; ETC. This Agreement, together with the Disclosure
Letters, represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and supersedes any and all
other oral or written agreements heretofore made. All terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Except for SECTION
5.13, which confers rights on the parties described therein, nothing in this
Agreement is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
8.9 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by either party hereto without the written consent of the other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers as of the date first above
written.
FIRST COMMUNITY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
DUTCHFORK BANCSHARES, INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief Executive Officer
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EXHIBIT A
April__, 2004
First Community Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Board of Directors
To the Board of Directors:
The undersigned is a director of DutchFork Bancshares, Inc. ("DFBS") and
the beneficial holder of shares of common stock of DFBS (the "DFBS Common
Stock").
First Community Corporation ("FCCO") and DFBS are considering the
execution of an Agreement and Plan of Merger (the "Agreement") contemplating the
acquisition of DFBS through the merger of DFBS with and into FCCO (the
"Merger"). The execution of the Agreement by FCCO is subject to the execution
and delivery of this letter agreement.
In consideration of the substantial expenses that FCCO will incur in
connection with the transactions contemplated by the Agreement and to induce
FCCO to execute the Agreement and to proceed to incur such expenses, the
undersigned agrees and undertakes, in his capacity as a stockholder of DFBS, and
not in his capacity as a director or officer of DFBS, as follows:
1. While this letter agreement is in effect the undersigned shall not,
directly or indirectly, except with the prior approval of FCCO, which approval
shall not be unreasonably withheld, (a) sell or otherwise dispose of or encumber
prior to the record date of the DFBS Stockholder Meeting (as defined in the
Agreement) any or all of his shares of DFBS Common Stock, or (b) deposit any
shares of DFBS Common Stock into a voting trust or enter into a voting agreement
or arrangement with respect to any shares of DFBS Common Stock or grant any
proxy with respect thereto, other than to other members of the Board of
Directors of DFBS for the purpose of voting to approve the Agreement and the
Merger and matters related thereto.
2. While this letter agreement is in effect the undersigned shall vote
or cause to be voted all of the shares of DFBS Common Stock that the undersigned
shall be entitled to so vote, whether such shares are beneficially owned by the
undersigned on the date of this letter agreement or are subsequently acquired:
(a) for the approval of the Agreement and the Merger at the DFBS Stockholder
Meeting; and (b) against (i) any Acquisition Proposal (as defined in the
Agreement) (other than the Merger).
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3. The undersigned acknowledges and agrees that any remedy at law for
breach of the foregoing provisions shall be inadequate and that, in addition to
any other relief which may be available, FCCO shall be entitled to temporary and
permanent injunctive relief without having to prove actual damages.
4. The foregoing restrictions shall not apply to shares with respect to
which the undersigned may have voting power as a fiduciary for others. In
addition, this letter agreement shall only apply to actions taken by the
undersigned in his capacity as a stockholder of DFBS and, if applicable, shall
not in any way limit or affect actions the undersigned may take in his capacity
as a director or officer of DFBS.
5. This letter agreement shall automatically terminate upon the earlier of
(i) the favorable vote of DFBS's stockholders with respect to the approval of
the Agreement and the Merger, (ii) the termination of the Agreement in
accordance with its terms or (iii) the Effective Time (as that term is defined
in the Agreement) of the Merger.
6. As of the date hereof; the undersigned has voting power with respect to
______________ shares of DFBS Common Stock.
IN WITNESS WHEREOF, the undersigned has executed this agreement as of the
date first above written.
Very truly yours,
---------------------------
---------------------------
Print Name
Accepted and agreed to as of the date first above written:
First Community Corporation
---------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President and Chief Executive Officer
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EXHIBIT B
FIRST COMMUNITY CORPORATION
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (the "Agreement") is entered into as of
April __, 2004, by and between First Community Corporation ("First Community"),
a corporation organized under the laws of the State of South Carolina and the
holding company for First Community Bank, National Association (the "Bank"),
with its principal offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ and ___________ (the "Individual"), a director of DutchFork Bancshares,
Inc. ("DFBS"), a corporation organized under the laws of the State of Delaware
and the holding company for Newberry Federal Savings Bank ("Newberry Federal"),
with its principal office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Boards of Directors of First Community and DFBS have
determined that the acquisition of DFBS by First Community (the "Merger") is in
the best interests of the shareholders and consistent with, and in furtherance
of, their respective business strategies; and
WHEREAS, the parties hereto acknowledge that the Individual, as a director
of DFBS and Newberry Federal, occupies a unique position of trust and confidence
with respect to DFBS; and
WHEREAS, the parties further acknowledge that, by virtue of this position,
the Individual has acquired significant knowledge relating to the business of
the DFBS and Newberry Federal; and
WHEREAS, following the Merger the Individual will join the advisory board
of Newberry Federal; and
WHEREAS, the Board of Directors of First Community has determined that it
is in the best interests of First Community and its shareholders to protect the
business and goodwill associated with the business of DFBS and Newberry Federal
by strengthening restrictions on the Individual's ability to enter into certain
competitive business activities following the completion of the Merger; and
WHEREAS, the Individual has agreed to accept such limitations on his
ability to compete with First Community and the Bank following the Merger as an
inducement for First Community to execute the Agreement and Plan of Merger
between DFBS and First Community.
NOW, THEREFORE, in consideration of the foregoing, and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. The Individual agrees that, upon the consummation of the Merger, the
Individual will not, directly or indirectly:
72
a. become a director, officer, employee, shareholder, principal, agent,
consultant or independent contractor of (a) any insured depository
institution, trust company or parent holding company of any such
institution or company which has an office in ▇▇▇▇▇▇▇▇ County,
South Carolina or (b) any other entity whose business in ▇▇▇▇▇▇▇▇
County, South Carolina materially competes with the depository,
lending or other business activities of First Community or any of
its subsidiaries (in each case, a "Competing Business"), provided,
however, that this provision shall not prohibit the Individual from
owning bonds, non-voting preferred stock or up to 5% of the
outstanding common stock of any such entity if such common stock is
publicly traded;
b. form, organize or take any action towards the formation or
organization of a insured depository institution or trust company
with business operations in ▇▇▇▇▇▇▇▇ County, South Carolina;
c. solicit or induce, or cause others to solicit or induce, any
employee of First Community or any of its subsidiaries to leave the
employment of such entities; or
d. solicit (whether by mail, telephone, personal meeting or any other
means) any customer of First Community or any of its subsidiaries to
transact business with any Competing Business, or to reduce or
refrain from doing any business with First Community or its
subsidiaries, or interfere with or damage (or attempt to interfere
with or damage) any relationship between First Community or its
subsidiaries and any such customers.
2. The Individual hereby agrees to comply with the provisions of
Section 1 for a period of 24 months following the effective date of the Merger.
3. Notwithstanding any other provision hereof, the Individual agrees to
treat as confidential all information (excluding, however, information contained
in publicly available reports filed by First Community with any governmental
entity and information published or disclosed to the public by a third party)
concerning the records, properties, books, contracts, commitments and affairs of
First Community and/or its subsidiaries and affiliates, including, but not
limited to, information regarding accounts, shareholders, finances, strategies,
marketing, customers and potential customers (their identities, preferences,
likes and dislikes) and other information of a similar nature not available to
the public.
4. No rights under this Agreement shall be assignable nor duties delegable
by either party, except that First Community may assign any of its rights
hereunder to any acquiror of all or substantially all of the assets of First
Community. This Agreement will inure to the benefit of and be binding upon any
successor to First Community by merger or consolidation or any other change in
form or any other person or firm or entity to which all or substantially all of
the assets and business of First Community may be sold or otherwise transferred.
Nothing contained in this Agreement is intended to confer upon any person or
entity, other than the parties hereto, their successors in interest and
permitted transferees, any rights or remedies under or by reason of this
Agreement unless expressly so stated to the contrary.
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73
5. This Agreement shall be construed, enforced and interpreted in
accordance with and governed by the laws of the State of South Carolina, without
reference to its principles of conflict of laws, except to the extent that
federal law shall be deemed to preempt such state laws.
6. It is the intention of the parties hereto that the provisions of
this Agreement shall be enforced to the fullest extent permissible under all
applicable laws and public policies, but that the unenforceability or the
modification to conform with such laws or public policies of any one provision
hereof shall not render unenforceable or impair the remainder of the Agreement.
Accordingly, if any provision shall be determined to be invalid or unenforceable
either in whole or in part, this Agreement shall be deemed amended to delete or
modify as necessary the invalid or unenforceable provisions to alter the balance
of this Agreement to render the same valid and enforceable.
7. The Individual acknowledges that any breach of this Agreement will
result in irreparable damage to First Community for which First Community will
not have an adequate remedy at law. In addition to any other remedies and
damages available to First Community, the Individual further acknowledges that
First Community shall be entitled to injunctive relief hereunder to enjoin any
breach of this Agreement, and the parties hereby consent to an injunction in
favor of First Community by any court of competent jurisdiction, without
prejudice to any other right or remedy to which First Community may be entitled.
The Individual represents and acknowledges that, in light of his experience and
capabilities, the Individual can obtain employment with other than a Competing
Business or in a business engaged in other lines and/or of a different nature
than those engaged in by First Community or its subsidiaries or affiliates, and
that the enforcement of a remedy by way of injunction will not prevent the
Individual from earning a livelihood. Each of the remedies available to First
Community in the event of a breach by the Individual shall be cumulative and not
mutually exclusive.
8. If an action is instituted to enforce any of the provisions of this
Agreement, the prevailing party in such action shall be entitled to recover from
the losing party reasonable attorneys' fees and costs.
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IN WITNESS WHEREOF, First Community has caused this Agreement to be
executed by its duly authorized officer on behalf of the board of directors, and
the Individual has signed this Agreement, effective as of the date first above
written.
ATTEST: FIRST COMMUNITY CORPORATION
------------------------------ --------------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President and Chief Executive Officer
WITNESS: INDIVIDUAL
------------------------------ --------------------------------------------
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EXHIBIT C
AGREEMENT TO MERGE
between
▇▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK
and
FIRST COMMUNITY BANK, NATIONAL ASSOCIATION
under the charter of
FIRST COMMUNITY BANK, NATIONAL ASSOCIATION
This AGREEMENT TO MERGE made between ▇▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK
(hereinafter referred to as "Newberry Federal"), a federally-chartered savings
association organized under the laws of the United States, being located at 1735
▇▇▇▇▇▇ Road, ▇▇▇▇▇▇▇▇ , county of ▇▇▇▇▇▇▇▇, in the State of South Carolina, with
capital of $________ divided into _________ shares of common stock issued and
outstanding, each of $0.01 par value, surplus of $_________________ and
undivided profits, including capital reserves, of $_____________ as
of___________,2004, and FIRST COMMUNITY BANK, NATIONAL ASSOCIATION, (hereinafter
referred to as "First Community"), a banking association organized under the
laws of the United States, being located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, county
of Lexington, in the State of South Carolina, with capital of $_________ divided
into___________ shares of common stock, each of $______________ $1.00 par value,
surplus of $____________, and undivided profits, including capital reserves, of
$______________ as of _____________, 2004, each acting pursuant to a resolution
of its board of directors adopted by the vote of a majority of its directors,
witnessed as follows:
SECTION 1.
Newberry Federal shall be merged into First Community under the charter of
the latter (the "Merger").
SECTION 2.
The name of the receiving association (hereinafter referred to as the
"Association") shall be First Community Bank, National Association.
SECTION 3.
The business of the Association shall be that of a national banking
association. This business shall be conducted by the Association at its main
office which shall be located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
and at its legally established branches.
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SECTION 4.
The amount of the capital stock of the Association shall be approximately
$____________ divided into ________________ shares of common stock, each of
$1.00 par value, and at the time the Merger shall become effective, the
Association shall have a surplus of approximately $____________, and undivided
profits, including capital reserves of approximately $____________, which when
combined with the capital and surplus will be equal to the combined capital
structures of the merging banks as stated in the preamble to this agreement;
adjusted however, for normal earnings, expenses and any permitted dividends (and
if applicable, purchase accounting adjustments) between _________________, 2004
and the effective time of the Merger.
SECTION 5.
All assets of Newberry Federal and First Community as they exist at the
effective time of the Merger shall pass to and vest in the Association without
any conveyance or other transfer. The Association shall be responsible for all
of the liabilities of every kind and description of each of Newberry Federal and
First Community existing as of the effective time of the Merger. A committee
of____________, three to be appointed by the board of directors of each of
Newberry Federal and First Community at the time of the Merger shall have
satisfied themselves, that the statement of condition of each bank as of
_______________________ 2004, fairly presents its financial condition and since
such date there have been no material adverse change in the financial condition
or business of either bank.
SECTION 6.
Newberry Federal shall contribute to the Association acceptable assets
having a book value, over and above its liability to its creditors, of at least
$____________, and having an estimated fair value over and above its liability
to creditors, of at least $________, or ______% of the estimated fair value of
excess acceptable assets over and above liabilities to creditors, to the
Association; adjusted however, for normal earnings, expenses and any permitted
dividends (and if applicable, purchase accounting adjustments) between
_________________, 2004 and the effective time of the Merger.
The difference between the book and the estimated fair value the assets to
be contributed is made up as follows:
At the effective time of the Merger, First Community shall have on hand
acceptable assets having a book value of at least $________ over and above its
liabilities to its creditors, and having a fair value, over and above its
liability to creditors, of at least $________, or ______% of the estimated fair
value of excess acceptable assets, over and above liabilities to its creditors,
of the Association; adjusted however, for normal earnings, expenses and any
permitted dividends (and if applicable, purchase accounting adjustments) between
_________________, 2004 and the effective time of the Merger.
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The difference between the book and fair value of excess acceptable
assets, as set forth above, is made up of the following:
SECTION 7.
Each share of capital stock of the First Community, par value $1.00 per
share, which is issued and outstanding immediately prior to the Merger shall be
unchanged and shall remain issued and outstanding and the holders of it shall
retain their present rights.
Each share of capital stock of Newberry Federal, par value $_______ per
share, which is issued and outstanding immediately prior to the Merger shall
cease to exist and the certificates for such shares shall, as promptly as
practicable thereafter, be cancelled and no payments made in consideration
therefor.
SECTION 8.
Neither of the banks shall declare nor pay any dividend to its
shareholders between the date of the agreement and the time at which the Merger
shall become effective, nor dispose of any of its assets in any other manner,
except in the normal course of business and for adequate value.
SECTION 9.
The following named persons shall serve as the board of directors of the
Association to serve until the next annual meeting of its shareholders or until
such time as their successors have been elected and qualified:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, MD
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., D.M.D.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇, D.M.D.
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
SECTION 10.
Effective as of the time this Merger shall become effective as specified
in the merger approval to be issued by the Comptroller of the Currency, the
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Articles of Association of the Association, which shall be the present Articles
of Association of First Community, shall read in their entirety, as set forth in
Exhibit 1 attached hereto and incorporated herein by reference.
SECTION 11.
This Agreement shall terminate immediately and automatically without any
further action on the part of Newberry Federal or First Community or any other
person upon the termination of the Agreement and Plan of Merger, dated as
of___________, 2004, by and between First Community Corporation and DutchFork
Bancshares, Inc.
SECTION 12.
This Agreement shall be ratified and confirmed by the written consent of
First Community Corporation as the sole shareholder of Community, and by the
written consent of DutchFork Bancshares, Inc., as the sole shareholder of
Newberry Federal, as required by applicable law; and the Merger shall become
effective at the time specified in a merger approval issued by the Comptroller
of the Currency of the United States.
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WITNESS, the signatures and seals of said merging banks as of this _____
day of ______________ 2004, each set by its president and chief executive
officer and attested to by its secretary, pursuant to a resolution of its board
of directors, acting by a majority.
▇▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK
By:
------------------------------------------
------------------------------------------
President and Chief Executive Officer
Attest:
-------------------------
-------------------------
Name:
Title: Secretary
(Seal)
-----------------------------
STATE OF SOUTH CAROLNA )
) ss:
COUNTY OF ▇▇▇▇▇▇▇▇ )
On this ______ day of _________________, 2004, before me, a notary public for
this state and county, personally came ___________, President and Chief
Executive Officer, and _____________, as Secretary, of Newberry Federal, and
each in his or her capacity acknowledged this instrument to be the act and deed
of the association.
WITNESS my official seal and signature this day and year.
--------------------------------------------
Notary Public, ▇▇▇▇▇▇▇▇ County
(Seal of Notary)
My commission expires: ________ ___, 200__
5
80
FIRST COMMUNITY BANK
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
Attest:
-------------------------
-------------------------
Name:
Title: Secretary
(Seal)
------------------------------
STATE OF SOUTH CAROLNA )
) ss:
COUNTY OF LEXINGTON )
On this ______ day of _________________, 2004, before me, a notary public for
this state and county, personally came _____________, President and Chief
Executive Officer, and _______________, as Secretary, of First Community Bank, a
national banking association, and each in his or her capacity acknowledged this
instrument to be the act and deed of the association.
WITNESS my official seal and signature this day and year.
--------------------------------------------
Notary Public, Lexington County
(Seal of Notary)
My commission expires: ________ ___, 200__
6
81
EXHIBIT 1
ARTICLES OF ASSOCIATION
82
EXHIBIT D
April_, 2004
First Community Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit that I
am, an "affiliate" of DutchFork Bancshares, Inc., a Delaware corporation
("DFBS"), as that term is defined in Rule 144 and used in Rule 145 promulgated
by the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act"). I understand that pursuant to the
terms of the Agreement and Plan of Merger, dated as of April 12, 2004 (the
"Merger Agreement"), by and between DFBS and First Community Corporation, a
South Carolina corporation ("FCCO"), DFBS plans to merge with and into FCCO (the
"Merger").
I further understand that as a result of the Merger, I may receive shares
of common stock, par value $1.00 per share, of FCCO ("FCCO Common Stock") in
exchange for shares of common stock, par value $0.01 per share, of DFBS ("DFBS
Common Stock").
I have carefully read this letter and reviewed the Merger Agreement and
discussed their requirements and other applicable limitations upon my ability to
sell, transfer, or otherwise dispose of FCCO Common Stock, to the extent I felt
necessary, with my counsel or counsel for DFBS.
I represent, warrant and covenant with and to FCCO that in the event I
receive any shares of FCCO Common Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other disposition of such shares
of FCCO Common Stock unless (i) such sale, transfer or other disposition has
been registered under the Securities Act, which is not anticipated, (ii) such
sale, transfer or other disposition is made in conformity with the provisions of
Rule 145 under the Securities Act (as such rule may be amended from time to
time), or (iii) in the opinion of counsel in form and substance reasonably
satisfactory to FCCO, or under a "no-action" letter obtained by me from the
staff of the SEC, such sale, transfer or other disposition will not violate the
registration requirements of, or is otherwise exempt from registration under,
the Securities Act.
2. I understand that, subject to the last paragraph of this letter, FCCO is
under no obligation to register the sale, transfer or other disposition of
83
First Community Corporation
Page 2
shares of FCCO Common Stock by me or on my behalf under the Securities Act or to
take any other action necessary to make compliance with an exemption from such
registration available.
3. I understand that stop transfer instructions will be given to FCCO's
transfer agent with respect to shares of FCCO Common Stock issued to me as a
result of the Merger and that there will be placed on the certificates for such
shares, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued as a result of the
merger of DutchFork Bancshares, Inc. with and into First Community
Corporation, in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares represented by this certificate
may be transferred only in accordance with the terms of a letter agreement
between the registered holder hereof and First Community Corporation, a
copy of which agreement is on file at the principal offices of First
Community Corporation."
4. I understand that, unless the transfer by me of the FCCO Common Stock
issued to me as a result of the Merger has been registered under the Securities
Act or such transfer is made in conformity with the provisions of Rule 145(d)
under the Securities Act, FCCO reserves the right, in its sole discretion, to
place the following legend on the certificates for such shares, or any
substitutions therefor, issued to my transferee:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 and were acquired from [SHAREHOLDER] who, in
turn, received such shares as a result of the merger of DutchFork
Bancshares, Inc. with and into First Community Corporation, in a
transaction to which Rule 145 under the Securities Act of 1933 applies.
The shares have been acquired by the holder not with a view to, or for
resale in connection with, any distribution thereof within the meaning of
the Securities Act of 1933 and may not be offered, sold, pledged or
otherwise transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs (3)
and (4) above shall be removed by delivery of substitute certificates without
such legends if I shall have delivered to FCCO (i) a copy of a "no action"
letter from the staff of the SEC, or an opinion of counsel in form and substance
reasonably satisfactory to FCCO, to the effect that such legend is not required
for purposes of the Act, or (ii) evidence or representations satisfactory to
FCCO that FCCO Common Stock represented by such certificates is being or has
been sold in conformity with the provisions of Rule 145(d).
I further understand and agree that the provisions of Rule 145 shall apply
to all shares of FCCO Common Stock that my spouse, any relative of mine, or any
relative of my spouse, any one of whom has the same home as me, receives as a
result of the Merger.
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First Community Corporation
Page 3
By acceptance hereof, FCCO agrees, for a period of two years after the
Effective Time (as defined in the Agreement) that, so long as it is obligated to
file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, that it will use commercially reasonable efforts to timely
file such reports so that the public information requirements of Rule 144(c)
promulgated under the Securities Act are satisfied and the resale provisions of
Rule 145(d)(1) and (2) are therefore available to me if I desire to transfer any
FCCO Common Stock issued to me in the Merger.
Very truly yours,
By:-----------------------------------
Name:
Accepted this _____ day of ________________, 2004.
First Community Corporation
---------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President and Chief Executive Officer
85
EXHIBIT E
FIRST COMMUNITY BANK, N.A.
EMPLOYMENT, CONSULTING, AND NONCOMPETE AGREEMENT
This EMPLOYMENT, CONSULTING, AND NONCOMPETE AGREEMENT (this "Agreement")
is made by and between First Community Bank, N.A. (the "Bank"), a wholly owned
subsidiary of First Community Corporation, a South Carolina corporation (the
"Company"), ▇▇▇▇▇▇▇▇ Federal Savings Bank ("Newberry Federal"), DutchFork
Bancshares, Inc. ("DFBS"), and J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual resident of
South Carolina (the "Executive"), as of this 12th day of April, 2004.
WHEREAS, the Executive is employed by DFBS and possesses intimate
knowledge of the business and affairs of DFBS and its wholly-owned subsidiary,
Newberry Federal, and has acquired certain confidential information and data
with respect to DFBS and Newberry Federal;
WHEREAS, pursuant to the agreement and plan of merger dated as of April
12, 2004 by among the Company and DFBS (the "Merger Agreement"), DFBS will merge
with and into the Company (the "Merger");
WHEREAS, the Executive is currently a party to employment agreements with
DFBS and Newberry Federal; and
WHEREAS, the Executive is willing to terminate his interests and rights
under the employment agreements with DFBS and Newberry Federal in consideration
for entering into an employment agreement with the Bank;
WHEREAS, the Bank desires to secure the continued services of the
Executive in accordance herewith, effective upon the date of the consummation of
the Merger pursuant to the Merger Agreement (the "Merger Effective Date");
WHEREAS, the obligations of each party to effect the Merger is subject to
the execution of this Agreement;
WHEREAS, the Executive is willing to serve in the employ of the Bank on
a full-time basis and as a consultant on a part-time basis for the periods
provided in this Agreement;
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree that on the Merger Effective Date:
1. Employment Services. The Bank shall employ the Executive, and the
-------------------
Executive shall serve the Bank, as Executive Vice President upon the terms and
conditions set forth herein. The Executive shall have such authority and
responsibilities as are consistent with his position and which may be set forth
in this Agreement or assigned by the Board of Directors of the Bank from time to
86
time (the "Employment Services"). The Executive shall devote his full business
time, attention, skill and efforts to the performance of his duties hereunder,
except during periods of illness or periods of vacation and leaves of absence
consistent with the Bank's policy. The Executive may devote reasonable periods
of time to perform charitable and other community activities and to manage his
personal investments; provided, however, that such activities will not
materially interfere with the performance of his duties hereunder and will not
be in conflict or competitive with, or adverse to, the interests of the Bank.
Under no circumstances will the Executive work for any competitor or have any
financial interest in any competitor of the Bank; provided, however, that the
Executive may invest in up to 1% of the publicly-traded stock or securities of
any company whose stock or securities are traded on a national exchange.
2. Employment Term. Unless earlier terminated as provided herein, the
---------------
Employment Services under this Agreement shall commence on the Merger Effective
Date and be for a term of three years (the "Employment Term"). Absent written
agreement by both the Bank and the Executive, the provision of Employment
Services shall not be extended beyond the Employment Term. The covenants in
Sections 7 though 11 shall survive expiration or termination of this Agreement.
3. Consulting Services. Upon the later to occur of the expiration of the
-------------------
Employment Term or the termination of Employment Services during the Employment
Term for reasons other than death, Cause, or violations of Sections 8 through 11
of this Agreement (the "Restrictive Covenants"), the Executive shall provide
consulting services to the Bank and the Company in accordance with the terms of
this Agreement for a period of two years (the "Consulting Period"). During the
Consulting Period, the Executive shall be an independent contractor of the Bank
and shall not be an employee of the Bank. Executive agrees to spend at least 10
hours a month providing consulting services under this Agreement.
4. Additional Consideration for the Restrictive Covenants. Upon the
------------------------------------------------------
expiration of the Consulting Period, the Bank agrees to pay to the Executive for
complying with the Restrictive Covenants the sum of $150,000 per year for three
years payable on a monthly basis in accordance with the Bank's standard payroll
practices. The Executive acknowledges and agrees that valid consideration has
been given to him in return for the promises and covenants set forth herein.
These payments shall not be due following termination of this Agreement for
reasons of death, Cause, or any violation of the Restrictive Covenants.
5. Compensation and Benefits.
-------------------------
a. Immediately prior to the Merger Effective Date, Newberry Federal
shall pay the Executive, in a single lump sum, (i) an amount equal to the lesser
of $863,298.37, or (ii) 2.99 times the Executive's "base amount," as such term
is defined for purposes of Section 280G of the Internal Revenue Code of 1986, as
amended, in consideration for the termination of all of his rights and interests
under the employment agreements entered into by and between the Executive,
Newberry Federal and DFBS on June 29, 2000, and as amended effective as of June
26, 2003.
b. During the Employment Term, the Bank shall pay the Executive a
2
87
salary at a rate of $175,000 per annum in accordance with the Bank's standard
payroll practices. The Bank shall have the right to increase this salary from
time to time in accordance with the salary payment practices of the Bank. The
Board of Directors shall review the Executive's salary at least annually and may
increase the Executive's base salary if it determines in its sole discretion
that an increase is appropriate.
c. During the Employment Term, the Executive shall participate in
any executive bonus program, retirement, welfare, deferred compensation, life
and health insurance, and other benefit plans or programs of the Bank now or
hereafter applicable to the Executive or applicable generally to employees of
the Bank, as determined by the Board of Directors. During the term of this
Agreement and afterwards (regardless of the Executive's employment status with
the Bank), the Bank will continue to provide, or will reimburse the Executive
the cost of obtaining, medical coverage substantially equivalent to that
provided to the Executive as of the Effective Date, at a premium cost not to
exceed the typical cost of coverage for employees of the Bank, until age 65.
During the Employment Term and during the Consulting Term, the Executive shall
continue to earn credit for vesting purposes under the salary continuation
agreement entered into by and between the Executive and Newberry Federal
effective November 1, 2002. The Executive shall become fully vested in his
interest under the salary continuation agreement immediately upon the
termination of the Consulting Period for any reason other than for Cause.
d. During the Employment Term, the Bank shall reimburse the
Executive for reasonable travel and other expenses related to the Executive's
duties which are incurred and accounted for in accordance with the Bank's
standard business practices.
e. During the Consulting Period, the Bank shall pay the Executive an
annual consulting fee of $172,500 on a monthly basis in accordance with the
Bank's standard payroll practices.
f. During the term of this Agreement, the Bank shall procure and
maintain a life insurance policy on the Executive with death benefits payable to
the Bank in an amount that approximates the total payments due to the Executive
during the Consulting Period and the Restricted Period if the Consulting
Services were performed and the Restrictive Covenants were honored in their
entirety; provided, however, that the Bank is only obligated to obtain such life
insurance policy if the premiums do not exceed $3,000 per year. The Bank's
obligation to maintain the insurance policy expires upon the termination of this
Agreement for Cause or violations of the Restrictive Covenants.
g. Automobile, Cellular Phone and Club Dues. The Bank shall continue
to provide the Executive with, and the Executive shall have the primary use of,
the automobile leased by Newberry Federal as of the date hereof and, during the
term of such lease, the Bank shall pay (or reimburse the Executive) for all
expenses of insurance, registration, operation and maintenance of the
automobile. Upon the expiration of the lease, the Bank shall obtain and transfer
title of the automobile to the Executive and will reimburse for mileage driven
for business purposes. The Executive shall comply with reasonable reporting and
expense limitations on the use of such automobile, as the Bank may establish
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88
from time to time, and the Bank shall annually include on the Executive's Form
W-2 any amount attributable to the Executive's personal use of such automobile.
The Bank shall also provide the Executive with a cellular phone and shall pay
(or reimburse the Executive) for all reasonable expenses related to the business
use of such phone. In addition, the Bank shall pay or reimburse the Executive
for any cost sufficient to maintain his membership at the Newberry Country Club
and Palmetto Club.
6. Termination.
-----------
a. This Agreement may be terminated prior to the end of the
Employment Term, the Consulting Period, or the Restricted Period only as
follows:
(i) upon the death of the Executive;
(ii) with respect to the Employment Term only, upon the
disability of the Executive for a period of 90 days
which, in the opinion of the Board of Directors, renders
him unable to perform the essential functions of his job
and for which reasonable accommodation is unavailable.
For purposes of this Agreement, a "disability" is
defined as a physical or mental impairment that
substantially limits one or more major life activities,
and a "reasonable accommodation" is one that does not
impose an undue hardship on the Bank;
(iii) upon the determination of Cause for termination, in
which event this Agreement may be terminated by written
notice at the election of the Bank. For purposes of this
Agreement, "Cause" shall consist of any of (A) the
commission by the Executive of a willful act (including,
without limitation, a dishonest or fraudulent act) or a
grossly negligent act, or the willful or grossly
negligent omission to act by the Executive, which is
intended to cause, causes, or is reasonably likely to
cause material harm to the Bank (including harm to its
business reputation); (B) the indictment of the
Executive for the commission or perpetration by the
Executive of any felony or any crime involving
dishonesty, moral turpitude or fraud; (C) the material
breach by the Executive of this Agreement that, if
susceptible of cure, remains uncured ten days following
written notice to the Executive of such breach; (D) the
exhibition by the Executive of a standard of behavior
within the scope of his services hereunder that is
materially disruptive to the orderly conduct of the
Bank's business operations (including, without
limitation, substance abuse or sexual misconduct) to a
level which, in the Board of Directors' good faith and
reasonable judgment, is materially detrimental to the
Bank's best interest, that, if susceptible of cure,
remains uncured ten days following written notice to the
Executive of such specific inappropriate behavior; (E)
the receipt of any form of notice, written or otherwise,
that any regulatory agency having jurisdiction over the
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Bank intends to institute any form of formal or informal
(e.g., a memorandum of understanding which relates to
the Executive's performance) regulatory action against
the Executive or the Bank if the Board of Directors
determines that the subject matter of such action
involves acts or omissions by or under the supervision
of the Executive or that termination of the Executive
would advance the Bank's compliance with the purpose of
the action or would assist the Bank in avoiding or
reducing the restrictions or adverse effects to the Bank
related to the regulatory action; or (F) the failure of
the Executive to render the services hereunder in
accordance with an appropriate performance standard
determined in the sole discretion of the Board of
Directors;
(iv) by written notice by the Executive or, with respect to
the Employment Term only, by written notice by the Bank
(termination "Without Cause").
b. If the Agreement is terminated because of the Executive's death,
the Executive's estate shall receive any sums due him as base pay and/or
reimbursement of expenses through the end of the month during which death
occurred. In addition, upon receipt of the insurance proceeds under the policy
set forth in Section 5(f), the Executive's estate shall be entitled to receive
an amount equal to the lesser of the total amount of benefits actually paid
under the insurance policy set forth in Section 5(f) and the total payments
remaining due to the Executive during the Consulting Period and the Restricted
Period if the Consulting Services were performed and the Restrictive Covenants
were honored in their entirety. The Bank is entitled to any remaining proceeds
under the insurance policy.
c. During the period of any incapacity leading up to the termination
of this Agreement as it relates to the Employment Term as a result of
disability, the Bank shall continue to pay the Executive his full base salary at
the rate then in effect and all perquisites and other benefits (other than any
bonus) until the Executive becomes eligible for benefits under any long-term
disability plan or insurance program applicable to the Executive (regardless of
whether the policy is maintained by the Bank), provided that the amount of any
such payments to the Executive shall be reduced by the sum of the amounts, if
any, payable to the Executive for the same period under such disability benefit
or pension plan. The Executive acknowledges that the Bank has made available the
opportunity for the Executive to obtain the Executive's own coverage under a
long-term disability plan or insurance program but that the Bank currently does
not maintain such a policy on behalf of the Executive.
d. If this Agreement is terminated for Cause as provided above or
for violations of the Restrictive Covenants, the Executive shall receive any
sums due him as base pay and/or reimbursement of expenses through the date of
such termination.
e. If this Agreement is terminated by the Bank Without Cause, the
5
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Bank shall pay to the Executive severance compensation in an amount equal to
100% of his then-current monthly base pay each month for the remainder of the
Employment Term, Consulting Period, and Restricted Period. The sum of these
amounts shall be paid to the Executive in a single lump sum payment no later
than the effective date of the termination of his employment. The Executive may
voluntarily terminate his employment with the Bank during the Employment Term at
any time. Effective immediately upon the Executive's voluntary termination of
his employment under this Agreement during the Employment Term, the Consulting
Period shall begin and the Executive and/or his estate shall remain entitled to
all payments pursuant to Sections 4, 5(e), 5(f), 6(b) and 6(e) of this
agreement.
f. With the exceptions of the provisions of this Section 6 and the
express terms of any benefit plan under which the Executive is a participant,
upon termination of this Agreement, the Bank shall have no obligation to the
Executive for, and the Executive waives and relinquishes, any further
compensation or benefits (exclusive of COBRA benefits). At the time of
termination, the Executive shall enter into a form of release acknowledging such
remaining obligations and discharging the Bank, as well as the Bank's officers,
directors and employees with respect to their actions for or on behalf of the
Bank, from any other claims or obligations arising out of or in connection with
this Agreement, including the circumstances of such termination.
g. In the event that this Agreement is terminated for any reason and
the Executive serves as a director of the Company, the Bank, or any other
subsidiary of the Company, the Executive shall (and does hereby) tender his
resignation from such positions effective as of the date of termination.
h. Notwithstanding anything to the contrary herein, if the Executive
is suspended or temporarily prohibited from participating in the conduct of the
Bank's affairs by a notice served under section 8(e)(3) or (g)(1) of Federal
Deposit Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)), the Bank's obligations
under this Agreement shall be suspended as of the date of service unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all or part of the compensation
withheld while the obligations under this Agreement were suspended and (ii)
reinstate (in whole or in part) any of such obligations which were suspended.
i. Notwithstanding anything to the contrary herein, if the Executive
is removed or permanently prohibited from participating in the conduct of the
Bank's affairs by an order issued under section 8 (e)(4) or (g)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(4) or (g)(1)), all obligations
of the Executive under this Agreement shall terminate as of the effective date
of the order, but any vested rights of the parties hereto shall not be affected.
j. Notwithstanding anything to the contrary herein, if the Bank is
in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(x)), all obligations under this Agreement shall terminate as of
the date of default, but this paragraph (4)(m) shall not affect any vested
rights of the parties hereto.
k. Any payments made to the Executive pursuant to this Agreement,
6
91
or otherwise, are subject to and conditioned upon their compliance with 12
U.S.C. Section 1828(k) and any regulations promulgated thereunder.
7. Ownership of Work Product. The Bank shall own all Work Product arising
-------------------------
during the course of this Agreement (prior, present or future). For purposes
hereof, "Work Product" shall mean all intellectual property rights, including
all Trade Secrets, U.S. and international copyrights, patentable inventions, and
other intellectual property rights, in any programming, documentation,
technology, work of authorship or other work product that relates to the Bank,
its business or its customers and that Executive conceives, develops, or
delivers to the Bank or that otherwise arises out of the services provided by
the Executive to the Bank hereunder, at any time during his employment, during
or outside normal working hours, in or away from the facilities of the Bank, and
whether or not requested by the Bank. If the Work Product contains any
materials, programming or intellectual property rights that the Executive
conceived or developed prior to, and independent of, the Executive's work for
the Bank, the Executive agrees to identify the pre-existing items to the Bank,
and the Executive grants the Bank a worldwide, unrestricted, royalty-free right,
including the right to sublicense such items. The Executive agrees to take such
actions and execute such further acknowledgments and assignments as the Bank may
reasonably request to give effect to this provision.
8. Protection of Trade Secrets. The Executive agrees to maintain in strict
---------------------------
confidence and, except as necessary to perform his duties for the Bank, the
Executive agrees not to use or disclose any Trade Secrets of the Bank or the
Company during or after this Agreement. For the purposes hereof, "Trade Secret"
means information, including, without limitation, technical or non-technical
data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a process, a drawing, financial data, financial plans, product plans,
information on customers or a list of actual or potential customers or
suppliers, which: (i) derives economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or use; and
(ii) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
9. Protection of Other Confidential Information. In addition, the
--------------------------------------------
Executive agrees to maintain in strict confidence and, except as necessary to
perform his duties for the Bank, not to use or disclose any Confidential
Business Information of the Bank or the Company during the Employment Term, the
Consulting Period, and for a period of 36 months thereafter (the "Restricted
Period"). "Confidential Business Information" shall mean any internal,
non-public information (other than Trade Secrets already addressed above)
concerning the Bank's or the Company's financial position and results of
operations (including revenues, assets, net income, etc.); annual and long-range
business plans; product or service plans; marketing plans and methods; training,
educational and administrative manuals; customer and supplier information and
purchase histories; and employee lists. The provisions of Sections 8 and 9 above
shall also apply to protect Trade Secrets and Confidential Business Information
of third parties provided to the Bank under an obligation of secrecy.
10. Return of Materials. The Executive shall surrender to the Bank,
-------------------
promptly upon its request and in any event upon termination this Agreement, all
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92
media, documents, notebooks, computer programs, handbooks, data files, models,
samples, price lists, drawings, customer lists, prospect data, or other material
of any nature whatsoever (in tangible or electronic form) in the Executive's
possession or control, including all copies thereof, relating to the Bank, its
business, or its customers. Upon the request of the Bank, Executive shall
certify in writing compliance with the foregoing requirement.
11. Restrictive Covenants.
---------------------
a. No Solicitation of Customers. During the Restricted Period, the
----------------------------
Executive shall not (except on behalf of or with the prior written consent of
the Bank), either directly or indirectly, on the Executive's own behalf or in
the service or on behalf of others, solicit or attempt to solicit Customers to
induce or encourage them to acquire or obtain from anyone other than the Bank or
its subsidiaries any product or service competitive with or substitute for any
of the Bank's Products. For purposes of this Section, "Customer" refers to any
person or group of persons with whom the Executive had direct material contact
with regard to the selling, delivery, or support of the Bank's Products,
including servicing such person's or group's account. The "Bank's Products"
refers to the products and services that the Bank or any of its subsidiaries or
affiliates offered or sold within six months of the solicitation date.
b. No Recruitment of Personnel. During the Restricted Period, the
---------------------------
Executive shall not, either directly or indirectly, on the Executive's own
behalf or in the service or on behalf of others, solicit or induce any employee
of or consultant to the Bank or any of its subsidiaries or affiliates to leave
his or her position with the Bank (or the subsidiary or affiliate), or recruit
or attempt to recruit such persons to accept employment or any other position
with another business.
c. Non-Competition Agreement. During the Restricted Period, the
-------------------------
Executive shall not (without the prior written consent of the Bank) compete with
the Bank or any of its affiliates by, directly or indirectly, forming, serving
as an organizer, director or officer of, or consultant to, or acquiring or
maintaining more than a 1% passive investment in, a depository financial
institution or holding company therefor if such depository institution or
holding company has one or more offices or branches located within a radius of
30 miles from (i) the main office of the Bank or (ii) any branch office of the
Bank.
d. Independent Provisions. The provisions in each of the above
----------------------
Sections 11(a), 11(b), and 11(c) are independent, and the unenforceability of
any one provision shall not affect the enforceability of any other provision.
12. Successors; Binding Agreement. This Agreement shall be binding upon
-----------------------------
and shall inure to the benefit of the Bank and its successors and assigns.
Neither this Agreement nor any right or interest hereunder shall be assignable
or transferable by the Executive, his beneficiaries or legal representatives,
except by will or by the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's legal personal
representative.
13. Notice. For the purposes of this Agreement, notices and all other
------
communications provided for in the Agreement shall be in writing and shall be
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93
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other; provided, however, that all
notices to the Bank shall be directed to the attention of the Bank with a copy
to the Secretary of the Bank. All notices and communications shall be deemed to
have been received on the date of delivery thereof.
14. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of South Carolina without
giving effect to the conflict of laws principles thereof. Any action brought by
any party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in State of South Carolina.
15. Non-Waiver. Failure of the Bank to enforce any of the provisions of
----------
this Agreement or any rights with respect thereto shall in no way be considered
to be a waiver of such provisions or rights, or in any way affect the validity
of this Agreement.
16. Enforcement. The Executive agrees that in the event of any breach or
-----------
threatened breach by the Executive of any covenant contained in Sections 7
through 11 hereof, the resulting injuries to the Bank would be difficult or
impossible to estimate accurately, even though irreparable injury or damages
would certainly result. Accordingly, an award of legal damages, if without other
relief, would be inadequate to protect the Bank. The Executive, therefore,
agrees that in the event of any such breach, the Bank shall be entitled to
obtain from a court of competent jurisdiction an injunction to restrain the
breach or anticipated breach of any such covenant, and to obtain any other
available legal, equitable, statutory, or contractual relief. Should the Bank
have cause to seek such relief, no bond shall be required from the Bank, and the
Executive shall pay all attorney's fees and court costs which the Bank may incur
to the extent the Bank prevails in its enforcement action.
17. Saving Clause. To the extent that any provision or language of this
-------------
Agreement is deemed unenforceable, by virtue of the scope of the business
activity prohibited, the geographical restriction of the prohibition or the
length of time the activity is prohibited, the Executive and the Bank agree that
this Agreement shall be enforced to the fullest extent permissible under the
laws and public policies of the State of South Carolina.
18. Reasonable Restraint. It is agreed by the parties that the foregoing
--------------------
covenants in this Agreement are necessary for the legitimate business interests
of the Bank and impose a reasonable restraint on the Executive in light of the
activities and business of the Bank on the date of the execution of this
Agreement.
19. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. In the event that the closing date of
the Merger does not occur for any reason, this Agreement shall be deemed null
and void AB INITIO and of no force and effect, and the employment agreements by
and among the Executive, ▇▇▇▇▇▇▇▇ Federal and DFBS dated as of June 29, 2000,
and as amended as of June 26, 2003, shall be reinstated effective immediately.
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20. Extension of Periods. The time period described in Sections 9 and 11
--------------------
of this Agreement shall be automatically extended by any length of time during
which the Executive is in breach of the covenant described therein. The
provisions of this Agreement shall continue in full force and effect throughout
the duration of the extended period.
21. Amendments. No amendments or variation of the terms or conditions of
----------
this Agreement shall be valid unless agreed to in writing and signed by the
parties.
22. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
its seal to be affixed hereunto by its officers thereunto duly authorized, and
the Executive has signed and sealed this Agreement, effective as of the date
first above written.
FIRST COMMUNITY BANK, N.A.
By:
------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK
By:
------------------------------
Name:
Title:
DUTCHFORK BANCSHARES, INC.
By:
------------------------------
Name:
Title:
EXECUTIVE
------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT F
FIRST COMMUNITY BANK, N.A.
EMPLOYMENT, CONSULTING, AND NONCOMPETE AGREEMENT
This EMPLOYMENT, CONSULTING, AND NONCOMPETE AGREEMENT (this "Agreement")
is made by and between First Community Bank, N.A. (the "Bank"), a wholly owned
subsidiary of First Community Corporation, a South Carolina corporation (the
"Company"), ▇▇▇▇▇▇▇▇ Federal Savings Bank ("Newberry Federal"), DutchFork
Bancshares, Inc. ("DFBS"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual resident of South
Carolina (the "Executive"), as of this 12th day of April, 2004.
WHEREAS, the Executive is employed by DFBS and possesses intimate
knowledge of the business and affairs of DFBS and its wholly-owned subsidiary,
▇▇▇▇▇▇▇▇ Federal, and has acquired certain confidential information and data
with respect to DFBS and ▇▇▇▇▇▇▇▇ Federal;
WHEREAS, pursuant to the agreement and plan of merger dated as of April
12, 2004 by among the Company and DFBS (the "Merger Agreement"), DFBS will merge
with and into the Company (the "Merger");
WHEREAS, the Executive is currently a party to employment agreements with
DFBS and ▇▇▇▇▇▇▇▇ Federal; and
WHEREAS, the Executive is willing to terminate his interests and rights
under the employment agreements with DFBS and ▇▇▇▇▇▇▇▇ Federal in consideration
for entering into an employment agreement with the Bank;
WHEREAS, the Bank desires to secure the continued services of the
Executive in accordance herewith, effective upon the date of the consummation of
the Merger pursuant to the Merger Agreement (the "Merger Effective Date");
WHEREAS, the obligations of each party to effect the Merger is subject to
the execution of this Agreement;
WHEREAS, the Executive is willing to serve in the employ of the Bank on
a full-time basis and as a consultant on a part-time basis for the periods
provided in this Agreement;
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree that on the Merger Effective Date:
1. Employment Services. The Bank shall employ the Executive, and the
-------------------
Executive shall serve the Bank, as Executive Vice President upon the terms and
conditions set forth herein. The Executive shall have such authority and
responsibilities as are consistent with his position and which may be set forth
97
in this Agreement or assigned by the Board of Directors of the Bank from time to
time (the "Employment Services"). The Executive shall devote his full business
time, attention, skill and efforts to the performance of his duties hereunder,
except during periods of illness or periods of vacation and leaves of absence
consistent with the Bank's policy. The Executive may devote reasonable periods
of time to perform charitable and other community activities and to manage his
personal investments; provided, however, that such activities will not
materially interfere with the performance of his duties hereunder and will not
be in conflict or competitive with, or adverse to, the interests of the Bank.
Under no circumstances will the Executive work for any competitor or have any
financial interest in any competitor of the Bank; provided, however, that the
Executive may invest in up to 1% of the publicly-traded stock or securities of
any company whose stock or securities are traded on a national exchange.
2. Employment Term. Unless earlier terminated as provided herein, the
---------------
Employment Services under this Agreement shall commence on the Merger Effective
Date and be for a term of three years (the "Employment Term"). Absent written
agreement by both the Bank and the Executive, the provision of Employment
Services shall not be extended beyond the Employment Term. The covenants in
Sections 7 though 11 shall survive expiration or termination of this Agreement.
3. Consulting Services. Upon the later to occur of the expiration of the
-------------------
Employment Term or the termination of Employment Services during the Employment
Term for reasons other than death, Cause, or violations of Sections 8 through 11
of this Agreement (the "Restrictive Covenants"), the Executive shall provide
consulting services to the Bank and the Company in accordance with the terms of
this Agreement for a period of two years (the "Consulting Period"). During the
Consulting Period, the Executive shall be an independent contractor of the Bank
and shall not be an employee of the Bank. Executive agrees to spend at least 10
hours a month providing consulting services under this Agreement.
4. Additional Consideration for the Restrictive Covenants. Upon the
------------------------------------------------------
expiration of the Consulting Period, the Bank agrees to pay to the Executive for
complying with the Restrictive Covenants the sum of $150,000 per year for three
years payable on a monthly basis in accordance with the Bank's standard payroll
practices. The Executive acknowledges and agrees that valid consideration has
been given to him in return for the promises and covenants set forth herein.
These payments shall not be due following termination of this Agreement for
reasons of death, Cause, or any violation of the Restrictive Covenants.
5. Compensation and Benefits.
-------------------------
a. Immediately prior to the Merger Effective Date, ▇▇▇▇▇▇▇▇ Federal
shall pay the Executive, in a single lump sum, (i) an amount equal to the lesser
of $749,862.81, or (ii) 2.99 times the Executive's "base amount," as such term
is defined for purposes of Section 280G of the Internal Revenue Code of 1986, as
amended, in consideration for the termination of all of his rights and interests
under the employment agreements entered into by and between the Executive,
▇▇▇▇▇▇▇▇ Federal and DFBS on June 29, 2000, and as amended effective as of June
26, 2003.
b. During the Employment Term, the Bank shall pay the Executive a
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salary at a rate of $175,000 per annum in accordance with the Bank's standard
payroll practices. The Bank shall have the right to increase this salary from
time to time in accordance with the salary payment practices of the Bank. The
Board of Directors shall review the Executive's salary at least annually and may
increase the Executive's base salary if it determines in its sole discretion
that an increase is appropriate.
c. During the Employment Term, the Executive shall participate in
any executive bonus program, retirement, welfare, deferred compensation, life
and health insurance, and other benefit plans or programs of the Bank now or
hereafter applicable to the Executive or applicable generally to employees of
the Bank, as determined by the Board of Directors. During the term of this
Agreement and afterwards (regardless of the Executive's employment status with
the Bank), the Bank will continue to provide, or will reimburse the Executive
the cost of obtaining, medical coverage substantially equivalent to that
provided to the Executive as of the Effective Date, at a premium cost not to
exceed the typical cost of coverage for employees of the Bank, until age 65.
During the Employment Term and during the Consulting Term, the Executive shall
continue to earn credit for vesting purposes under the salary continuation
agreement entered into by and between the Executive and ▇▇▇▇▇▇▇▇ Federal
effective November 1, 2002. The Executive shall become fully vested in his
interest under the salary continuation agreement immediately upon the
termination of the Consulting Period for any reason other than for Cause.
d. During the Employment Term, the Bank shall reimburse the
Executive for reasonable travel and other expenses related to the Executive's
duties which are incurred and accounted for in accordance with the Bank's
standard business practices.
e. During the Consulting Period, the Bank shall pay the Executive an
annual consulting fee of $172,500 on a monthly basis in accordance with the
Bank's standard payroll practices.
f. During the term of this Agreement, the Bank shall procure and
maintain a life insurance policy on the Executive with death benefits payable to
the Bank in an amount that approximates the total payments due to the Executive
during the Consulting Period and the Restricted Period if the Consulting
Services were performed and the Restrictive Covenants were honored in their
entirety; provided, however, that the Bank is only obligated to obtain such life
insurance policy if the premiums do not exceed $3,000 per year. The Bank's
obligation to maintain the insurance policy expires upon the termination of this
Agreement for Cause or violations of the Restrictive Covenants.
g. Automobile, Cellular Phone and Club Dues. The Bank shall continue
to provide the Executive with, and the Executive shall have the primary use of,
the automobile leased by ▇▇▇▇▇▇▇▇ Federal as of the date hereof and, during the
term of such lease, the Bank shall pay (or reimburse the Executive) for all
expenses of insurance, registration, operation and maintenance of the
automobile. Upon the expiration of the lease, the Bank shall obtain and transfer
title of the automobile to the Executive and will reimburse for mileage driven
for business purposes. The Executive shall comply with reasonable reporting and
expense limitations on the use of such automobile, as the Bank may establish
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99
from time to time, and the Bank shall annually include on the Executive's Form
W-2 any amount attributable to the Executive's personal use of such automobile.
The Bank shall also provide the Executive with a cellular phone and shall pay
(or reimburse the Executive) for all reasonable expenses related to the business
use of such phone. In addition, the Bank shall pay or reimburse the Executive
for any cost sufficient to maintain his membership at the ▇▇▇▇▇▇▇▇ Country Club.
6. Termination.
-----------
a. This Agreement may be terminated prior to the end of the
Employment Term, the Consulting Period, or the Restricted Period only as
follows:
(i) upon the death of the Executive;
(ii) with respect to the Employment Term only, upon the
disability of the Executive for a period of 90 days
which, in the opinion of the Board of Directors, renders
him unable to perform the essential functions of his job
and for which reasonable accommodation is unavailable.
For purposes of this Agreement, a "disability" is
defined as a physical or mental impairment that
substantially limits one or more major life activities,
and a "reasonable accommodation" is one that does not
impose an undue hardship on the Bank;
(iii) upon the determination of Cause for termination, in
which event this Agreement may be terminated by written
notice at the election of the Bank. For purposes of this
Agreement, "Cause" shall consist of any of (A) the
commission by the Executive of a willful act (including,
without limitation, a dishonest or fraudulent act) or a
grossly negligent act, or the willful or grossly
negligent omission to act by the Executive, which is
intended to cause, causes, or is reasonably likely to
cause material harm to the Bank (including harm to its
business reputation); (B) the indictment of the
Executive for the commission or perpetration by the
Executive of any felony or any crime involving
dishonesty, moral turpitude or fraud; (C) the material
breach by the Executive of this Agreement that, if
susceptible of cure, remains uncured ten days following
written notice to the Executive of such breach; (D) the
exhibition by the Executive of a standard of behavior
within the scope of his services hereunder that is
materially disruptive to the orderly conduct of the
Bank's business operations (including, without
limitation, substance abuse or sexual misconduct) to a
level which, in the Board of Directors' good faith and
reasonable judgment, is materially detrimental to the
Bank's best interest, that, if susceptible of cure,
remains uncured ten days following written notice to the
Executive of such specific inappropriate behavior; (E)
the receipt of any form of notice, written or otherwise,
that any regulatory agency having jurisdiction over the
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100
Bank intends to institute any form of formal or informal
(e.g., a memorandum of understanding which relates to
the Executive's performance) regulatory action against
the Executive or the Bank if the Board of Directors
determines that the subject matter of such action
involves acts or omissions by or under the supervision
of the Executive or that termination of the Executive
would advance the Bank's compliance with the purpose of
the action or would assist the Bank in avoiding or
reducing the restrictions or adverse effects to the Bank
related to the regulatory action; or (F) the failure of
the Executive to render the services hereunder in
accordance with an appropriate performance standard
determined in the sole discretion of the Board of
Directors;
(iv) by written notice by the Executive or, with respect to
the Employment Term only, by written notice by the Bank
(termination "Without Cause").
b. If the Agreement is terminated because of the Executive's death,
the Executive's estate shall receive any sums due him as base pay and/or
reimbursement of expenses through the end of the month during which death
occurred. In addition, upon receipt of the insurance proceeds under the policy
set forth in Section 5(f), the Executive's estate shall be entitled to receive
an amount equal to the lesser of the total amount of benefits actually paid
under the insurance policy set forth in Section 5(f) and the total payments
remaining due to the Executive during the Consulting Period and the Restricted
Period if the Consulting Services were performed and the Restrictive Covenants
were honored in their entirety. The Bank is entitled to any remaining proceeds
under the insurance policy.
c. During the period of any incapacity leading up to the termination
of this Agreement as it relates to the Employment Term as a result of
disability, the Bank shall continue to pay the Executive his full base salary at
the rate then in effect and all perquisites and other benefits (other than any
bonus) until the Executive becomes eligible for benefits under any long-term
disability plan or insurance program applicable to the Executive (regardless of
whether the policy is maintained by the Bank), provided that the amount of any
such payments to the Executive shall be reduced by the sum of the amounts, if
any, payable to the Executive for the same period under such disability benefit
or pension plan. The Executive acknowledges that the Bank has made available the
opportunity for the Executive to obtain the Executive's own coverage under a
long-term disability plan or insurance program but that the Bank currently does
not maintain such a policy on behalf of the Executive.
d. If this Agreement is terminated for Cause as provided above or
for violations of the Restrictive Covenants, the Executive shall receive any
sums due him as base pay and/or reimbursement of expenses through the date of
such termination.
e. If this Agreement is terminated by the Bank Without Cause, the
Bank shall pay to the Executive severance compensation in an amount equal to
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100% of his then-current monthly base pay each month for the remainder of the
Employment Term, Consulting Period, and Restricted Period. The sum of these
amounts shall be paid to the Executive in a single lump sum payment no later
than the effective date of the termination of his employment. The Executive may
voluntarily terminate his employment with the Bank during the Employment Term at
any time. Effective immediately upon the Executive's voluntary termination of
his employment under this Agreement during the Employment Term, the Consulting
Period shall begin and the Executive and/or his estate shall remain entitled to
all payments pursuant to Sections 4, 5(e), 5(f), 6(b) and 6(e) of this
agreement.
f. With the exceptions of the provisions of this Section 6 and the
express terms of any benefit plan under which the Executive is a participant,
upon termination of this Agreement, the Bank shall have no obligation to the
Executive for, and the Executive waives and relinquishes, any further
compensation or benefits (exclusive of COBRA benefits). At the time of
termination, the Executive shall enter into a form of release acknowledging such
remaining obligations and discharging the Bank, as well as the Bank's officers,
directors and employees with respect to their actions for or on behalf of the
Bank, from any other claims or obligations arising out of or in connection with
this Agreement, including the circumstances of such termination.
g. In the event that this Agreement is terminated for any reason and
the Executive serves as a director of the Company, the Bank, or any other
subsidiary of the Company, the Executive shall (and does hereby) tender his
resignation from such positions effective as of the date of termination.
h. Notwithstanding anything to the contrary herein, if the Executive
is suspended or temporarily prohibited from participating in the conduct of the
Bank's affairs by a notice served under section 8(e)(3) or (g)(1) of Federal
Deposit Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)), the Bank's obligations
under this Agreement shall be suspended as of the date of service unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all or part of the compensation
withheld while the obligations under this Agreement were suspended and (ii)
reinstate (in whole or in part) any of such obligations which were suspended.
i. Notwithstanding anything to the contrary herein, if the
Executive is removed or permanently prohibited from participating in the conduct
of the Bank's affairs by an order issued under section 8 (e)(4) or (g)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(4) or (g)(1)), all obligations
of the Executive under this Agreement shall terminate as of the effective date
of the order, but any vested rights of the parties hereto shall not be affected.
j. Notwithstanding anything to the contrary herein, if the Bank is
in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(x)), all obligations under this Agreement shall terminate as of
the date of default, but this paragraph (4)(m) shall not affect any vested
rights of the parties hereto.
k. Any payments made to the Executive pursuant to this Agreement,
or otherwise, are subject to and conditioned upon their compliance with 12
6
102
U.S.C. Section 1828(k) and any regulations promulgated thereunder.
7. Ownership of Work Product. The Bank shall own all Work Product arising
-------------------------
during the course of this Agreement (prior, present or future). For purposes
hereof, "Work Product" shall mean all intellectual property rights, including
all Trade Secrets, U.S. and international copyrights, patentable inventions, and
other intellectual property rights, in any programming, documentation,
technology, work of authorship or other work product that relates to the Bank,
its business or its customers and that Executive conceives, develops, or
delivers to the Bank or that otherwise arises out of the services provided by
the Executive to the Bank hereunder, at any time during his employment, during
or outside normal working hours, in or away from the facilities of the Bank, and
whether or not requested by the Bank. If the Work Product contains any
materials, programming or intellectual property rights that the Executive
conceived or developed prior to, and independent of, the Executive's work for
the Bank, the Executive agrees to identify the pre-existing items to the Bank,
and the Executive grants the Bank a worldwide, unrestricted, royalty-free right,
including the right to sublicense such items. The Executive agrees to take such
actions and execute such further acknowledgments and assignments as the Bank may
reasonably request to give effect to this provision.
8. Protection of Trade Secrets. The Executive agrees to maintain in strict
---------------------------
confidence and, except as necessary to perform his duties for the Bank, the
Executive agrees not to use or disclose any Trade Secrets of the Bank or the
Company during or after this Agreement. For the purposes hereof, "Trade Secret"
means information, including, without limitation, technical or non-technical
data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a process, a drawing, financial data, financial plans, product plans,
information on customers or a list of actual or potential customers or
suppliers, which: (i) derives economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or use; and
(ii) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
9. Protection of Other Confidential Information. In addition, the
--------------------------------------------
Executive agrees to maintain in strict confidence and, except as necessary to
perform his duties for the Bank, not to use or disclose any Confidential
Business Information of the Bank or the Company during the Employment Term, the
Consulting Period, and for a period of 36 months thereafter (the "Restricted
Period"). "Confidential Business Information" shall mean any internal,
non-public information (other than Trade Secrets already addressed above)
concerning the Bank's or the Company's financial position and results of
operations (including revenues, assets, net income, etc.); annual and long-range
business plans; product or service plans; marketing plans and methods; training,
educational and administrative manuals; customer and supplier information and
purchase histories; and employee lists. The provisions of Sections 8 and 9 above
shall also apply to protect Trade Secrets and Confidential Business Information
of third parties provided to the Bank under an obligation of secrecy.
10. Return of Materials. The Executive shall surrender to the Bank,
-------------------
promptly upon its request and in any event upon termination this Agreement, all
media, documents, notebooks, computer programs, handbooks, data files, models,
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103
samples, price lists, drawings, customer lists, prospect data, or other material
of any nature whatsoever (in tangible or electronic form) in the Executive's
possession or control, including all copies thereof, relating to the Bank, its
business, or its customers. Upon the request of the Bank, Executive shall
certify in writing compliance with the foregoing requirement.
11. Restrictive Covenants.
---------------------
a. No Solicitation of Customers. During the Restricted Period, the
----------------------------
Executive shall not (except on behalf of or with the prior written consent of
the Bank), either directly or indirectly, on the Executive's own behalf or in
the service or on behalf of others, solicit or attempt to solicit Customers to
induce or encourage them to acquire or obtain from anyone other than the Bank or
its subsidiaries any product or service competitive with or substitute for any
of the Bank's Products. For purposes of this Section, "Customer" refers to any
person or group of persons with whom the Executive had direct material contact
with regard to the selling, delivery, or support of the Bank's Products,
including servicing such person's or group's account. The "Bank's Products"
refers to the products and services that the Bank or any of its subsidiaries or
affiliates offered or sold within six months of the solicitation date.
b. No Recruitment of Personnel. During the Restricted Period, the
---------------------------
Executive shall not, either directly or indirectly, on the Executive's own
behalf or in the service or on behalf of others, solicit or induce any employee
of or consultant to the Bank or any of its subsidiaries or affiliates to leave
his or her position with the Bank (or the subsidiary or affiliate), or recruit
or attempt to recruit such persons to accept employment or any other position
with another business.
c. Non-Competition Agreement. During the Restricted Period, the
-------------------------
Executive shall not (without the prior written consent of the Bank) compete with
the Bank or any of its affiliates by, directly or indirectly, forming, serving
as an organizer, director or officer of, or consultant to, or acquiring or
maintaining more than a 1% passive investment in, a depository financial
institution or holding company therefor if such depository institution or
holding company has one or more offices or branches located within a radius of
30 miles from (i) the main office of the Bank or (ii) any branch office of the
Bank.
d. Independent Provisions. The provisions in each of the above
----------------------
Sections 11(a), 11(b), and 11(c) are independent, and the unenforceability of
any one provision shall not affect the enforceability of any other provision.
12. Successors; Binding Agreement. This Agreement shall be binding upon
-----------------------------
and shall inure to the benefit of the Bank and its successors and assigns.
Neither this Agreement nor any right or interest hereunder shall be assignable
or transferable by the Executive, his beneficiaries or legal representatives,
except by will or by the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's legal personal
representative.
13. Notice. For the purposes of this Agreement, notices and all other
------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
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104
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other; provided, however, that all
notices to the Bank shall be directed to the attention of the Bank with a copy
to the Secretary of the Bank. All notices and communications shall be deemed to
have been received on the date of delivery thereof.
14. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of South Carolina without
giving effect to the conflict of laws principles thereof. Any action brought by
any party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in State of South Carolina.
15. Non-Waiver. Failure of the Bank to enforce any of the provisions of
----------
this Agreement or any rights with respect thereto shall in no way be considered
to be a waiver of such provisions or rights, or in any way affect the validity
of this Agreement.
16. Enforcement. The Executive agrees that in the event of any breach or
-----------
threatened breach by the Executive of any covenant contained in Sections 7
through 11 hereof, the resulting injuries to the Bank would be difficult or
impossible to estimate accurately, even though irreparable injury or damages
would certainly result. Accordingly, an award of legal damages, if without other
relief, would be inadequate to protect the Bank. The Executive, therefore,
agrees that in the event of any such breach, the Bank shall be entitled to
obtain from a court of competent jurisdiction an injunction to restrain the
breach or anticipated breach of any such covenant, and to obtain any other
available legal, equitable, statutory, or contractual relief. Should the Bank
have cause to seek such relief, no bond shall be required from the Bank, and the
Executive shall pay all attorney's fees and court costs which the Bank may incur
to the extent the Bank prevails in its enforcement action.
17. Saving Clause. To the extent that any provision or language of this
-------------
Agreement is deemed unenforceable, by virtue of the scope of the business
activity prohibited, the geographical restriction of the prohibition or the
length of time the activity is prohibited, the Executive and the Bank agree that
this Agreement shall be enforced to the fullest extent permissible under the
laws and public policies of the State of South Carolina.
18. Reasonable Restraint. It is agreed by the parties that the foregoing
--------------------
covenants in this Agreement are necessary for the legitimate business interests
of the Bank and impose a reasonable restraint on the Executive in light of the
activities and business of the Bank on the date of the execution of this
Agreement.
19. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. In the event that the closing date of
the Merger does not occur for any reason, this Agreement shall be deemed null
and void AB INITIO and of no force and effect, and the employment agreements by
and among the Executive, Newberry Federal and DFBS dated as of June 29, 2000,
and as amended as of June 26, 2003, shall be reinstated effective immediately.
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20. Extension of Periods. The time period described in Sections 9 and 11
--------------------
of this Agreement shall be automatically extended by any length of time during
which the Executive is in breach of the covenant described therein. The
provisions of this Agreement shall continue in full force and effect throughout
the duration of the extended period.
21. Amendments. No amendments or variation of the terms or conditions of
----------
this Agreement shall be valid unless agreed to in writing and signed by the
parties.
22. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
its seal to be affixed hereunto by its officers thereunto duly authorized, and
the Executive has signed and sealed this Agreement, effective as of the date
first above written.
FIRST COMMUNITY BANK, N.A.
By:
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Name:
Title:
▇▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK
By:
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Name:
Title:
DUTCHFORK BANCSHARES, INC.
By:
------------------------------
Name:
Title:
EXECUTIVE
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
107
EXHIBIT G
TERMINATION AND RELEASE AGREEMENT
This Termination and Release Agreement is made by and between First
Community Corporation, a South Carolina corporation ("FCCO"), ▇▇▇▇▇▇▇▇ Federal
Savings Bank ("Newberry Federal"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual resident
of the State of South Carolina, as of this ___ day of April 2004 ("Effective
Date").
WHEREAS, the undersigned serves as a director of DutchFork Bancshares,
Inc. ("DFBS") and its wholly-owned subsidiary, ▇▇▇▇▇▇▇▇ Federal Savings Bank
("Newberry Federal");
WHEREAS, pursuant to the agreement and plan of merger dated as of April
12, 2004 by among FCCO and DFBS (the "Merger Agreement"), DFBS will merge with
and into FCCO (the "Merger");
WHEREAS, the undersigned is currently a participant in a salary
continuation plan (the "Plan") (sometimes known as the "director salary
continuation plan") attached hereto as Exhibit A; and
WHEREAS, the obligations of FCCO and DFBS to effect the Merger are subject
to the execution of this Agreement;
WHEREAS, the undersigned is willing to terminate his interests and rights
under the Plan in exchange for the consideration set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agrees as follows:
1. Termination and Release. The undersigned individual agrees to and does
-----------------------
hereby terminate, and does hereby consent to and approve of the termination of,
the Plan; and does hereby waive, disclaim and otherwise renounce any and all
rights and benefits pursuant to the Plan, including, without limitation, any and
all vested and unvested benefits and any other entitlements under the Plan. The
undersigned individual agrees to and does hereby release, discharge, save and
hold harmless DFBS and FCCO from any and all liabilities, claims, causes of
action, known or unknown, foreseen or unforeseen, contingent or fixed, that the
undersigned individual may claim as a result of such termination, this
Agreement, or otherwise in connection with the Plan. Except as set forth in
Section 2, from and after the Effective Date, DFBS or FCCO shall have no further
liability or other obligation to the undersigned individual with respect to the
Plan.
108
2. Consideration. On the closing date of the Merger, Newberry Federal
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shall pay the undersigned individual, in a single lump sum, (i) an amount equal
to the lesser of $__________, or (ii) 2.99 times the individual's "base amount,"
as such term is defined for purposes of Section 280G of the Internal Revenue
Code of 1986, as amended, in consideration for the termination of all of his
rights and interests under the Plan and the execution of this Agreement by the
undersigned individual. In the event that the closing date of the Merger does
not occur for any reason, this Agreement shall be deemed null and void AB INITIO
and of no force and effect, and the Plan shall be reinstated effectively
immediately.
3. Miscellaneous.
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a. This Agreement may be executed in two or more of counterparts,
each of which shall constitute an original and all of which taken together shall
constitute one and the same instrument.
b. Captions and section headings appearing herein are included solely
for convenience of reference only and are not intended to affect the
interpretation of any provision of this Agreement.
c. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of South Carolina, without regard to principles of
conflict of laws.
d. No principle of law providing for the interpretation of a contract
provision against the draftsperson shall be applied in interpreting any
provision of this Agreement, both parties having had ample opportunity to have
this Agreement reviewed and negotiated by counsel of their choosing.
e. This Agreement cannot be modified, or any of the terms hereof
waived, except by an instrument in writing (referring specifically to this
Agreement) executed by the party against whom enforcement of the modification or
waiver is sought.
f. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns.
109
IN WITNESS WHEREOF, FCCO and the undersigned have executed this Agreement
as of the day and year first above written.
FIRST COMMUNITY CORPORATION
By:
------------------------------------
Print name:
----------------------------
Title:
---------------------------------
▇▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK
By:
------------------------------------
Print name:
----------------------------
Title:
---------------------------------
INDIVIDUAL
--------------------------------
Print name:
----------------------------
