AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered into as of this 3rd day of March, 2000, by and between
INDEPENDENT BANCSHARES, INC., a Georgia business corporation (hereinafter
"Independent," and unless the context otherwise requires, the term "Independent"
shall include both Independent Bancshares, Inc. and its subsidiary Independent
Bank & Trust Company ("Independent Bank")), and UNITED COMMUNITY BANKS, INC., a
Georgia business corporation (hereinafter "United," and unless the context
otherwise requires, the term "United" shall include United Community Banks, Inc.
and its subsidiaries, United Community Bank, a Georgia banking corporation,
Peoples Bank of Xxxxxx County, a Georgia banking corporation, White County Bank,
a Georgia banking corporation, Towns County Bank, a Georgia banking corporation,
Bank of Adairsville, a Georgia banking corporation, Carolina Community Bank, a
North Carolina banking corporation, First Xxxxxxx Bank & Trust Company, a
Georgia banking corporation, 1st Xxxxx Bank, a Georgia banking corporation and
United Family Finance Company, a Georgia business corporation).
R E C I T A L S:
WHEREAS, the respective boards of directors of Independent and
United deem it advisable and in the best interests of each such entity and their
respective shareholders that Independent merge with United (the "Merger"), with
United being the surviving corporation and with all of the issued and
outstanding shares of common stock, $1.00 par value per share, of Independent
("Independent Stock") being converted into the right to receive shares of the
authorized common stock, $1 par value per share, of United ("United Stock"), all
upon the terms and conditions hereinafter set forth and as set forth in the
Agreement and Plan of Merger attached hereto as Exhibit A and incorporated
herein by reference (the "Merger Agreement"); and
WHEREAS, the boards of directors of the respective entities
believe that the merger of Independent and United and the synergies produced
thereby will greatly enhance and strengthen the franchises and future prospects
of both companies;
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, and other good and
valuable consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
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CLOSING
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The transactions contemplated herein shall be consummated (the
"Closing") at the offices of Xxxxxxxxxx Xxxxxxxx LLP, Suite 2800, 0000 Xxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx, xx the first business day following receipt of all
approvals from any governmental authorities having jurisdiction over the
transactions contemplated by this Agreement and the Merger Agreement, and the
expiration of any waiting or similar period required by applicable law (the
"Closing Date"), or at such other time and place as may be mutually satisfactory
to the parties hereto.
ARTICLE II
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MERGER
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Pursuant to the terms and conditions provided herein, on the
Closing Date Independent and United shall be merged in accordance with and in
the manner set forth in the Merger Agreement. The surviving corporation
following the Merger will operate under the Articles of Incorporation of United
and will be the parent holding company of Independent Bank & Trust Company, a
Georgia banking corporation, United Community Bank, a Georgia banking
corporation, Peoples Bank of Xxxxxx County, a Georgia banking corporation, White
County Bank, a Georgia banking corporation, Towns County Bank, a Georgia banking
corporation, Bank of Adairsville, a Georgia banking corporation, Carolina
Community Bank, a North Carolina banking corporation, Xxxxxxx Bank & Trust
Company, a Georgia banking corporation, 1st Xxxxx Bank, a Georgia banking
corporation and United Family Finance Company, a Georgia business corporation,
the latter nine of which are currently wholly-owned subsidiaries of United. Upon
the terms and conditions of this Agreement and the Merger Agreement, United
shall make available on or before the Effective Date (as defined in the Merger
Agreement) for delivery to the holders of Independent Stock (i) the number of
shares of United Stock to be issued upon conversion of the shares of Independent
Stock and (ii) sufficient funds to provide for cash payments in lieu of the
issuance of fractional shares as provided in the Merger Agreement, provided,
however, that unless and until a holder of Independent Stock entitled to receive
United Stock pursuant to the Merger shall have surrendered his Independent Stock
certificate(s) or unless otherwise required by law, the holder of such
certificate(s) shall not have any right to receive payment of any dividends or
other distributions on the shares of United Stock or receive any notices sent by
United to its shareholders or to vote such shares.
ARTICLE III
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OTHER AGREEMENTS
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3.1 Registration of United Stock. United agrees to file with
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the Securities and Exchange Commission (the "SEC") as soon as reasonably
practical a registration statement (the "United Registration Statement") under
the Securities Act of 1933, as amended (the "1933 Act"), on Form S-4 or some
other appropriate form covering the issuance of the shares of United Stock to
the shareholders of Independent pursuant to this Agreement and the Merger
Agreement and to use its reasonable best efforts to cause the United
Registration Statement to become effective and to remain effective through the
Closing Date. United agrees to take any action required to be taken under the
applicable state securities laws in connection with the issuance of shares of
United Stock upon consummation of the Merger. Independent agrees to provide
United reasonable assistance as necessary in the preparation of the United
Registration Statement, including, without limitation, providing United with all
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material facts regarding the operations, business, assets, liabilities and
personnel of Independent, together with the audited financial statements of
Independent, all as required by the 1933 Act and the rules, regulations and
practices of the SEC, for inclusion in the United Registration Statement. The
United Registration Statement shall not cover resales of United Stock by any of
the shareholders of Independent, and United shall have no obligation to cause
the United Registration Statement to continue to be effective after the Closing
or to prepare or file any post-effective amendments to the United Registration
Statement after the Closing.
3.2 Meeting of Shareholders of Independent. Independent shall
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call a special meeting of its shareholders (the "Special Meeting") to be held
not more than forty-five (45) days after the United Registration Statement
becomes effective under the 1933 Act for the purpose of submitting the Merger
Agreement to such shareholders for their approval. In connection with the
Special Meeting, United and Independent shall prepare and submit to the
Independent shareholders a notice of meeting, proxy statement and proxy (the
"Independent Proxy Materials"), which shall include the final prospectus from
the United Registration Statement in the form filed with the SEC.
3.3 Absence of Brokers. Each party hereto represents and
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warrants to the other that no broker, finder or other financial consultant has
acted on its behalf in connection with this Agreement or the transactions
contemplated hereby. Each party agrees to indemnify the other and hold and save
it harmless from any claim or demand for commissions or other compensation by
any broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party.
3.4 Access to Properties, Books, Etc. Each party hereto shall
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allow the other party and its authorized representatives full access during
normal business hours from and after the date hereof and prior to the Closing
Date to all of the respective properties, books, contracts, commitments and
records of such party and its subsidiaries and shall furnish the other party and
its authorized representatives such information concerning its affairs and the
affairs of its subsidiaries as the other party may reasonably request provided
that such request shall be reasonably related to the transactions contemplated
by this Agreement and shall not interfere unreasonably with normal operations.
Each party shall cause its and its subsidiaries' personnel, employees and other
representatives to assist the other party in making any such investigation.
During such investigation, the investigating party and its authorized
representatives shall have the right to make copies of such records, files, tax
returns and other materials as it may deem advisable and shall advise the other
party of those items of which copies are made. No investigation made heretofore
or hereafter by either party and its authorized representatives shall affect the
representations and warranties of either such party hereunder.
3.5 Confidentiality. Prior to consummation of the Merger, the
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parties to this Agreement will provide one another with information which may be
deemed by the party providing the information to be confidential. Each party
agrees that it will hold confidential and protect all information provided to it
by the other party to this Agreement or such party's affiliates, except that the
obligations contained in this Section 3.5 shall not in any way restrict the
rights of any party or person to use information that (i) was known to such
party prior to the disclosure by the other party; (ii) is or becomes generally
available to the public other than by breach of this Agreement; (iii) is
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provided by one party for disclosure concerning such party in the United
Registration Statement; or (iv) otherwise becomes lawfully available to a party
to this Agreement on a nonconfidential basis from a third party who is not under
an obligation of confidence to the other party to this Agreement. If this
Agreement is terminated prior to the Closing, each party hereto agrees to return
all documents, statements and other written materials, whether or not
confidential, and all copies thereof, provided to it by or on behalf of the
other party to this Agreement. The provisions of this Section 3.5 shall survive
termination, for any reason whatsoever, of this Agreement, and, without limiting
the remedies of the parties hereto in the event of any breach of this Section
3.5, the parties hereto will be entitled to seek injunctive relief against the
other party in the event of a breach or threatened breach of this Section 3.5.
3.6 Full Cooperation. The parties shall cooperate fully with
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each other in connection with any acts or actions required to be taken as part
of their respective obligations under this Agreement.
3.7 Expenses. All of the expenses incurred by United in
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connection with the authorization, preparation, execution and performance of
this Agreement and the Merger Agreement including, without limitation, all fees
and expenses of its agents, representatives, counsel and accountants and the
fees and expenses related to filing the United Registration Statement and all
regulatory applications with state and federal authorities in connection with
the transactions contemplated hereby and thereby, shall be paid by United. All
expenses incurred by Independent in connection with the authorization,
preparation, execution and performance of this Agreement and the Merger
Agreement, including, without limitation, all fees and expenses of its agents,
representatives, counsel and accountants for Independent (except for the cost of
reproducing and mailing the Independent Proxy Materials which shall be equally
divided between United and Independent), shall be paid by Independent.
3.8 Preservation of Goodwill. Each party hereto shall use its
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best efforts to preserve its business organization and the business organization
of its subsidiaries, to keep available the services of its present employees and
of the present employees of its subsidiaries, and to preserve the goodwill of
customers and others having business relations with such party or its
subsidiaries.
3.9 Approvals and Consents. Each party hereto represents and
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warrants to and covenants with the other that it will use its best efforts, and
will cause its officers, directors, employees and agents and its subsidiaries
and any subsidiary's officers, directors, employees and agents to use their best
efforts, to obtain as soon as is reasonably practicable all approvals and
consents of state and federal departments or agencies required or deemed
necessary for consummation of the transactions contemplated by this Agreement
and the Merger Agreement.
3.10 Agreement by Independent Executive Officers and
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Directors.
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Each of the directors and executive officers of Independent will,
contemporaneously with the execution of this Agreement, execute and deliver to
United an agreement, the form of which is attached hereto as Exhibit B, pursuant
to which each of them agrees, subject to their fiduciary duty, (i) to recommend
to Independent shareholders approval of the Merger, (ii) to vote the capital
stock of Independent owned or controlled by them in favor of the Merger, and
(iii) to transfer or assign shares of United Stock received by them in
connection with the Merger only in compliance with the 1933 Act, applicable
state securities laws and the rules and regulations promulgated under either.
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3.11 Press Releases. Prior to the Effective Date, Independent
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and United shall agree with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, however, that nothing in this
Section 3.11 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by law.
3.12 Employee Benefits and Contracts. Following the Effective
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Date, United shall provide generally to officers, employees and former employees
of Independent who continue employment with United employee benefits on terms
and conditions which, when taken as a whole, are substantially similar to those
then currently provided by United to its other similarly situated officers,
employees and former employees. For purposes of eligibility to participate and
any vesting determinations in connection with the provision of any such employee
benefits, service with Independent prior to the Effective Date shall be counted.
United shall also honor in accordance with their terms all employment,
severance, consulting, option and other contracts of a compensatory nature to
the extent disclosed in the Independent Disclosure Memorandum between
Independent and any current or former director, officer or employee thereof and
no other contracts of the types described that are not so disclosed shall be
deemed to be assumed by United by reason of this Section 3.12. If, during the
calendar year in which falls the Effective Date, United shall terminate any
"group health plan", within the meaning of Section 4980B(g)(2) of the Internal
Revenue Code, in which one or more Independent employees participated
immediately prior to the Effective Date (a "Independent Plan"), United shall
cause any successor group health plan to waive any underwriting requirements; to
give credit for any such Independent employee's participation in the Independent
Plan prior to the Effective Date for purposes of applying any pre-existing
condition limitations set forth therein; and to give credit for covered expenses
paid by any such Independent employee under a Independent Plan prior to the
Effective Date towards satisfaction of any annual deductible limitation and
out-of pocket maximum applied under such successor group health plan. United
also shall be considered a successor employer for and shall provide to
"qualified beneficiaries", determined immediately prior to the Effective Date,
under any Independent Plan appropriate "continuation coverage" (as those terms
are defined in Section 4980B of the Internal Revenue Code) following the
Effective Date under either the Independent Plan or any successor group health
plan maintained by United.
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF INDEPENDENT
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As an inducement to United to enter into this Agreement and to
consummate the transactions contemplated hereby, Independent represents,
warrants, covenants and agrees as follows:
4.1 Independent Disclosure Memorandum. By March 17, 2000,
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Independent will deliver to United a memorandum (the "Independent Disclosure
Memorandum") containing certain information regarding Independent as indicated
at various places in this Agreement. All information set forth in the
Independent Disclosure Memorandum or in documents incorporated by reference in
the Independent Disclosure Memorandum is true, correct and complete, does not
omit to state any fact necessary in order to make the statements therein not
misleading, and shall be deemed for all purposes of this Agreement to constitute
part of the representations and warranties of Independent under this Article IV.
The information contained in the Independent Disclosure Memorandum shall be
deemed to be part of and qualify all representations and warranties contained in
this Article IV and the covenants in Article V to the extent applicable. All
information in each of the documents and other writings furnished to United
pursuant to this Agreement or the Independent Disclosure Memorandum is or will
be true, correct and complete and does not and will not omit to state any fact
necessary in order to make the statements therein not misleading. Independent
shall promptly provide United with written notification of any event, occurrence
or other information necessary to maintain the Independent Disclosure Memorandum
and all other documents and writings furnished to United pursuant to this
Agreement as true, correct and complete in all material respects at all times
prior to and including the Closing. Independent agrees that upon receipt of the
Independent Disclosure Memorandum, United shall have until March 24, 2000 to
review the Independent Disclosure Memorandum and to terminate this Agreement if
for any reason in its sole discretion United believes that proceeding with the
Merger in light of the contents of such memorandum would be detrimental to
United.
4.2 Corporate and Financial.
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4.2.1 Authority. Subject to the approval of various
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state and federal regulators and Independent Shareholders, the execution,
delivery and performance of this Agreement and the other transactions
contemplated or required in connection herewith will not, with or without the
giving of notice or the passage of time, or both, (a) violate any provision of
federal or state law applicable to Independent, the violation of which could be
reasonably expected to have a material adverse effect on the business,
operations, properties, assets, financial condition or prospects of Independent;
(b) violate any provision of the articles of incorporation or bylaws of
Independent; (c) conflict with or result in a breach of any provision of, or
termination of, or constitute a default under any instrument, license,
agreement, or commitment to which Independent is a party, which, singly or in
the aggregate, could reasonably be expected to have a material adverse effect on
the business, operations, properties, assets, financial condition or prospects
of Independent; or (d) constitute a violation of any order, judgment or decree
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to which Independent is a party, or by which Independent or any of its assets or
properties are bound. Assuming this Agreement constitutes the valid and binding
obligation of United, this Agreement constitutes the valid and binding
obligation of Independent, and is enforceable in accordance with its terms,
except as limited by laws affecting creditors' rights generally and by the
discretion of courts to compel specific performance.
4.2.2 Corporate Status. Independent is a business
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corporation duly organized, validly existing and in good standing under the laws
of the state of Georgia and has no direct or indirect subsidiaries other than
Independent Bank. Independent Bank is a banking corporation duly organized and
validly existing under the laws of the State of Georgia. Independent and
Independent Bank have all of the requisite corporate power and authority and are
entitled to own or lease their respective properties and assets and to carry on
their respective businesses as and in the places where such properties or assets
are now owned, leased or operated and such businesses are now conducted.
4.2.3 Capital Structure. (a) Independent has an
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authorized capital stock consisting of 10,000,000 shares, $1.00 par value of
common stock, of which 2,067,439 shares of common stock are issued and
outstanding as of the date hereof including options to acquire 119,283 shares
(the "Independent Stock Options"). Independent Bank has an authorized capital
stock consisting solely of 5,000,000 shares of Common Stock, par value $1.00
("Independent Bank Stock"), of which 1,116,438 shares are issued and outstanding
as of the date hereof. All of the outstanding shares of Independent Stock and
Independent Bank Stock are duly and validly issued, fully paid and
non-assessable and were offered, issued and sold in compliance with all
applicable federal and state securities laws. No person has any right of
rescission or claim for damages under federal or state securities laws with
respect to the issuance of any shares of Independent Stock or Independent Bank
Stock previously issued. None of the shares of Independent Stock or Independent
Bank Stock has been issued in violation of any preemptive or other rights of its
shareholders. All of the issued and outstanding shares of Independent Bank Stock
are owned by Independent.
(b) Except for the Independent Stock Options and as
set forth in the Independent Disclosure Memorandum, Independent does not have
outstanding any securities which are either by their terms or by contract
convertible or exchangeable into capital stock of Independent, or any other
securities or debt, of Independent, or any preemptive or similar rights to
subscribe for or to purchase, or any options or warrants or agreements or
understandings for the purchase or the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital stock
or securities convertible into its capital stock. Independent is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(c) There is no agreement, arrangement or
understanding to which Independent is a party restricting or otherwise relating
to the transfer of any shares of capital stock of Independent.
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(d) All shares of common stock or other capital
stock, or any other securities or debt, of Independent, which have been
purchased or redeemed by Independent have been purchased or redeemed in
accordance with all applicable federal, state and local laws, rules, and
regulations, including, without limitation, all federal and state securities
laws and rules and regulations of any securities exchange or system on which
such stock, securities or debt are, or at such time were, traded, and no such
purchase or redemption has resulted or will, with the giving of notice or lapse
of time, or both, result in a default or acceleration of the maturity of, or
otherwise modify, any agreement, note, mortgage, bond, security agreement, loan
agreement or other contract or commitment of Independent.
4.2.4 Corporate Records. The stock records and minute books of
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Independent, whether heretofore or hereafter furnished or made available to
United by Independent, (a) fully and accurately reflect all issuances, transfers
and redemptions of the Common Stock, (b) correctly show the record addresses and
the number of shares of such stock issued and outstanding on the date hereof
held by the shareholders of Independent, (c) correctly show all corporate action
taken by the directors and shareholders of Independent (including actions taken
by consent without a meeting) and (d) contain true and correct copies or
originals of the respective articles of incorporation and all amendments
thereto, bylaws as amended and currently in force, and the minutes of all
meetings or consent actions of its directors and shareholders. No resolutions,
regulations or bylaws have been passed, enacted, consented to or adopted by such
directors or shareholders except those contained in the minute books. All
corporate records have been maintained in accordance with all applicable
statutory requirements and are complete and accurate.
4.2.5 Tax Returns; Taxes. (a) Independent has duly filed (i)
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all required federal and state tax returns and reports, and (ii) all required
returns and reports of other governmental units having jurisdiction with respect
to taxes imposed upon its income, properties, revenues, franchises, operations
or other assets or taxes imposed which might create a material lien or
encumbrance on any of such assets or affect materially and adversely its
business or operations. To the knowledge of the officers of Independent (the
"Independent Management"), such returns or reports are, and when filed will be,
true, complete and correct, and Independent has paid, to the extent such taxes
or other governmental charges have become due, all taxes and other governmental
charges set forth in such returns or reports. To the knowledge of the
Independent Management, all federal, state and local taxes and other
governmental charges paid or payable by Independent have been paid, or have been
accrued or reserved on its books in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods. To the
knowledge of the Independent Management, adequate reserves for the payment of
taxes have been established on the books of Independent for all periods through
the date hereof, whether or not due and payable and whether or not disputed.
Until the Closing Date, Independent shall continue to provide adequate reserves
for the payment of expected tax liabilities in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods.
Independent has not received any notice of a tax deficiency or assessment of
additional taxes of any kind and, to the knowledge of the Independent
Management, there is no threatened claim against Independent, or to the
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knowledge of the Independent Management, any basis for any such claim, for
payment of any additional federal, state, local or foreign taxes for any period
prior to the date of this Agreement in excess of the accruals or reserves with
respect to any such claim shown in the 1999 Independent Financial Statements
described in Section 4.2.6 below or disclosed in the notes with respect thereto.
There are no waivers or agreements by Independent for the extension of time for
the assessment of any taxes. The federal income tax returns of Independent have
not been examined by the Internal Revenue Service for any period since December
31, 1994.
(b) Except as set forth in the Independent Disclosure
Memorandum, to the knowledge of the Independent Management, proper and accurate
amounts have been withheld by Independent from its employees for all periods in
full and complete compliance with the tax withholding provisions of applicable
federal, state and local tax laws, and proper and accurate federal, state and
local tax returns have been filed by Independent for all periods for which
returns were due with respect to withholding, social security and unemployment
taxes, and the amounts shown thereon to be due and payable have been paid in
full.
4.2.6 Financial Statements. Independent has delivered to
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United true, correct and complete copies of the audited financial statements of
Independent for the years ended December 31, 1997, 1998 and 1999, including
balance sheets, statements of income, statements of shareholders' equity,
statements of cash flows and related notes (the audited financial statements for
the year ended December 31, 1999 being referred to as the "1999 Independent
Financial Statements"). All of such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and present fairly the assets, liabilities and financial condition of
Independent as of the dates indicated therein and the results of its operations
for the respective periods then ended.
4.2.7 Regulatory Reports. Independent has made available to
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United for review and inspection the year-end Report of Condition and year-end
Report of Income and Dividends as filed by Independent Bank with the Federal
Deposit Insurance Corporation (the "FDIC") for each of the three years ended
December 31, 1999, 1998 and 1997, together with all such other reports filed for
the same three-year period with the FDIC, and the Department of Banking and
Finance of the State of Georgia (the "Department of Banking"), and other
applicable regulatory agencies and the Form F.R. Y-6 filed by Independent with
the Board of Governors of the Federal Reserve System (the "Federal Reserve") for
each of the three years ended December 31, 1999, 1998 and 1997 (collectively,
the "Independent Reports"). All of the Independent Reports, as amended, have
been prepared in accordance with applicable rules and regulations applied on a
basis consistent with prior periods and contain in all material respects all
information required to be presented therein in accordance with such rules and
regulations.
4.2.8 Accounts. The Independent Disclosure Memorandum contains
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a list of each and every bank and other institution in which Independent
maintains an account or safety deposit box, the account numbers, and the names
of all persons who are presently authorized to draw thereon, have access thereto
or give instructions regarding distribution of funds or assets therein.
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4.2.9 Notes and Obligations. (a) Except as set forth in the
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Independent Disclosure Memorandum or as provided for in the loss reserve
described in subsection (b) below, all notes receivable or other obligations
owned by Independent or due to it shown in the 1999 Independent Financial
Statements and any such notes receivable and obligations on the date hereof and
on the Closing Date are and will be genuine, legal, valid and collectible
obligations of the respective makers thereof and are not and will not be subject
to any offset or counterclaim. Except as set forth in subsection (b) below, all
such notes and obligations are evidenced by written agreements, true and correct
copies of which will be made available to United for examination prior to the
Closing Date. All such notes and obligations were entered into by Independent in
the ordinary course of its business and in compliance with all applicable laws
and regulations.
(b) Independent has established a loss reserve in the 1999
Independent Financial Statements and as of the date of this Agreement and will
establish a loan loss reserve as of the Closing Date which is adequate to cover
anticipated losses which might result from such items as the insolvency or
default of borrowers or obligors on such loans or obligations, defects in the
notes or evidences of obligation (including losses of original notes or
instruments), offsets or counterclaims properly chargeable to such reserve, or
the availability of legal or equitable defenses which might preclude or limit
the ability of Independent to enforce the note or obligation, and the
representations set forth in subsection (a) above are qualified in their
entirety by the aggregate of such loss reserve. Except as described in the
Independent Disclosure Memorandum, at the Closing Date, the ratio of the loss
reserve, established on such date in good faith by Independent, to total loans
outstanding at such time shall not exceed the ratio of the loan loss reserve to
the total loans outstanding as reflected in the 1999 Independent Financial
Statements, established on or before such date in good faith by Independent, in
accordance with generally accepted accounting principles.
4.2.10 Liabilities. Independent has no debt, liability or
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obligation of any kind required to be shown pursuant to generally accepted
accounting principles on the consolidated balance sheet of Independent, whether
accrued, absolute, known or unknown, contingent or otherwise, including, but not
limited to (a) liability or obligation on account of any federal, state or local
taxes or penalty, interest or fines with respect to such taxes, (b) liability
arising from or by virtue of the distribution, delivery or other transfer or
disposition of goods, personal property or services of any type, kind or
variety, (c) unfunded liabilities with respect to any pension, profit sharing or
employee stock ownership plan, whether operated by Independent or any other
entity covering employees of Independent, or (d) environmental liabilities,
except (i) those reflected in the 1999 Independent Financial Statements, and
(ii) as disclosed in the Independent Disclosure Memorandum.
4.2.11 Absence of Changes. Except as specifically provided for
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in this Agreement or specifically set forth in the Independent Disclosure
Memorandum, since December 31, 1998:
(a) there has been no change in the business, assets,
liabilities, results of operations or financial condition of Independent, or in
any of its relationships with customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had, or which the Independent Management believes may have,
a material adverse effect on such businesses or properties;
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(b) there has been no material damage, destruction or loss to
the assets, properties or business of Independent, whether or not covered by
insurance, which has had, or which the Independent Management believes may have,
an adverse effect thereon;
(c) the business of Independent has been operated in the
ordinary course, and not otherwise;
(d) the properties and assets of Independent used in its
business have been maintained in good order, repair and condition, ordinary wear
and tear excepted;
(e) the books, accounts and records of Independent have been
maintained in the usual, regular and ordinary manner;
(f) there has been no declaration, setting aside or payment of
any dividend or other distribution on or in respect of the capital stock of
Independent;
(g) there has been no increase in the compensation or in the
rate of compensation or commissions payable or to become payable by Independent
to any director or executive officer, or to any employee earning $35,000 or more
per annum, or any general increase in the compensation or in the rate of
compensation payable or to become payable to employees of Independent earning
less than $35,000 per annum ("general increase" for the purpose hereof meaning
any increase generally applicable to a class or group of employees, but not
including increases granted to individual employees for merit, length of
service, change in position or responsibility or other reasons applicable to
specific employees and not generally to a class or group thereof), or any
director, officer, or employee hired at a salary in excess of $35,000 per annum,
or any increase in any payment of or commitment to pay any bonus, profit sharing
or other extraordinary compensation to any employee;
(h) there has been no change in the articles of incorporation
or bylaws of Independent;
(i) there has been no labor dispute, unfair labor practice
charge or employment discrimination charge, nor, to the knowledge of
Independent, any organizational effort by any union, or institution or
threatened institution, of any effort, complaint or other proceeding in
connection therewith, involving Independent, or affecting its operations;
(j) there has been no issuance, sale, repurchase, acquisition,
or redemption by Independent of any of its capital stock, bonds, notes, debt or
other securities, and there has been no modification or amendment of the rights
of the holders of any outstanding capital stock, bonds, notes, debt or other
securities thereof;
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(k) there has been no mortgage, lien or other encumbrance or
security interest (other than liens for current taxes not yet due or purchase
money security interests arising in the ordinary course of business) created on
or in (including without limitation, any deposit for security consisting of) any
asset or assets of Independent or assumed by it with respect to any asset or
assets;
(l) there has been no indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise) incurred by
Independent which would be required to be reflected on a balance sheet of
Independent prepared as of the date hereof in accordance with generally accepted
accounting principles applied on a consistent basis, except as incurred in the
ordinary course of business;
(m) no obligation or liability of Independent has been
discharged or satisfied, other than in the ordinary course of business;
(n) there have been no sales, transfers or other dispositions
of any asset or assets of Independent, other than sales in the ordinary course
of business; and
(o) there has been no amendment, termination or waiver of any
right of Independent under any contract or agreement or governmental license,
permit or permission which has had or may have an adverse effect on its business
or properties.
4.2.12 Litigation and Proceedings. Except as set forth on the
--------------------------
Independent Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or investigations,
pending or, to the knowledge of Independent, threatened against, by or affecting
Independent, or any officer, director, employee or agent in such person's
capacity as an officer, director, employee or agent of Independent or relating
to the business or affairs of Independent, in any court or before any arbitrator
or governmental agency, and no judgment, award, order or decree of any nature
has been rendered against or with respect thereto by any agency, arbitrator,
court, commission or other authority, nor does Independent have any unasserted
contingent liabilities which might have an adverse effect on its assets or on
the operation of its businesses or which might prevent or impede the
consummation of the transactions contemplated by this Agreement.
4.2.13 Proxy Materials. Neither the Independent Proxy
-----------------
Materials nor other materials furnished by Independent to the Independent
shareholders in connection with the transactions contemplated by this Agreement
or the Merger Agreement, or in any amendments thereof or supplements thereto,
will, at the times such documents are distributed to the holders of shares of
Independent Stock and through the acquisition of shares of Independent Stock by
United pursuant to the Merger, contain with respect to Independent any untrue
statement of a material fact or omit to state any information required to be
stated therein or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made with
respect to Independent, not misleading.
4.3 Business Operations.
-------------------
-12-
4.3.1 Customers. Independent has no knowledge of any presently
---------
existing facts which could reasonably be expected to result in the loss of any
material borrower or depositor or in Independent's inability to collect amounts
due therefrom or to return funds deposited thereby, except as set forth on the
Independent Disclosure Memorandum.
4.3.2 Permits; Compliance with Law. (a) Independent has all
------------------------------
permits, licenses, approvals, authorizations and registrations under all
federal, state, local and foreign laws required for Independent to carry on its
business as presently conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect, and no suspension
or cancellation of any of them is pending or, to the knowledge of Independent,
threatened.
(b) Independent has complied with all laws, regulations, and
orders applicable to it or its business, except for any non-compliance which
would not have a material adverse effect on Independent. The Independent
Disclosure Memorandum contains a list of any known violations of such laws,
regulations, ordinances or rules by any present officer, director, or employee
of Independent which occurred since December 31, 1994, and which resulted in any
order, proceeding, judgment or decree which would be required to be disclosed
pursuant to Item 401(f) of Regulation S-K promulgated by the Securities and
Exchange Commission if Independent had been subject to the reporting
requirements under the 1933 Act or the Securities Exchange Act of 1934. No past
violation of any such law, regulation, ordinance or rule has occurred which
could impair the right or ability of Independent to conduct its business.
(c) Except as set forth in the Independent Disclosure
Memorandum, no notice or warning from any governmental authority with respect to
any failure or alleged failure of Independent to comply in any respect with any
law, regulation or order has been received, nor is any such notice or warning
proposed or, to the knowledge of Independent, threatened.
4.3.3 Environmental. (a) Except as set forth in the
-------------
Independent Disclosure Memorandum, Independent
(i) has not caused or permitted, and has no knowledge
of any claim regarding the environmental condition of the
property or the generation, manufacture, use, or handling or
the release or presence of, any Hazardous Material on, in,
under or from any properties or facilities currently owned or
leased by Independent or adjacent to any properties so owned
or leased; and
(ii) has complied in all material respects with, and
has kept all records and made all filings or reports required
by, and is otherwise in substantial compliance with all
applicable federal, state and local laws, regulations, orders,
permits and licenses relating to the generation, treatment,
manufacture, use, handling, release or presence of any
Hazardous Material on, in, under or from any properties or
facilities currently owned or leased by Independent.
-13-
(b) To Independent's knowledge, except as set forth in the
Independent Disclosure Memorandum, neither Independent nor any of its officers,
directors, employees or agents, in the course of such individual's employment by
Independent, has given advice with respect to, or participated in any respect
in, the decisions regarding Hazardous Material handling or disposal of any
entity or concern whose business relates in any way to the generation, storage,
handling, disposal, transfer, production, use or processing of Hazardous
Material, nor to Independent's knowledge has Independent foreclosed on any
property on which there is a threatened release of any Hazardous Material, or on
which there has been such a release and full remediation has not been completed.
(c) Except as set forth in the Independent Disclosure
Memorandum, neither Independent, nor any of its officers, directors, employees,
or agents, is aware of, has been told of, or has observed, the presence of any
Hazardous Material on, in, under, or around property on which Independent holds
a legal or security interest, in violation of, or creating a material liability
under, federal, state, or local environmental statutes, regulations, or
ordinances.
(d) The term "Hazardous Material" means any substance whose
nature, use, manufacture, or effect render it subject to federal, state or local
regulation governing that material's investigation, remediation or removal as a
threat or potential threat to human health or the environment and includes,
without limitation, any substance within the meaning of "hazardous substances"
under the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. ss. 9601, "hazardous wastes" within the meaning of the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6921, any petroleum product,
including any fraction of petroleum, or any asbestos containing materials.
However, the term "Hazardous Material" shall not include those substances which
are normally and reasonably used in connection with the occupancy or operation
of office buildings (such as cleaning fluids, and supplies normally used in the
day to day operation of business offices).
4.3.4 Insurance. The Independent Disclosure Memorandum
---------
contains a complete list and description (including the expiration date, premium
amount and coverage thereunder) of all policies of insurance and bonds presently
maintained by, or providing coverage for, Independent or any of its officers,
directors and employees, all of which are, and will be maintained through the
Closing Date, in full force and effect, together with a complete list of all
pending claims under any of such policies or bonds. All terms, obligations and
provisions of each of such policies and bonds have been complied with, all
premiums due thereon have been paid, and no notice of cancellation with respect
thereto has been received. Except as set forth in the Independent Disclosure
Memorandum, such policies and bonds provide adequate coverage to insure the
properties and businesses of Independent and the activities of its officers,
directors and employees against such risks and in such amounts as are prudent
and customary. Independent will not as of the Closing Date have any liability
for premiums or for retrospective premium adjustments for any period prior to
the Closing Date. Independent has heretofore made, or will hereafter make,
available to United a true, correct and complete copy of each insurance policy
and bond in effect since December 31, 1994 with respect to the business and
affairs of Independent.
-14-
4.4 Properties and Assets.
---------------------
4.4.1 Contracts and Commitments. The Independent Disclosure
--------------------------
Memorandum contains a list identifying and briefly describing all written
contracts, purchase orders, agreements, security deeds, guaranties or
commitments to which Independent is a party or by which it may be bound
involving the payment or receipt, actual or contingent, of more than $25,000 or
having a term or requiring performance over a period of more than ninety (90)
days. Each such contract, agreement, guaranty and commitment of Independent is
in full force and effect and is valid and enforceable in accordance with its
terms, and constitutes a legal and binding obligation of the respective parties
thereto and is not the subject of any notice of default, termination, partial
termination or of any ongoing, pending, completed or threatened investigation,
inquiry or other proceeding or action that may give rise to any notice of
default, termination or partial termination. Independent has complied in all
material respects with the provisions of such contracts, agreements, guaranties
and commitments. A true and complete copy of each such document has been or will
be made available to United for examination.
4.4.2 Licenses; Intellectual Property. Independent has all
---------------------------------
patents, trademarks, trade names, service marks, copyrights, trade secrets and
know-how reasonably necessary to conduct its business as presently conducted
and, except as described in the Independent Disclosure Memorandum, Independent
is not a party, either as licensor or licensee, to any agreement for any patent,
process, trademark, service xxxx, trade name, copyright, trade secret or other
confidential information and there are no rights of third parties with respect
to any trademark, service xxxx, trade secrets, confidential information, trade
name, patent, patent application, copyright, invention, device or process owned
or used by Independent or presently expected to be used by either of them in the
future. All patents, copyrights, trademarks, service marks, trade names, and
applications therefor or registrations thereof, owned or used by Independent,
are listed in the Independent Disclosure Memorandum. Independent has complied
with all applicable laws relating to the filing or registration of "fictitious
names" or trade names.
4.4.3 Personal Property. Independent has good and marketable
------------------
title to all of its personalty, tangible and intangible, reflected in the 1999
Independent Financial Statements (except as since sold or otherwise disposed of
by it in the ordinary course of business), free and clear of all encumbrances,
liens or charges of any kind or character, except (i) those referred to in the
notes to the 1999 Independent Financial Statements as securing specified
liabilities (with respect to which no default exists or, to the knowledge of
Independent, is claimed to exist), (ii) those described in the Independent
Disclosure Memorandum and (iii) liens for taxes not due and payable.
4.4.4 Independent Leases. (a) All leases (the "Independent
-------------------
Leases") pursuant to which Independent is lessor or lessee of any real or
personal property (such property, the "Leased Property") are valid and
enforceable in accordance with their terms; there is not under any of the
Independent Leases any default or, to the knowledge of Independent, any claimed
default by Independent, or event of default or event which with notice or lapse
of time, or both, would constitute a default by Independent and in respect of
which adequate steps have not been taken to prevent a default on its part from
occurring.
-15-
(b) The copies of the Independent Leases heretofore or
hereafter furnished or made available by Independent to United are true, correct
and complete, and the Independent Leases have not been modified in any respect
other than pursuant to amendments, copies of which have been concurrently
delivered or made available to United, and are in full force and effect in
accordance with their terms.
(c) Except as set forth in the Independent Disclosure
Memorandum, there are no contractual obligations, agreements in principle or
present plans for Independent to enter into new leases of real property or to
renew or amend existing Independent Leases prior to the Closing Date.
4.4.5 Real Property. (a) Independent does not own any interest
-------------
in any real property (other than as lessee) except as set forth in the
Independent Disclosure Memorandum (such properties being referred to herein as
"Independent Realty"). Except as disclosed in the Independent Disclosure
Memorandum, Independent has good title to the Independent Realty and the titles
to the Independent Realty are covered by title insurance policies providing
coverage in the amount of the original purchase price, true, correct and
complete copies of which have been or will be furnished to United with the
Independent Disclosure Memorandum. Independent has not encumbered the
Independent Realty since the effective dates of the respective title insurance
policies.
(b) Except as set forth in the Independent Disclosure
Memorandum, the interests of Independent in the Independent Realty and in and
under each of the Independent Leases are free and clear of any and all liens and
encumbrances and are subject to no present claim, contest, dispute, action or,
to the knowledge of Independent, threatened action at law or in equity.
(c) The present and past use and operations of, and
improvements upon, the Independent Realty and all real properties leased by
Independent (the "Independent Leased Real Properties") are in compliance in all
material respects with all applicable building, fire, zoning and other
applicable laws, ordinances and regulations and with all deed restrictions of
record, no notice of any violation or alleged violation thereof has been
received, and to the knowledge of Independent there are no proposed changes
therein that would affect the Independent Realty, the Independent Leased Real
Properties or their uses.
(d) Except as set forth in the Independent Disclosure
Memorandum, no rent has been paid in advance and no security deposit has been
paid by, nor is any brokerage commission payable by or to, Independent with
respect to any Lease pursuant to which it is lessor or lessee.
(e) Independent is not aware of any proposed or pending change
in the zoning of, or of any proposed or pending condemnation proceeding with
respect to, any of the Independent Realty or the Independent Leased Real
Properties which may adversely affect the Independent Realty or the Independent
Leased Real Properties or the current or currently contemplated use thereof.
-16-
(f) The buildings and structures owned, leased or used by
Independent are, taken as a whole, in good operating order (except for ordinary
wear and tear), usable in the ordinary course of business, and are sufficient
and adequate to carry on the business and affairs of Independent.
4.5 Employees and Benefits.
----------------------
4.5.1 Directors or Officers of Other Corporations. Except as
--------------------------------------------
set forth in the Independent Disclosure Memorandum, no director, officer, or
employee of Independent serves, or in the past five years has served, as a
director or officer of any other corporation on behalf of or as a designee of
Independent or any of its subsidiaries.
4.5.2 Employee Benefits. (a) Except as set forth in the
------------------
Independent Disclosure Memorandum, Independent does not provide and is not
obligated to provide, directly or indirectly, any benefits for employees of a
material nature, including, without limitation, any pension, profit sharing,
stock option, retirement bonus, hospitalization, medical, insurance or vacation
under any practice, agreement or understanding.
(b) The Independent Disclosure Memorandum lists separately any
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") sponsored by
Independent (collectively, "ERISA Plans"). True, correct and complete copies of
all ERISA Plans and, to the extent applicable, all related trust agreements,
insurance contracts, summary plan descriptions, Internal Revenue Service
determination letters and filings, the past three years of actuarial reports and
valuations, annual reports and Form 5500 filings (including attachments), and
any other related documents requested by United or its counsel have been, or
prior to the Closing Date will be, made available to United.
(c) Independent is not currently and has never been in the
past required to contribute to a multiemployer plan as defined in Section
3(37)(A) of ERISA. Independent does not maintain or contribute to, nor within
the past six years has it maintained or contributed to, an employee pension
benefit plan as defined in Section 3(2) of ERISA that is or was subject to Title
IV of ERISA.
(d) Except as set forth in the Independent Disclosure
Memorandum, each ERISA Plan has been operated and administered in all material
respects in accordance with, and has been amended to comply with (unless such
amendment is not yet required), all applicable laws, rules and regulations,
including, without limitation, ERISA, the Internal Revenue Code of 1986, as
amended ("Code"), and the regulations issued under ERISA and the Code. With
respect to each ERISA Plan, other than routine claims for benefits submitted in
the ordinary course of the benefits process, no litigation or administrative or
other proceeding is pending or, to the knowledge of Independent, threatened
involving such ERISA Plan or any of its fiduciaries. With respect to each ERISA
Plan, neither Independent nor any of its directors, officers, employees or
agents, nor to Independent's knowledge, any "party in interest" or "disqualified
-17-
person" (as such terms are defined in Section 3(14) of ERISA and Section 4975 of
the Code) has been engaged in or been a party to any transaction relating to the
ERISA Plan which would constitute a breach of fiduciary duty under ERISA or a
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code), unless such transaction is specifically permitted
under Sections 407 or 408 of ERISA, Section 4975 of the Code or a class or
administrative exemption issued by the Department of Labor. Except as disclosed
in the Independent Disclosure Memorandum, each ERISA Plan that is a group health
plan within the meaning of Section 607(l) of ERISA and Section 4980B of the Code
is in material compliance with the continuation coverage requirements of Section
501 of ERISA and Section 4980B of the Code.
(e) Of the ERISA Plans, the "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA (collectively, the "Employee Pension
Benefit Plans") are separately identified on the Independent Disclosure
Memorandum. With respect to each Employee Pension Benefit Plan, except as set
forth on the Independent Disclosure Memorandum: (i) such Employee Pension
Benefit Plan is intended to constitute a qualified plan within the meaning of
Section 401(a) of the Code and the trust is intended to be exempt from federal
income tax under Section 501(a) of the Code; (ii) all contributions required by
such plan have been made or will be made on a timely basis; and (iii) no
termination, partial termination or discontinuance of contributions has occurred
without a determination by the IRS that such action does not affect the
tax-qualified status of such plan.
(f) As of the Closing Date, with respect to each ERISA Plan,
Independent will have provided adequate reserves, or insurance or qualified
trust funds, to provide for all payments and contributions required, or
reasonably expected to be required, to be made under the provisions of such
ERISA Plan or required to be made under applicable laws, rules and regulations,
with respect to any period prior to the Closing Date to the extent reserves are
required under generally accepted accounting principles, based on an actuarial
valuation satisfactory to the actuaries of Independent representing a projection
of claims expected to be incurred under such ERISA Plan.
(g) Except as disclosed on the Independent Disclosure
Memorandum, Independent does not provide and has no obligation to provide
benefits, including, without limitation, death, health or medical benefits
(whether or not insured) with respect to current or former employees of
Independent beyond their retirement or other termination of service with
Independent other than (i) coverage mandated by applicable Law, (ii) benefits
under the Employee Pension Benefit Plans, or (iii) benefits the full cost of
which is borne by the current or former employee or his beneficiary.
(h) Except as disclosed in the Independent Disclosure
Memorandum, neither this Agreement nor any transaction contemplated hereby will
(i) entitle any current or former employee, officer or director of Independent
to severance pay, unemployment compensation or any similar or other payment, or
(ii) accelerate the time of payment or vesting of, or increase the amount of
compensation or benefits due any such employee, officer or director.
-18-
4.5.3 Labor-Related Matters. Except as described in the
----------------------
Independent Disclosure Memorandum, Independent is not, and has not been, a party
to any collective bargaining agreement or agreement of any kind with any union
or labor organization or to any agreement with any of its employees which is not
terminable at will or upon ninety (90) days notice at the election of, and
without cost or penalty to, Independent. Independent has not received at any
time in the past five (5) years, any demand for recognition from any union, and
no attempt has been made, or will have been made as of the Closing Date, to
organize any of its employees. Independent has complied in all material respects
with all obligations under the National Labor Relations Act, as amended, the Age
Discrimination in Employment Act, as amended, and all other federal, state and
local labor laws and regulations applicable to employees. There are no unfair
labor practice charges pending or threatened against Independent, and there are,
and in the past three (3) years there have been, no charges, complaints, claims
or proceedings, no slowdowns or strikes pending or threatened against, or
involving, as the case may be, Independent with respect to any alleged violation
of any legal duty (including but not limited to any wage and hour claims,
employment discrimination claims or claims arising out of any employment
relationship) by Independent as to any of its employees or as to any person
seeking employment therefrom, and no such violations exist.
4.5.4 Related Party Transactions. Except for (a) loans and
----------------------------
extensions of credit made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions by Independent with other persons who are not affiliated with
Independent, and which do not involve more than the normal risk of repayment or
present other unfavorable features, (b) deposits, all of which are on terms and
conditions identical to those made available to all customers of Independent at
the time such deposits were entered into, and (c) transactions specifically
described in the Independent Disclosure Memorandum, there are no contracts with
or commitments to present or former 5% or greater shareholders, directors,
officers, or employees involving the expenditure after December 31, 1994 of more
than $60,000 as to any one individual, including with respect to any business
directly or indirectly controlled by any such person, or $100,000 for all such
contracts or commitments in the aggregate for all such individuals (other than
contracts or commitments relating to services to be performed by any officer,
director or employee as a currently-employed employee of Independent).
4.6 Other Matters.
-------------
4.6.1 Regulatory Reports. Independent will make available to
-------------------
United for review and inspection all applications, reports or other documents
filed by it for each of its past three full fiscal years with any regulatory or
governmental agencies. All of such applications, reports and other documents
have been prepared in accordance with applicable rules and regulations of the
regulatory agencies with which they were filed.
4.6.2 Approvals, Consents and Filings. Except for the approval
-------------------------------
of the Federal Reserve and the Department of Banking, or as set forth in the
Independent Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
-19-
thereby will (a) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, or (b)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Independent, or any of Independent's assets.
4.6.3 Default. (a) Except for those consents described in or
-------
set forth pursuant to Section 4.6.2 above, neither the execution of this
Agreement nor consummation of the transactions contemplated herein (i)
constitutes a breach of or default under any contract or commitment to which
Independent is a party or by which Independent or its properties or assets are
bound, (ii) does or will result in the creation or imposition of any security
interest, lien, encumbrance, charge, equity or restriction of any nature
whatsoever in favor of any third party upon any assets of Independent, or (iii)
constitutes an event permitting termination of any agreement or the acceleration
of any indebtedness of Independent.
(b) Independent is not in default under its articles of
incorporation or bylaws or under any term or provision of any security deed,
mortgage, indenture or security agreement or of any other contract or instrument
to which Independent is a party or by which it or any of its property is bound.
4.6.4 Representations and Warranties. No representation or
-------------------------------
warranty contained in this Article IV or in any written statement delivered by
or at the direction of Independent pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of all
documents that have been or will be furnished to United in connection with this
Agreement or pursuant hereto are or shall be true, correct and complete.
ARTICLE V
---------
CONDUCT OF BUSINESS OF INDEPENDENT PENDING CLOSING
--------------------------------------------------
Except as expressly otherwise provided herein, Independent
covenants and agrees that, without the prior written consent of United between
the date hereof and the Closing Date:
5.1 Conduct of Business. Independent will conduct its business
-------------------
only in the ordinary course, without the creation of any indebtedness for
borrowed money (other than deposit and similar accounts and customary credit
arrangements between banks in the ordinary course of business). Independent will
not engage in or undertake any action that would lead to the disqualification of
the pooling of interests method of accounting. Independent knows of no reason
that the proposed transaction would not qualify for pooling of interests
accounting treatment.
5.2 Maintenance of Properties. Independent will maintain its
-------------------------
properties and assets in good operating condition, ordinary wear and tear
excepted.
-20-
5.3 Insurance. Independent will maintain and keep in full
---------
force and effect all of the insurance referred to in Section 4.3.4 hereof or
other insurance equivalent thereto in all material respects.
5.4 Capital Structure. No change will be made in the
------------------
authorized or issued capital stock or other securities of Independent, and
Independent will not issue or grant any right or option to purchase or otherwise
acquire any of the capital stock or other securities of Independent.
5.5 Dividends. Except for quarterly dividends paid in
---------
accordance with previous practices, no dividend, distribution or payment will be
declared or made in respect to the Independent Stock and Independent will not,
directly or indirectly, redeem, purchase or otherwise acquire any of its capital
stock.
5.6 Amendment of Articles; Corporate Existence. Independent
---------------------
will not amend its articles of incorporation or bylaws, and Independent will
maintain its corporate existence and powers.
5.7 No Acquisitions. Independent shall not, without the
----------------
express written consent of United, acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other entity or
division thereof or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to it.
5.8 No Dispositions. Independent will not sell, mortgage,
----------------
lease, buy or otherwise acquire, transfer or dispose of any real property or
interest therein (except for sales in the ordinary course of business) and
Independent will not, except in the ordinary course of business, sell or
transfer, mortgage, pledge or subject to any lien, charge or other encumbrance
any other tangible or intangible asset.
5.9 Banking Arrangements. No change will be made in the
---------------------
banking and safe deposit arrangements referred to in Section 4.2.8 hereof.
5.10 Contracts. Except for renewals of existing contracts in
---------
effect as of the date hereof, or entering into a contract for the purpose of
substituting a vendor under any such existing contract, Independent will not,
without the express written consent of United, enter into any contract of the
kind described in Section 4.4.1 hereof.
5.11 Books and Records. The books and records of Independent
-----------------
will be maintained in the usual, regular and ordinary course.
5.12 Advice of Changes. Independent shall promptly advise
-----------------
United orally and in writing of any change or event having, or which the
Independent Management believes could have, a material adverse effect on the
assets, liabilities, business, operations or financial condition of Independent.
-21-
5.13 Reports. Independent shall file all reports required to
-------
be filed with any regulatory or governmental agencies between the date of this
Agreement and the Closing Date and shall deliver to United copies of all such
reports promptly after the same are filed.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF UNITED
----------------------------------------
As an inducement to Independent to enter into this Agreement
and to consummate the transactions contemplated hereby, United represents,
warrants, covenants and agrees as follows:
6.1 Corporate Status. United is a business corporation duly
-----------------
organized, validly existing and in good standing under the laws of the State of
Georgia and has no direct or indirect subsidiaries, which are material to
United, other than United Community Bank, Blairsville, Georgia ("United Bank"),
Towns County Bank, Hiawassee, Georgia ("Towns"), Peoples Bank of Xxxxxx Xxxxxx,
Xxxx Ridge, Georgia ("Xxxxxx"), White County Bank, Cleveland, Georgia ("White"),
Carolina Community Bank, Xxxxxx, North Carolina ("Carolina"), Bank of
Adairsville, Adairsville, Georgia ("Adairsville"), First Xxxxxxx Bank & Trust
Company, Clayton, Georgia ("Clayton"), 0xx Xxxxx Xxxx, Xxxx, Xxxxxxx ("Xxxxx")
and United Family Finance Company, Blairsville, Georgia (the "Finance Company")
(collectively the "United Subsidiaries.") The United Subsidiaries are banking
corporations, except for the Finance Company, which is a business corporation,
all of which are duly organized, validly existing and in good standing under the
laws of the State of Georgia with respect to United Bank, Towns, Fannin, White,
Adairsville, Xxxxx, Xxxxxxx, and the Finance Company, and the State of North
Carolina with respect to Carolina. United and the United Subsidiaries are
entitled to own or lease their respective properties and to carry on their
respective businesses in the places where such properties are now owned, leased
or operated and such businesses are now conducted.
6.2 Authority. Subject to the approval of various state and
---------
federal regulators, the execution, delivery and performance of this Agreement
and the other transactions contemplated or required in connection herewith will
not, with or without the giving of notice or the passage of time, or both, (a)
violate any provision of federal or state law applicable to United, the
violation of which could be reasonably expected to have a material adverse
effect on the business, operations, properties, assets, financial condition or
prospects of United; (b) violate any provision of the articles of incorporation
or bylaws of United; (c) conflict with or result in a breach of any provision
of, or termination of, or constitute a default under any instrument, license,
agreement, or commitment to which United is a party, which, singly or in the
aggregate, could reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, financial condition or prospects of
United; or (d) constitute a violation of any order, judgment or decree to which
-22-
bound. Assuming this Agreement constitutes the valid and binding obligation of
Independent, this Agreement constitutes the valid and binding obligation of
United, and is enforceable in accordance with its terms, except as limited by
laws affecting creditors' rights generally and by the discretion of courts to
compel specific performance.
6.3 Capital Structure. (a) As of the date of this Agreement,
------------------
United has authorized capital stock consisting solely of 10,000,000 shares of
common stock, par value $1.00 per share, of which 8,429,090 shares are issued
and outstanding as of the date hereof including 140,000 deemed outstanding
pursuant to United's prime plus 1/4% Convertible Subordinated Debentures due
December 31, 2006 (the "2006 Debentures") and presently exercisable options to
acquire 254,822 shares (the "United Stock Options") and 10,000,000 shares of
Preferred Stock, none of which is outstanding. All of the issued and outstanding
shares of United Stock and the United Subsidiaries capital stock (the "United
Subsidiaries Stock") is duly and validly issued, fully paid and nonassessable
and was offered, issued and sold in compliance with all applicable federal or
state securities laws. No person has any right of rescission or claim for
damages under federal or state securities laws with respect to the issuance of
shares of United Stock or any of the shares of United Subsidiaries Stock
previously issued. None of the shares of United Stock has been issued in
violation of the preemptive or other rights of any shareholder of United. None
of the shares of the United Subsidiaries Stock was issued in violation of the
preemptive or other rights of any shareholder of the United Subsidiaries. All of
the issued and outstanding shares of the United Subsidiaries Stock are owned by
United.
(b) Except for the 2006 Debentures and the United Stock
Options, United does not have outstanding any securities which are either by
their terms or by contract convertible or exchangeable into United Stock, or any
other securities or debt, of United, or any preemptive or similar rights to
subscribe for or to purchase, or any options or warrants or agreements or
understandings for the purchase or the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital stock
or securities convertible into its capital stock. United is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(c) There is no agreement, arrangement or understanding to
which United is a party restricting or otherwise relating to the transfer of any
shares of United Stock.
(d) All shares of common stock or other capital stock, or any
other securities or debt, of United, which have been purchased or redeemed by
United have been purchased or redeemed in accordance with all applicable
federal, state and local laws, rules, and regulations, including, without
limitation, all federal and state securities laws and rules and regulations of
any securities exchange or system on which such stock, securities or debt are,
or at such time were, traded, and no such purchase or redemption has resulted or
will, with the giving of notice or lapse of time, or both, result in a default
or acceleration of the maturity of, or otherwise modify, any agreement, note,
mortgage, bond, security agreement, loan agreement or other contract or
commitment of United.
6.4 Financial Statements. United has delivered to Independent
--------------------
true, correct and complete copies of the audited financial statements of United
for the years ended December 31, 1997, 1998 and 1999, including balance sheets,
statements of income, statements of shareholders' equity, statements of cash
flows and related notes (the audited financial statements for the year ended
-23-
December 31, 1999 being referred to as the "1999 United Financial Statements").
All of such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and present fairly the
assets, liabilities and financial condition of United as of the dates indicated
therein and the results of its operations for the respective periods then ended.
6.5 Permits; Compliance with Law. (a) United has all permits,
-----------------------------
licenses, approvals, authorizations and registrations under all federal, state,
local and foreign laws required for United to carry on its business as presently
conducted, and all of such permits, licenses, approvals, authorizations and
registrations are in full force and effect, and no suspension or cancellation of
any of them is pending or, to the knowledge of United, threatened.
(b) United has complied with all laws, regulations, and orders
applicable to it or its business, except for any non-compliance which would not
have a material adverse effect on United, and United has received no notice or
warning from any governmental authority with respect to any failure or alleged
failure of United to comply in any respect with any law, regulation or order has
been received, nor is any such notice or warning proposed or, to the knowledge
of United, threatened.
6.6 Litigation and Proceedings. There are no actions, decrees,
--------------------------
suits, counterclaims, claims, proceedings or governmental actions or
investigations, pending or, to the knowledge of United, threatened against, by
or affecting United, any officer, director, employee or agent in such person's
capacity as an officer, director, employee or agent of United or relating to the
business or affairs of United, in any court or before any arbitrator or
governmental agency, and no judgment, award, order or decree of any nature has
been rendered against or with respect thereto by any agency, arbitrator, court,
commission or other authority, nor does United have any unasserted contingent
liabilities which may have an adverse effect on its assets or on the operation
of its businesses or which might prevent or impede the consummation of the
transactions contemplated by this Agreement.
6.7 Default. (a) Except for those consents described in or set
-------
forth pursuant to Section 6.2 above, neither the execution of this Agreement nor
consummation of the transactions contemplated herein (i) constitutes a breach of
or default under any contract or commitment to which United is a party or by
which United or its properties or assets are bound, (ii) does or will result in
the creation or imposition of any security interest, lien, encumbrance, charge,
equity or restriction of any nature whatsoever in favor of any third party upon
any assets of United, or (iii) constitutes an event permitting termination of
any agreement or the acceleration of any indebtedness of United.
(b) United is not in default under its articles of
incorporation or bylaws or under any term or provision of any security deed,
mortgage, indenture or security agreement or of any other contract or instrument
to which United is a party or by which it or any of its property is bound.
-24-
6.8 Disclosure Reports. United has a class of securities
-------------------
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and has delivered to Independent copies of:
(a) its Annual Report on Form 10-K for its fiscal year ended
December 31, 1998 (and those portions of its 1998 Annual Report to Shareholders
incorporated therein by reference) filed pursuant to Section 13 of the Act;
(b) the Proxy Statement for its Annual Meeting of Shareholders
held on April 15, 1999, filed pursuant to Section 14 of the Act; and
(c) its Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999, and September 30, 1999, filed pursuant to Section
13 of the Act.
The report, proxy statement and quarterly reports include all of the regular and
periodic reports and proxy statements required to be filed by United with the
Securities and Exchange Commission since September 30, 1999, and are herein
collectively referred to as the "United SEC Reports." The United SEC Reports
taken together correctly describe, among other things, the business, operations
and principal properties of United in accordance with the requirements of the
applicable report forms. As of the respective dates of filing, none of the
United SEC Reports contained any untrue statement of material fact necessary to
make the statements therein not misleading. The financial statements contained
in the United SEC Reports have been prepared in accordance with generally
accepted accounting principals consistently applied and present fairly the
financial condition of United as of the dates thereof and the results of
operations for the periods covered thereby.
6.9 No Material Adverse Change. Since the date of its latest
----------------------------
published financial statements included in the United SEC Reports, there has not
been any change in the condition of United, any contracts entered into by
United, or other changes in the operations of United which, in any case, would
have a material adverse effect on United on a consolidated basis taken as a
whole.
6.10 Representations and Warranties. No representation or
-------------------------------
warranty contained in this Article VI or in any written statement delivered by
or at the direction of United pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of all
documents that have been or will be furnished to Independent in connection with
this Agreement or pursuant hereto are or shall be true, correct and complete.
-25-
ARTICLE VII
-----------
CONDITIONS TO OBLIGATIONS OF UNITED
-----------------------------------
All of the obligations of United under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by United:
7.1 Veracity of Representations and Warranties. The
-------------------------------------------------
representations and warranties of Independent contained herein or in any
certificate, schedule or other document delivered pursuant to the provisions
hereof, or in connection herewith, shall be true in all material respects as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true in all material respects at and as of such time, except
as a result of changes or events expressly permitted or contemplated herein.
7.2 Performance of Agreements. Independent shall have
----------------------------
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
7.3 Certificates, Resolutions, Opinion. Independent shall have
----------------------------------
delivered to United:
(a) a certificate executed by the President and
Secretary of Independent, dated as of the Closing Date, and certifying
in such detail as United may reasonably request to the fulfillment of
the conditions specified in Sections 7.1 and 7.2 hereof;
(b) duly adopted resolutions of the Board of
Directors and shareholders of Independent certified by the Secretary
thereof, dated the Closing Date, (i) authorizing and approving the
execution of this Agreement (with respect to the directors of
Independent) and the Merger Agreement (with respect to the directors and
shareholders of Independent) and the consummation of the transactions
contemplated herein and therein in accordance with their respective
terms and (ii) authorizing all other necessary and proper corporate
action to enable Independent to comply with the terms hereof and
thereof;
(c) certificates of the valid existence of
Independent and Independent Bank under the laws of the State of Georgia,
executed by the Secretary of State and the Department of Banking,
respectively, and dated not more than five (5) business days prior to
the Closing Date;
(d) certificates from the appropriate public
officials of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date, certifying that Independent has filed
all corporate tax returns required by the laws of such state and has
paid all taxes shown thereon to be due; and
-26-
(e) an opinion of Powell, Goldstein, Xxxxxxx &
Xxxxxx, counsel for Independent, dated the Closing Date, in the form
attached hereto as Exhibit D.
7.4 Shareholder Approval. The Merger Agreement shall have been
--------------------
approved by the vote of the holders of at least a majority of Independent Stock.
7.5 Regulatory Approvals. United shall have received from any
--------------------
and all governmental authorities, bodies or agencies having jurisdiction over
the transactions contemplated by this Agreement and the Merger Agreement,
including, but not limited to the Federal Reserve and the Department of Banking,
such consents, authorizations and approvals as are necessary for the
consummation thereof and all applicable waiting or similar periods required by
law shall have expired.
7.6 Effective Registration Statement. The United Registration
-------------------------------
Statement shall have been declared effective by the SEC and no stop order shall
have been entered with respect thereto.
7.7 Certificate of Merger. The Secretary of State of the State
---------------------
of Georgia shall have issued a certificate of merger with regard to the Merger
in accordance with the provisions of the Georgia Business Corporation Code.
7.8 Accountants' Letter. United shall have received a letter
--------------------
from Xxxxxxx & Xxxxxxx, dated the Closing Date, to the effect that: At the
request of Independent they have carried out procedures to a specified date not
more than five business days prior to the Closing Date, which procedures did not
constitute an examination in accordance with generally accepted auditing
standards, of the financial statements of Independent, as follows: (a) read the
unaudited balance sheets and statements of income of Independent from December
31, 1999 through the date of the most recent monthly financial statements
available in the ordinary course of business; (b) read the minutes of the
meetings of shareholders and Board of Directors of Independent from December 31,
1998 to said date nor more than five business days prior to the Closing Date;
and (c) consulted with certain officers and employees of Independent responsible
for financial and accounting matters and, based on such procedures, nothing has
come to their attention which would cause them to believe that (i) such
unaudited interim balance sheets and statements of income are not fairly
presented in conformity with generally accepted accounting principles applied on
a basis consistent with that of the 1999 Independent Financial Statements, (ii)
as of said date not more than five business days prior to the Closing Date, the
shareholders' equity, long-term debt, reserve for possible loan losses and total
assets of Independent, in each case as compared with the amounts shown in the
1999 Independent Financial Statements, are not different except as set forth in
such letter, or (iii) for the period from December 31, 1998 to said date not
more than five business days prior to the Closing Date, the net interest income,
total and per-share amounts of consolidated income (before extraordinary items)
and net income of Independent, as compared with the corresponding portion of the
preceding 12-month period, are not different except as set forth in such letter.
-27-
7.9 Employment Agreement. Xxxxx X. Xxxxxx shall have executed
--------------------
an employment agreement in form reasonably satisfactory to United and Xx.
Xxxxxx.
7.10 Pooling of Interests. United shall have received an
---------------------
opinion of Porter, Keadle, Xxxxx LLP, certified public accountants, to the
effect that the Merger will be accounted for as a "pooling of interests," which
opinion will be subject only to such qualifications, exceptions and factual
assumptions as are satisfactory to United.
7.11 Increase in Authorized Capital Stock. An increase in the
-------------------------------------
number of authorized shares United common stock, from 10,000,000 shares to
50,000,000 shares, shall have been approved by a vote of the shareholders of
United.
ARTICLE VIII
------------
CONDITIONS TO OBLIGATIONS OF INDEPENDENT
----------------------------------------
All of the obligations of Independent under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by it:
8.1 Veracity of Representations and Warranties. The
-------------------------------------------------
representations and warranties of United contained herein or in any certificate,
schedule or other document delivered pursuant to the provisions hereof, or in
connection herewith, shall be true in all material respects as of the date when
made and shall be deemed to be made again at and as of the Closing Date and
shall be true in all material respects at and as of such time, except as a
result of changes or events expressly permitted or contemplated herein (provided
that representations and warranties which are confined to a specific date shall
speak only as of such date).
8.2 Performance of Agreements. United shall have performed and
-------------------------
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
8.3 Certificates, Resolutions, Opinion. United shall have
------------------------------------
delivered to Independent:
(a) a certificate executed by the President and
Secretary of United, dated the Closing Date, certifying in such detail
as Independent may reasonably request to the fulfillment of the
conditions specified in Sections 8.1 and 8.2 hereof;
(b) duly adopted resolutions of the board of
directors of United, certified by the Secretary thereof, dated the
Closing Date, (i) authorizing and approving the execution of this
Agreement and the Merger Agreement on behalf of United, and the
consummation of the transactions contemplated herein and therein in
accordance with their respective terms, and (ii) authorizing all other
necessary and proper corporate actions to enable United to comply with
the terms hereof and thereof;
-28-
(c) a certificate of the valid existence of United,
under the laws of the State of Georgia executed by the Secretary of
State of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date;
(d) certificates from the appropriate public
officials of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date, certifying that United has filed all
corporate tax returns required by the laws of such state and has paid
all taxes shown thereon to be due; and
(e) an opinion of Xxxxxxxxxx Xxxxxxxx LLP, counsel
for United, dated the Closing Date, in the form attached hereto as
Exhibit E.
8.4 Shareholder Approval. The Merger Agreement shall have been
--------------------
approved by the vote of the holders of at least a majority of Independent Stock.
8.5 Regulatory Approvals. Any and all governmental
----------------------
authorities, bodies or agencies having jurisdiction over the transactions
contemplated by this Agreement and the Merger Agreement, including, but not
limited to the Federal Reserve and the Department of Banking, shall have granted
such consents, authorizations and approvals as are necessary for the
consummation hereof and thereof, and all applicable waiting or similar periods
required by law shall have expired.
8.6 Effective Registration Statement. The United Registration
--------------------------------
Statement shall have been declared effective by the SEC and no stop order shall
have been entered with respect thereto.
8.7 Tax Opinion. Independent shall have received from
------------
Xxxxxxxxxx Xxxxxxxx LLP its opinion, in form and substance reasonably
satisfactory to Independent, to the effect that:
(1) The Merger and the issuance of shares of United
Stock in connection therewith, as described herein and in the Merger
Agreement, will constitute a tax-free reorganization under Section
368(a)(1)(A) of the Code;
(2) No gain or loss will be recognized by holders of
Independent Stock upon the exchange of such stock solely for United
Stock as a result of the Merger;
(3) Gain or loss will be recognized pursuant to
Section 302 of the Code by holders of Independent Stock upon their
receipt of cash in lieu of fractional shares of United Stock and upon
their exercise of dissenters' rights;
(4) No gain or loss will be recognized by Independent
as a result of the Merger;
-29-
(5) The aggregate tax basis of United Stock received
by shareholders of Independent pursuant to the Merger will be the same
as the tax basis of the shares of Independent Stock exchanged therefor
decreased by any portion of such tax basis allocated to fractional
shares of United Stock that are treated as redeemed by United; and
(6) The holding period of the shares of United Stock
received by the shareholders of Independent will include the holding
period of the shares of Independent Stock exchanged therefor, provided
that the stock of Independent is held as a capital asset on the date of
the consummation of the Merger.
8.8 Certificate of Merger. The Secretary of State of the State
---------------------
of Georgia shall have issued a certificate of merger with regard to the Merger
in accordance with the provisions of the Georgia Business Corporation Code.
8.9 Employment Agreement. Xxxxx X. Xxxxxx shall have executed
--------------------
an employment agreement in form reasonably satisfactory to United and Xx.
Xxxxxx.
8.10 Increase in Authorized Capital Stock. An increase in the
------------------------------------
number of authorized shares United common stock, from 10,000,000 shares to
50,000,000 shares, shall have been approved by a vote of the shareholders of
United.
8.11 Fairness Opinion. Independent shall have received from
-----------------
Xxxx Xxxxxxxxxx and Company an opinion, dated no more than five business days
prior to the date of the Indpendent Proxy Materials, that the consideration to
be received by Independent shareholders as a result of the Merger is fair from a
financial point of view.
ARTICLE IX
----------
WARRANTIES, NOTICES, ETC.
-------------------------
9.1 Warranties. All statements contained in any certificate or
----------
other instrument delivered by or on behalf of Independent or United pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed representations and warranties hereunder by them. Unless the context
otherwise requires, the representations and warranties required of Independent
shall be required to be made, and shall be considered made, on behalf of both
Independent and its subsidiary Independent Bank, and the representations and
warranties required of United, shall be required to be made, and shall be
considered made, on behalf of United and the United Subsidiaries.
9.2 Survival of Representations. All representations,
------------------------------
warranties, covenants, and agreements made by either party hereto in or pursuant
to this Agreement or in any instrument, exhibit, or certificate delivered
pursuant hereto shall be deemed to have been material and to have been relied
upon by the party to which made, but, except as set forth hereafter or
specifically stated in this Agreement, such representations, warranties,
covenants, and agreements shall expire and be of no further force and effect
upon the consummation of the Merger; provided, however, that the following shall
survive consummation of the Merger and the transactions contemplated hereby:
-30-
(a) the opinions of counsel referred to in Sections
7.3(f) and 8.3(e) of this Agreement;
(b) any intentional misrepresentation of any material
fact made by either party hereto in or pursuant to this Agreement or in
any instrument, document or certificate delivered pursuant hereto; and
(c) the covenant with respect to the confidentiality
of certain information contained in Section 3.5 hereof.
9.3 Notices. All notices or other communications required or
-------
permitted to be given or made hereunder shall be in writing and delivered
personally or sent by pre-paid, first class certified or registered mail, return
receipt requested, or by facsimile transmission, to the intended recipient
thereof at its address or facsimile number set out below. Any such notice or
communication shall be deemed to have been duly given immediately (if given or
made in person or by facsimile confirmed by mailing a copy thereof to the
recipient in accordance with this Paragraph 9.3 on the date of such facsimile),
or five days after mailing (if given or made by mail), and in proving same it
shall be sufficient to show that the envelope containing the same was delivered
to the delivery service and duly addressed, or that receipt of a facsimile was
confirmed by the recipient as provided above. Either party may change the
address to which notices or other communications to such party shall be
delivered or mailed by giving notice thereof to the other party hereto in the
manner provided herein.
(a) To Independent: Independent Bancshares, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
President & CEO
Facsimile:
With copies to: Powell, Goldstein, Xxxxxx &
Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx,
XX
Facsimile: (000) 000-0000
(b) To United: United Community Banks, Inc.
X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
President
Facsimile: (000) 000-0000
-31-
With copies to: Xxxxxxxxxx Xxxxxxxx LLP
Suite 2800
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 000000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
9.4 Entire Agreement. This Agreement and the Merger Agreement
----------------
supersede all prior discussions and agreements between Independent and United
with respect to the Merger and the other matters contained herein and therein,
and this Agreement and the Merger Agreement contain the sole and entire
agreement between Independent and United with respect to the transactions
contemplated herein and therein.
9.5 Waiver; Amendment. Prior to or on the Closing Date, United
-----------------
shall have the right to waive any default in the performance of any term of this
Agreement by Independent, to waive or extend the time for the fulfillment by
Independent of any or all of Independent' obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of United
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any law or applicable governmental regulation. Prior to or
on the Closing Date, Independent shall have the right to waive any default in
the performance of any term of this Agreement by United, to waive or extend the
time for the fulfillment by United of any or all of United's obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Independent under this Agreement, except any condition which, if
not satisfied, would result in the violation of any law or applicable
governmental regulation. This Agreement may be amended by a subsequent writing
signed by the parties hereto, provided, however, that the provisions of Sections
7.5 and 8.5 requiring regulatory approval shall not be amended by the parties
hereto without regulatory approval.
ARTICLE X
---------
TERMINATION
-----------
This Agreement may be terminated at any time prior to or on
the Closing Date upon written notice to the other party as follows, and, upon
any such termination of this Agreement, neither party hereto shall have any
liability to the other, except that the provisions of Section 3.5 hereof shall
survive the termination of this Agreement for any reason.
10.1 Material Adverse Change. (a) By United, if, after the
-------------------------
date hereof, a material adverse change in the financial condition or business of
Independent shall have occurred which change would reasonably be expected to
have a material adverse affect on the market price of Independent Stock, or if
Independent shall have suffered a material loss or damage to any of its
properties or assets, which change, loss or damage materially affects or impairs
-32-
its ability to conduct its business. (b) By Independent, if, after the date
hereof, a material adverse change in the financial condition or business of
United shall have occurred which change would reasonably be expected to have a
material adverse affect on the market price of United Stock, or if United shall
have suffered a material loss or damage to any its properties or assets, which
change, loss or damage materially affects or impairs its ability to conduct its
business.
10.2 Noncompliance. (a) By United, if the terms, covenants or
-------------
conditions of this Agreement to be complied with or performed by Independent
before the Closing shall not have been substantially complied with or
substantially performed at or before the Closing Date and such noncompliance or
nonperformance shall not have been waived by United. (b) By Independent, if the
terms, covenants or conditions of this Agreement to be complied with or
performed by United before the Closing shall not have been substantially
complied with or substantially performed at or before the Closing Date and such
noncompliance or nonperformance shall not have been waived by Independent.
10.3 Failure to Disclose. (a) By United, if it learns of any
-------------------
fact or condition not disclosed in this Agreement, the Independent Disclosure
Memorandum, or the 1999 Independent Financial Statements, which was required to
be disclosed by Independent pursuant to the provisions of this Agreement at or
prior to the date of execution hereof with respect to the business, properties,
assets or earnings of Independent which materially and adversely affects such
business, properties, assets or earnings or the ownership, value or continuance
thereof. (b) By Independent, if it learns of any fact or condition not disclosed
in this Agreement or the 1999 United Financial Statements, which was required to
be disclosed by United pursuant to the provisions of this Agreement at or prior
to the date of execution hereof with respect to the business, properties, assets
or earnings of United which materially and adversely affect such business,
properties, assets or earnings or the ownership, value or continuance thereof.
10.4 Adverse Proceedings. By either party, if any action, suit
-------------------
or proceeding shall have been instituted or threatened against either party to
this Agreement to restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the consummation of the transactions contemplated
herein, which, in the good faith opinion of Independent or United makes
consummation of the transactions herein contemplated inadvisable.
10.5 Termination Date. By either party, if the Closing Date
-----------------
shall not have occurred on or before August 31, 2000.
10.6 Dissenters. By United, if the holders of more than
----------
155,852 shares of the outstanding Independent Stock elect to exercise this
statutory right to dissent from the Merger and demand payment in cash for the
"fair value" of their shares.
10.7 Shareholders Vote. By either party, if the Merger
------------------
Agreement is not approved by the Vote of the holders of Independent Stock as
required by applicable law.
-33-
10.8 Environmental Liability of Independent. By United, if it
--------------------------------------
learns of any potential liability of Independent arising from noncompliance with
any federal, state or local environmental law by Independent, or any potential
liability of Independent arising from any environmental condition of the
properties or assets of Independent, including any properties or assets in which
Independent holds a security interest.
ARTICLE XI
----------
COUNTERPARTS, HEADINGS, ETC.
----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The headings herein set out are for
convenience of reference only and shall not be deemed a part of this Agreement.
A pronoun in one gender includes and applies to the other genders as well.
ARTICLE XII
-----------
BINDING EFFECT
--------------
This Agreement shall be binding upon and shall 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
without the prior written consent of the other.
ARTICLE XIII
------------
GOVERNING LAW
-------------
The validity and effect of this Agreement and the Merger
Agreement and the rights and obligations of the parties hereto and thereto shall
be governed by and construed and enforced in accordance with the laws of the
State of Georgia.
-34-
IN WITNESS WHEREOF, Independent and United have caused this
Agreement to be executed by their respective duly authorized corporate officers
and their respective corporate seals to be affixed hereto as of the day and year
first above written.
INDEPENDENT BANCSHARES, INC.
(CORPORATE SEAL) By:_________________________
Name:___________________
Title:__________________
Attest:
_____________________________
Secretary
UNITED COMMUNITY BANKS, INC.
(CORPORATE SEAL) By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx Xxxxxxx
Title: President
Attest:
/s/ Xxxxx X. Xxxxxx
----------------------------
Secretary
-35-
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made
and entered into as of this _____ day of ____, 2000, by and between UNITED
COMMUNITY BANKS, INC. ("United") and INDEPENDENT BANCSHARES, INC.
("Independent"), both Georgia corporations (said corporations are hereinafter
collectively referred to as the "Constituent Corporations").
R E C I T A L S:
- - - - - - - -
WHEREAS, the authorized capital stock of United consists of
10,000,000 shares of Common Stock, $1.00 par value per share (the "United
Stock"), of which 8,429,090 shares are issued and outstanding; and
WHEREAS, the authorized capital stock of Independent consists
of 10,000,000 shares of Common Stock, $1.00 par value per share, of which
2,067,439 shares are issued and outstanding, including options to acquire
119,283 shares of Common Stock ("Independent Stock"); and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations deem it advisable and in the best interests of each such
corporation and its shareholders that Independent merge with United, with United
being the surviving corporation; and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations, by resolutions duly adopted, have unanimously approved and adopted
this Agreement, and the Board of Directors of Independent, by resolution duly
adopted, has directed that this Agreement be submitted to the shareholders of
Independent for their approval; and
WHEREAS, United has agreed to issue shares of United Stock
which shareholders of Independent will be entitled to receive, according to the
terms and conditions contained herein, on or after the Effective Date (as
defined herein) of the merger provided for herein.
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements herein contained, and other good and valuable
consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto have agreed and do
hereby agree, as follows:
1. MERGER.
------
Pursuant to and with the effects provided in the applicable
provisions of Article 11 of the Georgia Business Corporation Code, as amended
(Chapter 2 of Title 14 of the Official Code of Georgia), Independent
(hereinafter sometimes referred to as the "Merged Corporation") shall be merged
with and into United (the "Merger"). United shall be the surviving corporation
(the "Surviving Corporation") and shall continue under the name "United
Community Banks, Inc." On the Effective Date (as defined herein) of the Merger,
the individual existence of the Merged Corporation shall cease and terminate.
2. ACTIONS TO BE TAKEN.
-------------------
The acts and things required to be done by the Georgia
Business Corporation Code in order to make this Agreement effective, including
the submission of this Agreement to the shareholders of the Merged Corporation
and the filing of the Certificate of Merger relating hereto in the manner
provided in said Code, shall be attended to and done by the proper officers of
the Constituent Corporations with the assistance of counsel as soon as
practicable.
3. EFFECTIVE DATE.
--------------
The Merger shall be effective upon the approval of this
Agreement by the shareholders of the Merged Corporation and the filing of the
Certificate of Merger relating hereto in the manner provided in the Georgia
Business Corporation Code (the "Effective Date").
4. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
-----------------------------------------------------
CORPORATION.
------------
(a) The Articles of Incorporation of United, as heretofore
amended, shall on the Effective Date be the Articles of Incorporation of the
Surviving Corporation.
(b) Until altered, amended or repealed, as therein provided,
the Bylaws of United as in effect on the Effective Date shall be the Bylaws of
the Surviving Corporation.
5. MANNER AND BASIS OF CONVERTING SHARES OF CAPITAL STOCK;
----------------------------------------------------------
CAPITAL STRUCTURE OF THE SURVIVING CORPORATION.
------------------------------------------------
The manner and basis of converting the shares of capital stock
of each of the Constituent Corporations into shares of the Surviving Corporation
shall be as follows:
(a) Upon the Effective Date each of the shares of Independent
Stock outstanding on the Effective Date shall be converted into fully paid and
nonassessable shares of United Stock at the rate of .4211 shares of United Stock
for each outstanding share of Independent Stock. If either party should change
the number of its outstanding shares as a result of a stock split, stock
dividend, or similar recapitalization with respect to such shares prior to the
Effective Date then the shares to be issued hereunder to holders of Independent
Stock shall be proportionately adjusted.
(b) No scrip or fractional share certificates of United Stock
shall be issued in connection with the Merger and an outstanding fractional
share interest will not entitle the owner thereof to vote, to receive dividends
or to have any of the rights of a shareholder with respect to such fractional
interest. In lieu of any fractional interest, there shall be paid in cash an
amount (computed to the nearest cent) equal to such fraction multiplied by
$38.00.
-2-
(c) Upon the Effective Date, all rights with respect to
Independent Stock pursuant to stock options (the "Independent Stock Options")
granted by Independent which are outstanding at the Effective Date, whether or
not exercisable, shall be converted into and become rights with respect to
United Stock, and United shall assume each Independent Stock Option in
accordance with the terms of the stock option plan and the stock option
agreement by which it is evidenced. From and after the Effective Date, (i) each
Independent Stock Option assumed by United may be exercised solely for shares of
United Stock, (ii) the number of shares of United Stock subject to such
Independent Stock Option shall be equal to the product of the number of shares
of Independent Stock subject to such Independent Stock Option immediately prior
to the Effective Date multiplied by .4211, and (iii) the per share exercise
price under each such Independent Stock Option shall be adjusted by dividing the
per share exercise price by .4211 and rounding down to the nearest cent.
(d) As soon as practicable after the Effective Date, each
holder as of the Effective Date of any of the shares of Independent Stock, upon
presentation and surrender of the certificates representing such shares to
United, shall be entitled to receive in exchange therefor a certificate
representing the number of shares of United Stock to which such shareholder
shall be entitled according to the terms of this Agreement. Until such
surrender, each such outstanding certificate which prior to the Effective Date
represented Independent Stock shall be deemed for all corporate purposes to
evidence ownership of the number of shares of United Stock into which the same
shall have been converted and the right to receive payment for fractional
shares.
(e) Upon the Effective Date, each share of United Stock issued
and outstanding immediately prior to the Effective Date shall continue unchanged
and shall continue to evidence a share of common stock of the Surviving
Corporation.
6. TERMINATION OF SEPARATE EXISTENCE.
---------------------------------
Upon the Effective Date, the separate existence of the Merged
Corporation shall cease and the Surviving Corporation shall possess all of the
rights, privileges, immunities, powers and franchises, as well of a public
nature as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account, and
all other choses in action, and all and every other interest of or belonging to
or due to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed, and the title to any real estate or any interest therein, vested in either
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger. The Surviving Corporation shall thenceforth be responsible
and liable for all the liabilities, obligations and penalties of each of the
Constituent Corporations; and any claim existing or action or proceeding, civil
or criminal, pending by or against either of said Constituent Corporations may
be prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in its place, and any judgment rendered against either of the
Constituent Corporations may thenceforth be enforced against the Surviving
Corporation; and neither the rights of creditors nor any liens upon the property
of either of the Constituent Corporations shall be impaired by the Merger.
-3-
7. FURTHER ASSIGNMENTS.
-------------------
If at any time the Surviving Corporation shall consider or be
advised that any further assignments or assurances in law or any other things
are necessary or desirable to vest in said corporation, according to the terms
hereof, the title to any property or rights of the Merged Corporation, the
proper officers and directors of the Merged Corporation shall and will execute
and make all such proper assignments and assurances and do all things necessary
and proper to vest title in such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes of this Agreement.
8. CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER.
--------------------------------------------------
This Agreement is subject to, and consummation of the Merger
is conditioned upon, the fulfillment as of the Effective Date of each of the
following conditions:
(a) Approval of this Agreement by the affirmative vote of the
holders of a majority of the outstanding voting shares of Independent Stock; and
(b) All the terms, covenants, agreements, obligations and
conditions of the Agreement and Plan of Reorganization (the "Acquisition
Agreement") of even date herewith by and between Independent and United to be
complied with, satisfied and performed on or prior to the Closing Date (as
defined therein), shall have been complied with, satisfied and performed in all
material respects unless accomplishment of such covenants, agreements,
obligations and conditions has been waived by the party benefited thereby.
9. TERMINATION.
-----------
This Agreement may be terminated and the Merger abandoned in
accordance with the terms of the Acquisition Agreement, at any time before or
after adoption of this Agreement by the directors of either of the Constituent
Corporations, notwithstanding favorable action on the Merger by the shareholders
of the Merged Corporation, but not later than the issuance of the certificate of
merger by the Secretary of State of Georgia with respect to the Merger in
accordance with the provisions of the Georgia Business Corporation Code.
10. COUNTERPARTS; TITLE; HEADINGS.
-----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The title of this Agreement and the
headings herein set out are for the convenience of reference only and shall not
be deemed a part of this Agreement.
-4-
11. AMENDMENTS; ADDITIONAL AGREEMENTS.
---------------------------------
At any time before or after approval and adoption by the
shareholders of Independent, this Agreement may be modified, amended or
supplemented by additional agreements, articles or certificates as may be
determined in the judgment of the respective Boards of Directors of the
Constituent Corporations to be necessary, desirable or expedient to further the
purposes of this Agreement, to clarify the intention of the parties, to add to
or modify the covenants, terms or conditions contained herein or to effectuate
or facilitate any governmental approval of the Merger or this Agreement, or
otherwise to effectuate or facilitate the consummation of the transactions
contemplated hereby; provided, however, that no such modification, amendment or
supplement shall reduce to any extent the consideration into which shares of
Independent Stock shall be converted in the Merger pursuant to Section 5 hereof.
IN WITNESS WHEREOF, the Constituent Corporations have each
caused this Agreement to be executed on their respective behalfs and their
respective corporate seals to be affixed hereto as of the day and year first
above written.
UNITED COMMUNITY BANKS, INC.
(CORPORATE SEAL)
By:_________________________
ATTEST: Xxxxx Xxxxxxx
President
__________________________
Secretary
INDEPENDENT BANCSHARES, INC.
(CORPORATE SEAL)
By:________________________
Name:__________________
Title:_________________
_____________________________
Secretary
EXHIBIT B
United Community Banks, Inc.
X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
Gentlemen:
In connection with the proposed merger (the "Merger") of
Independent Bancshares, Inc. ("Independent") with and into United Community
Banks, Inc. ("United"), pursuant to the Agreement and Plan of Reorganization of
even date herewith among United and Independent (the "Reorganization
Agreement"), the undersigned hereby covenants, represents and warrants as
follows:
1. Recommendation for Merger and Voting of Independent Stock.
The undersigned agrees to recommend to all holders of the capital stock of
Independent ("Independent Stock") that they vote in favor of the Merger. In
addition, the undersigned agrees to vote any and all shares of Independent Stock
owned or controlled by him in favor of the Merger.
2. Compliance with Securities Laws. The undersigned
acknowledges that he will be subject to the restrictions on resales contained in
Rule 145 of the Rules and Regulations of the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended, and agrees to sell,
transfer or otherwise dispose of any shares of capital stock of United ("United
Stock") received by him pursuant to the Merger only in compliance with the
provisions of such Act and Rule. The undersigned acknowledges that United is not
under any obligation to file a registration statement with the SEC covering the
disposition of the undersigned's shares of United Stock to be received pursuant
to the Merger.
3. Restrictive Legend. The undersigned agrees that the
certificates representing shares of United Stock to be issued to the undersigned
pursuant to the Merger will be stamped or otherwise imprinted with a legend in
substantially the following form:
The shares represented by this certificate may not be sold,
transferred or otherwise disposed of except in a transaction
covered by an effective registration statement under the
Securities Act of 1933, as amended, or in accordance with Rule
145 promulgated thereunder, or in accordance with a legal
opinion satisfactory to the Company that such sale or transfer
is otherwise exempt from the requirements of such Act.
4. Initial Restriction on Disposition. The undersigned agrees
that the undersigned will not, except by operation of law, by will or under the
laws of descent and distribution, sell, transfer, or otherwise dispose of the
undersigned's interests in, or reduce the undersigned's risk relative to, any of
the shares of United Stock into which the undersigned's shares of Independent
Stock are converted upon consummation of the Merger until such time as United
notifies the undersigned that the requirements of SEC Accounting Series Release
Nos. 130 and 135 ("ASR 130 and 135") have been met. The undersigned understands
that ASR 130 and 135 relate to publication of financial results of post-Merger
combined operations of United and Independent. United agrees that it will
publish such results within 45 days after the end of the first fiscal quarter of
United containing the required period of post-Merger combined operations and
that it will notify the undersigned promptly following such publication.
Sincerely,
[Director or Executive Officer]
EXHIBIT D
(1) Independent was duly organized as a corporation, and is existing
and in good standing, under the laws of the State of Georgia.
(2) Independent the corporate power to execute and deliver the
Agreement and Plan of Reorganization Agreement (the "Reorganization Agreement")
and the Agreement and Plan of Merger Agreement (the "Merger Agreement"), to
perform its obligations thereunder, to own and use its Assets and to conduct its
business.
(3) Independent has duly authorized the execution and delivery of the
Reorganization Agreement and the Merger Agreement and all performance by
Independent thereunder, and has duly executed and delivered the Reorganization
Agreement and the Merger Agreement.
(4) No consent, approval, authorization or other action filed by, or
filing with, any governmental authority of the United States or the State of
Georgia is required for Independent's execution and delivery of the
Reorganization Agreement and the Merger Agreement and consummation of the
Transaction, which consent, approval or authorization has not been previously
received.
(5) The Reorganization Agreement and the Merger Agreement are
enforceable against Independent.
(6) The authorized capital stock of Independent consists of 10,000,000
shares of Common Stock, $1.00 par value per share, of which 2,067,439 shares are
issued and outstanding. All of the issued and outstanding capital stock of
Independent has been duly authorized and validly issued and are fully paid and
non-assessable and, to such counsel's knowledge, there are no outstanding
options, warrants, rights, calls, commitments, conversion rights, plans or other
agreements providing for the purchase or issuance of any authorized but unissued
shares of such capital stock.
EXHIBIT E
(1) United was duly organized as a corporation, and is existing and in
good standing, under the laws of the State of Georgia.
(2) United has the corporate power to execute and deliver the Agreement
and Plan of Reorganization (the "Reorganization Agreement) and the Agreement and
Plan of Merger (the "Merger Agreement") to perform its obligations thereunder,
to own and use its Assets and to conduct its business.
(3) United has duly authorized the execution and delivery of the
Reorganization Agreement and the Merger Agreement and all performance by United
thereunder, and has duly executed and delivered the Reorganization Agreement and
Merger Agreement:
(4) No consent, approval, authorization or other action filed by, or
filing with, any governmental authority of the United States or the State of
Georgia is required for United's execution and delivery of the Reorganization
Agreement and the Merger Agreement and consummation of the Transaction, which
consent, approval or authorization has not been previously received.
(5) The Reorganization Agreement and the Merger Agreement are
enforceable against United.
(6) The shares of United Stock to be issued upon consummation of the
Merger have been duly authorized and upon issuance as contemplated in the Merger
Agreement, will be validly issued, fully paid and non-assessable.
