AGREEMENT AND PLAN OF REORGANIZATION
Exhibit
2.1
AGREEMENT
AND PLAN OF REORGANIZATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION (the
“Agreement”)
is
made and entered into as of this 5th
day of
September, 2006, by and between SOUTHERN
BANCORP, INC.,
a
Georgia business corporation (hereinafter “SBI”
and,
unless the context otherwise requires, the term “SBI” shall include SBI and its
wholly-owned subsidiary bank, SOUTHERN
NATIONAL BANK,
a bank
chartered under the laws of the United States with its main office in Marietta,
Georgia (the “Bank”),
and
UNITED
COMMUNITY BANKS, INC.,
a
Georgia business corporation (hereinafter “United”).
WHEREAS,
the
respective boards of directors of SBI and United deem it advisable and in the
best interests of each such entity and their respective shareholders that SBI
merge with United (the “Merger”),
with
United being the surviving corporation, for $66,500,000 of common stock, $1.00
par value per share, of United (“United
Stock”),
all
upon the terms and conditions hereinafter set forth (including, without
limitation, the purchase price adjustment provisions of Article
II)
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
respective boards of directors of SBI and United deem it advisable and in the
best interests of each such entity and their respective shareholders that the
Bank merge with United’s Georgia banking subsidiary, United Community Bank
(“UCB
Georgia”),
with
UCB Georgia being the surviving bank (the “Bank
Merger”),
all
upon the terms hereinafter set forth and as set forth in the Agreement and
Plan
of Merger attached hereto as Exhibit
B
and
incorporated herein by reference (the “Bank
Merger Agreement”);
and
WHEREAS,
the
boards of directors of the respective entities believe that the merger of SBI
and United and their subsidiary banks and the operating effectiveness and
synergies produced thereby will enhance and strengthen the franchises and future
prospects of both companies and each of the banks;
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
CLOSING
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, the Merger Agreement and the Bank 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
MERGER
2.1 The
Merger.
Pursuant to the terms and conditions provided herein or otherwise in the Merger
Agreement, on the Closing Date SBI shall be merged with and into United. The
surviving corporation following the Merger will operate under the articles
of
incorporation of United. The Bank shall be merged with and into UCB Georgia
in
accordance with and in the manner set forth in the Bank Merger
Agreement.
2.2 Purchase
Price and Related Definitions.
As used
in this Agreement, the following terms shall have the following
meanings:
2.2.1 “Listed
OREO”
shall
mean the other real estate owned that is described in the SBI Disclosure
Memorandum.
2.2.2 “Loss”
shall
mean (1) the dollar amount of any Listed OREO owned by SBI as of the Closing
Date plus
(2) the
dollar amount of any difference between the value of the consideration received
by SBI upon the sale of any such Listed OREO and the value assigned to such
Listed OREO in the SBI Disclosure Memorandum.
2.2.3 “Purchase
Price”
shall
mean (1) $66,500,000 minus
(2) any
Purchase Price Adjustment.
2.2.4 “Purchase
Price Adjustment”
shall
mean (1) 1 times any Loss up to $300,000 plus
(2) 3.5
times any Loss greater than $300,000.
For
example, if the total amount of Listed OREO owned by SBI as of the Closing
Date
is $800,000 and all other Listed Oreo was sold for $3,600,000, then the Loss
would be $1,000,000. Thus, the Purchase Price Adjustment would be $2,750,000
(1
times $300,000 of Loss plus
3.5
times $700,000 of Loss), and the Purchase Price would equal $63,750,000
($66,500,000 minus
$2,750,000.
2.3 Payment
of Purchase Price.
Pursuant
to the terms and conditions provided herein or otherwise in the Merger
Agreement, United shall make available on or before the Closing Date for
delivery to the holders of issued and outstanding shares of common stock, $1.00
par value per share, of SBI (“SBI
Stock”)
and
outstanding options to acquire SBI Stock (the “SBI
Stock Options”):
(a) a
sufficient number of shares of United Stock to be issued upon conversion of
the
shares of SBI Stock in the Merger, (b) a sufficient number of shares of United
Stock to be issued upon the exercise of all SBI Stock Options at Closing, and
(c) sufficient funds to make cash payments in lieu of the issuance of fractional
shares. If any SBI Stock certificate shall have been lost, stolen or destroyed,
United may, in its reasonable discretion and as a condition precedent to the
issuance of any United Stock or cash payment, require the owner of such lost,
stolen or destroyed SBI Stock certificate to provide a bond and an appropriate
affidavit and indemnity agreement (reasonably satisfactory to United) as
indemnification against any claim that may be made against United with respect
to such SBI Stock certificate.
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ARTICLE
III
OTHER
AGREEMENTS
3.1 Registration
and Listing of United Stock.
(a)
United
agrees to file with the Securities and Exchange Commission (the “SEC”)
as
soon as reasonably practicable 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 SBI 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. SBI agrees to provide United
reasonable assistance as necessary in the preparation of the United Registration
Statement, including, without limitation, providing United with all material
facts regarding the operations, business, assets, liabilities and personnel
of
SBI, together with the audited financial statements of SBI, all as and to the
extent 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
SBI, 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.
(b) United
agrees to list on the Nasdaq Global Select Market, by the Closing Date, the
shares of United Stock to be issued to the shareholders of SBI pursuant to
this
Agreement and the Merger Agreement.
3.2 Meeting
of SBI Shareholders.
SBI
shall call a special meeting of its shareholders (the “Special
Meeting”)
to be
held not more than thirty (30) 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 SBI shall prepare and submit to the SBI shareholders
a notice of meeting, proxy statement and proxy (the “SBI
Proxy Materials”),
which
shall include the final prospectus from the United Registration Statement in
the
form filed with the SEC.
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3.3 Absence
of Brokers.
Except
for The Xxxxxx Xxxxxx Company, which has provided financial advisory services
to
SBI, SBI represents and warrants to United 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.
SBI
shall allow the United 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 SBI’s properties, books, contracts, commitments and records and
those of its subsidiaries and shall furnish the United and its authorized
representatives such information concerning its affairs and the affairs of
its
subsidiaries as United 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. SBI shall cause its
and
its subsidiaries’ personnel, employees and other representatives to assist
United in making any such investigation. During such investigation, United
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 SBI 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 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: (a) was known to such party prior to the disclosure by the other party;
(b) is or becomes generally available to the public other than by breach of
this
Agreement; (c) is provided by one party for disclosure concerning such party
in
the United Registration Statement; or (d) otherwise becomes lawfully available
to a party to this Agreement on a non-confidential 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.
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3.6 Full
Cooperation.
The
parties shall cooperate fully with 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 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, (the “United
Expenses”)
shall
be paid by United. All expenses incurred by SBI in connection with the
authorization, preparation, execution and performance of this Agreement, the
Merger Agreement and the Bank Merger Agreement, including, without limitation,
all fees and expenses of its agents, representatives, counsel and accountants
(the “SBI
Expenses”),
shall
be paid by SBI. The cost of reproducing and mailing the SBI Proxy Materials
shall be shared by the parties, with each party paying 50 percent
(50%).
3.8 Preservation
of Goodwill.
Each
party hereto shall use its 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 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 SBI Executive Officers and Directors.
Each of
the directors and executive officers of SBI will, contemporaneously with the
execution of this Agreement, execute and deliver to United an agreement, the
form of which is attached hereto as Exhibit
C,
pursuant to which each of them agrees: (a) to recommend, subject to any
applicable fiduciary duty, to SBI shareholders approval of the Merger; (b)
to
vote the capital stock of SBI owned or controlled by them in favor of the
Merger; and (c) 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.
SBI agrees that it will use its reasonable best efforts to obtain an agreement
in the form attached hereto as Exhibit
C
from any
beneficial owner of 5% or more of the issued and outstanding shares of SBI
Stock
who is not an officer or director.
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3.11 Press
Releases.
Prior
to the Effective Date, United and SBI shall each approve 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.
Following the Effective Date, United shall provide generally to employees of
SBI
who continue employment with United (“Hired
SBI Employees”)
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 employees. For purposes of eligibility to participate and
any
vesting determinations (but not benefit accruals) in connection with the
provision of any such employee benefits by United to the Hired SBI Employees,
service with SBI prior to the Effective Date shall be counted. The Hired SBI
Employees’ prior service with SBI shall be credited for purposes of all waiting
periods for participation in any health or hospitalization plan which United
shall make available to Hired SBI Employees after the Closing; provided,
however,
that
those Hired SBI Employees whose waiting periods for participation in SBI’s plans
have expired prior to the Effective Time will not be subject to any waiting
period with respect to participation in any health or hospitalization plan
which
United shall make available to Hired SBI Employees after the Closing. United
shall also waive all restrictions and limitations for preexisting conditions
under United’s health or hospitalization plans, to the extent such restrictions
or limitations would not apply to the Hired SBI Employees under SBI’s ERISA
plans, and United shall recognize, in accordance with the terms of United’s
health and hospitalization plans, all health expenses that were incurred prior
to Closing during the calendar year 2006 for purposes of satisfying any
deductibles and co-payment limitations under United’s health and hospitalization
plans for the 2006 calendar or plan year. At or prior to Closing, SBI will
provide United with information sufficient to determine the health expenses
that
have been paid to date in 2006.
3.13 ESOP.
Prior
to the Effective Date, United and SBI shall take such other actions as may
be
reasonably necessary for the Southern Bancorp, Inc. Employee Stock Ownership
Plan (“SBI
ESOP”) to
be
merged with and into the United Community Banks, Inc. Profit Sharing Plan (the
“United
401(k) Plan”)
at the
Effective Date. In connection with the Merger, participants in the SBI ESOP
will
be provided the right to vote the shares (or units representing shares) in
accordance with the requirements of Section 409(e) of the Code and the
regulations and rulings thereunder.
3.14 Directors
and Officers Insurance Coverage. Prior
to
Closing, SBI shall purchase for, and on behalf of, its current and former
officers and directors, extended coverage under the current directors’ and
officers’ liability insurance policy maintained by SBI to provide for
continued coverage of such insurance for a period of three (3) years from the
Effective Time, unless United’s directors’ and officers’ liability insurance
policy provides for coverage for such former officers and directors for actions
taken prior to the Merger.
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ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SBI
As
an
inducement to United to enter into this Agreement and to consummate the
transactions contemplated hereby, SBI represents, warrants, covenants and agrees
as follows:
4.1 Disclosure
Memorandum.
SBI has
delivered to United a memorandum (the “Disclosure
Memorandum”)
containing certain information regarding SBI as indicated at various places
in
this Agreement. All information set forth in the Disclosure Memorandum or in
documents incorporated by reference in the 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
SBI
under this Article
IV.
The
information contained in the 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 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.
SBI
shall promptly provide United with written notification of any event, occurrence
or other information necessary to maintain the Disclosure Memorandum and all
other documents and writings furnished to United pursuant to this Agreement
as
true, correct and complete at all times prior to and including the Closing.
4.2 Corporate
and Financial.
4.2.1
Corporate
Status. SBI
is a
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
the Bank, Southern Lending, LLC, its wholly-owned Georgia limited liability
company (“Southern
Lending”),
and
Southern Bancorp Capital Trust I, its wholly-owned Delaware statutory business
trust (the “Trust”).
The
Bank is a national bank duly organized, validly existing, and in good standing
under the laws of the United States. Southern Lending is a limited liability
company duly organized, validly existing, and in good standing under the laws
of
the State of Georgia. The Trust is a statutory trust duly created and validly
existing in good standing under the laws of the State of Delaware. SBI, the
Bank, Southern Lending and the Trust 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 businesses as and in the places where such
properties or assets are now owned, leased or operated and such businesses
are
now conducted.
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4.2.2
Authority.
Except
as set forth in the Disclosure Memorandum and subject to the required regulatory
approvals, as stated in Section
4.6.1
and the
approval of SBI 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 SBI, the violation of which
could be reasonably expected to have an adverse effect on the business,
operations, properties, assets, financial condition or prospects of SBI;
(b) violate
any provision of the articles of incorporation or bylaws of SBI;
(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
SBI
is a party, which, singly or in the aggregate, could reasonably be expected
to
have an adverse effect on the business, operations, properties, assets,
financial condition or prospects of SBI; or
(d) constitute
a violation of any order, judgment or decree to which SBI is a party, or by
which SBI 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 SBI, 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.
4.2.3
Capital
Structure.
(a) As of the date of this Agreement, SBI has authorized
capital stock consisting solely of (i) 10,000,000 shares of SBI Stock, of which
1,619,137 shares are issued and outstanding as of the date hereof, exclusive
of
45,000 shares reserved for issuance upon exercise of outstanding SBI Stock
Options and 185,000 shares reserved for issuance upon exercise of outstanding
warrants to acquire SBI Stock (the “SBI
Warrants”),
and
(ii) 2,000,000 shares of preferred stock, no par value, none of which is issued
and outstanding. The Bank has authorized capital stock consisting solely of
3,000,000 shares of common stock, par value $1.00 per share ( “Bank
Stock”),
1,310,000 of which are issued and outstanding as of the date hereof. Southern
Lending has a sole member, which owns a 100% membership interest in Southern
Lending. All of the issued and outstanding shares of SBI Stock and Bank Stock
are duly and validly issued, fully paid and non-assessable (except to the extent
such Bank Stock may be deemed assessable under 12 U.S.C. Section 55) 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 SBI Stock or Bank Stock previously issued. None of the shares of SBI
Stock or Bank Stock has been issued in violation of any preemptive or other
rights of its respective shareholders. All of the issued and outstanding shares
of the Bank Stock are owned by SBI. SBI is the sole member of Southern
Lending.
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(b) Except
for the SBI Options and SBI Warrants and as otherwise described in the
Disclosure Memorandum, SBI does not have outstanding any securities which are
either by their terms or by contract convertible or exchangeable into capital
stock of SBI, or any other securities or debt, of SBI, 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. Except
as
otherwise described in the Disclosure Memorandum, SBI 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) Except
as
disclosed in the SBI Disclosure Memorandum and other than restrictions required
by applicable federal and state securities laws, there is no agreement,
arrangement or understanding to which SBI is a party restricting or otherwise
relating to the transfer of any shares of capital stock of SBI.
(d) All
shares of common stock or other capital stock, or any other securities or debt,
of SBI, which have been purchased or redeemed by SBI 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 SBI.
(e) Except
as
set forth on the Disclosure Memorandum, no person beneficially owns greater
than
5% of the issued and outstanding shares of SBI Stock.
4.2.4
Corporate
Records.
The
stock records and minute books of SBI, whether heretofore or hereafter furnished
or made available to United by SBI, (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 SBI; (c) correctly show all
corporate action taken by the directors and shareholders of SBI (including
actions taken by consent without a meeting); and (d) contain true and correct
copies or originals of the respective articles of incorporation or association
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.
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4.2.5
Tax
Returns; Taxes.
(a)
SBI
has
duly filed: (i) 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 adversely its business or
operations. Such returns or reports were true, complete and correct, and SBI
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.
All unpaid federal, state and local taxes and other governmental charges payable
by SBI have been accrued or reserved on its books in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
(“GAAP”).
Adequate reserves for the payment of taxes have been established on the books
of
SBI for all periods through the date hereof, whether or not due and payable
and
whether or not disputed. Until the Closing Date, SBI shall continue to provide
adequate reserves for the payment of expected tax liabilities in accordance
with
GAAP. SBI has not received any notice of a tax deficiency or assessment of
additional taxes of any kind and, to the knowledge of SBI, there is no
threatened claim against SBI or 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 SBI Financial Statements (as defined in Section
4.2.6)
or
disclosed in the notes thereto. There are no waivers or agreements by SBI for
the extension of time for the assessment of any taxes. No federal or state
income, employment or property tax return is currently the subject of an
audit.
(b) Except
as
set forth in the Disclosure Memorandum, proper and accurate amounts have been
withheld by SBI 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 SBI 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.
(c) SBI
(and
any predecessor of SBI) has been a validly electing “S
corporation”
within
the meaning of Sections 1361 and 1362 of the Internal Revenue Code of 1986
(the
“Code”)
at all
times since its organization, and SBI will be an S corporation as defined in
Section 1361(a)(1) of the Code, up to and including the day before the Closing
Date. The SBI Disclosure Memorandum identifies each subsidiary of SBI that
is a
“qualified subchapter
S subsidiary”
as
defined in Section §1361(b)(3)(B) of the Code. Each subsidiary so identified has
been a qualified subchapter
S subsidiary at all times since the date shown on the SBI Disclosure Memorandum
up to and including the day before the Closing Date.
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4.2.6
Financial
Statements.
(a) SBI has delivered to United true, correct and complete copies, including
notes, of the financial statements of SBI for the years ended December 31,
2005, 2004 and 2003, and the financial statements of SBI for the six (6) month
period ended June 30, 2006, including consolidated balance sheets, consolidated
statements of earnings, consolidated statements of cash flows, consolidated
statements of comprehensive income and consolidated statements of changes in
shareholders’ equity (the financial statements for the years ended
December 31, 2005, 2004 and 2003, and the financial statements of SBI for
the six (6) month period ended June 30, 2006 being herein referred to as the
“SBI
Financial Statements”).
All
of such financial statements have been prepared in accordance with GAAP, and
present fairly the assets, liabilities and financial condition of SBI as of
the
dates indicated therein and the results of its operations for the respective
periods indicated therein.
(b) SBI
has
maintained a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate action is taken
with
respect to any differences. No changes have been made to SBI’s internal control
over financial reporting, as defined in Rule 13a-15(f) and Rule 15d-15(f) of
the
Securities Exchange Act of 1934, as amended (the “1934
Act”),
since
December 31, 2005 that materially affected, or are reasonably likely to
materially affect, its internal control over financial reporting.
4.2.7
Regulatory
Reports.
SBI has
made available to United for review and inspection the year-end and quarterly
Reports of Condition and Income filed by the Bank with the Office of the
Comptroller of the Currency (the “OCC”)
and
the Forms F.R. Y-6 and F.R. Y-9C filed
by
SBI with the Board of Governors of the Federal Reserve System (the “Federal
Reserve”)
for
each of the three (3) years ended December 31, 2005, 2004, and 2003, together
with all such other reports filed by SBI and the Bank for the same three-year
period with the Georgia Department of the Banking and Finance (the “Georgia
Department”),
if
any, and
with
any other applicable regulatory or governmental agencies (collectively, the
“SBI
Reports”).
All
of the SBI Reports have been prepared in accordance with applicable rules and
regulations applied on a basis consistent with prior periods and contain all
information required to be presented therein in accordance with such rules
and
regulations.
4.2.8
Accounts.
The
Disclosure Memorandum contains a list of each and every bank and other
institution in which SBI 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 Disclosure Memorandum or as provided for in
the
loss reserve described in subsection (b) below, all notes receivable or other
obligations owned by SBI or due to it shown in the SBI 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 SBI in the ordinary
course of its business and in compliance with all applicable laws and
regulations.
(b) SBI
has
established a loss reserve in the SBI 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 losses reasonably anticipated to 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 SBI 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.
4.2.10
Liabilities.
SBI has
no debt, liability or obligation of any kind required to be shown pursuant
to
GAAP on the consolidated balance sheet of SBI, 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 the ESOP Plan or any other pension, profit
sharing or employee stock ownership plan, whether operated by SBI or any other
entity covering employees of SBI; or (d) environmental liabilities, except:
(i)
those reflected in the SBI Financial Statements; and (ii) as disclosed in the
Disclosure Memorandum.
4.2.11
Absence
of Changes.
Except
as specifically provided for in this Agreement or specifically set forth in
the
Disclosure Memorandum, since December 31, 2005:
(a) there
has
been no change in the business, assets, liabilities, results of operations
or
financial condition of SBI, 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
could
reasonably be expected to have, an adverse effect on such businesses or
properties;
-12-
(b) there
has
been no damage, destruction or loss to the assets, properties or business of
SBI, whether or not covered by insurance, which has had, or which may reasonably
be expected to have, an adverse effect thereon;
(c) the
business of SBI has been operated in the ordinary course, and not
otherwise;
(d) the
properties and assets of SBI 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 SBI 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 SBI;
(g) there
has
been no increase in the compensation or in the rate of compensation or
commissions payable or to become payable by SBI to any director or executive
officer, or to any employee earning $50,000 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 SBI earning less than $50,000 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 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 charter or bylaws of SBI or the Bank;
(i) there
has
been no labor dispute, unfair labor practice charge or employment discrimination
charge, nor, to the knowledge of SBI, any organizational effort by any union,
or
institution or threatened institution, of any effort, complaint or other
proceeding in connection therewith, involving SBI, or affecting its
operations;
(j) there
has
been no issuance, sale, repurchase, acquisition, or redemption by SBI 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) any asset or assets of SBI 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 SBI which would be required to
be
reflected on a balance sheet of SBI prepared as of the date hereof in accordance
with GAAP, except as incurred in the ordinary course of business;
(m) no
obligation or liability of SBI 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
SBI, other than sales in the ordinary course of business; and
(o) there
has
been no amendment, termination or waiver of any right of SBI under any contract
or agreement or governmental license, permit or permission which has had, or
could reasonably be expected to have, an adverse effect on its business or
properties.
4.2.12
Litigation
and Proceedings.
Except
as set forth on the Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or investigations,
pending or, to the knowledge of SBI, threatened against, by or affecting SBI,
or
any officer, director, employee or agent in such person’s capacity as an
officer, director, employee or agent of SBI or relating to the business or
affairs of SBI, 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 SBI have, to the knowledge of SBI, any unasserted contingent
liabilities which are reasonably likely to have an adverse effect on its assets
or on the operation of its businesses or which could reasonably be expected
to
prevent or impede the consummation of the transactions contemplated by this
Agreement.
4.2.13
Proxy
Materials. Neither
the SBI Proxy Materials nor other materials furnished by SBI to the SBI
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
SBI Stock and through the acquisition of shares of SBI Stock by United pursuant
to the Merger, contain with respect to SBI 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, not
misleading.
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4.2.14
No
Adverse Change.
Since
December 31, 2005, there has not been any change in the condition of SBI, any
contracts entered into by SBI, or other changes in the operations of SBI which,
in any case, has had, or is reasonably likely to have, an adverse effect on
SBI
on a consolidated basis taken as a whole.
4.3 Business
Operations.
4.3.1
Customers.
To the
knowledge of SBI, there are no presently existing facts which could reasonably
be expected to result in the loss of any borrower or depositor or in SBI’s
inability to collect amounts due therefrom or to return funds deposited thereby,
except as set forth on the Disclosure Memorandum.
4.3.2
Permits;
Compliance with Law.
(a) SBI
has all permits, licenses, approvals, authorizations and registrations under
all
federal, state, local and foreign laws required for SBI 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 SBI,
threatened.
(b) SBI
has
complied with all laws, regulations, ordinances, rules, and orders applicable
to
it or its business, except for any non-compliance which could not reasonably
be
expected to have a material adverse effect on SBI. The Disclosure Memorandum
contains a list of any known violations of such laws, regulations, ordinances,
rules or orders by any present officer, director, or employee of SBI, 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 SEC.
No past violation of any such law, regulation, ordinance, rule or order has
occurred which could impair the right or ability of SBI to conduct its
business.
(c) Except
as
set forth in the Disclosure Memorandum, no notice or warning from any
governmental authority with respect to any failure or alleged failure of SBI
to
comply in any respect with any law, regulation, ordinance, rule or order has
been received, nor, to the knowledge of SBI, is any such notice or warning
proposed or threatened.
4.3.3
Environmental.
(a)
Except as set forth in the Disclosure Memorandum:
(i)
SBI
has
not caused or permitted the generation, manufacture, use, or handling or the
release or presence of, any Hazardous Material (as defined below) on, in, under
or from any properties or facilities currently owned or leased by SBI or
adjacent to any properties so owned or leased;
(ii)
to
the
knowledge of SBI, no claim has been asserted or threatened against SBI arising
from or relating to the environmental condition of any property or the
generation, manufacture, use, or handling or the release or presence of, any
Hazardous Material at any property;
-15-
(iii)
SBI
has
complied in all material respects with, and has kept all records and made all
filings or reports required by, and is otherwise in 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 SBI; and
(iv)
to
the
knowledge of SBI, the improvements on the property are free from the presence
or
growth of mold, fungi, spores or bacteria that could be reasonably expected
to
cause property damage or personal injury, and the improvements on the property
are, and have been, free of conditions that could lead to the growth or presence
of mold, fungi, spores or bacteria, including, without limitation, air
conditioner malfunction, water intrusion, water leaks, sewage backflows and
construction defects.
(b) Neither
SBI nor any of its officers, directors, employees or agents, in the course
of
such individual’s employment by SBI, has given advice with respect to, or
participated in any respect in, the management or operation of any entity or
concern regarding the generation, storage, handling, disposal, transfer,
production, use or processing of Hazardous Material.
(c) To
the
knowledge of SBI, except as set forth in the SBI Disclosure Memorandum, SBI
has
not foreclosed on any property on which there is a threatened release of any
Hazardous Material or on which there has been a release and a full remediation
has not been completed as required by environmental laws.
(d) Except
as
set forth in the Disclosure Memorandum, neither SBI nor any of its executive
officers or directors is aware of, has been told of, or has observed, the
presence of any Hazardous Material on, in, under, or around property on which
SBI holds a legal or security interest, in violation of, or creating a liability
under, federal, state, or local environmental statutes, regulations, or
ordinances.
(e) 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. § 9601, “hazardous
wastes”
within
the meaning of the Resource Conservation and Recovery Act, 42 U.S.C. § 6921, any
petroleum product, including any
-16-
fraction
of petroleum, or any friable 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) in quantities reasonable in relation to such use and in compliance
with
applicable law or such that may be naturally occurring in any ambient air,
surface water, ground water, land surface or subsurface strata.
(f) The
representations and warranties in this Section
4.3.3
are the
sole representations and warranties with respect to environmental, health and
safety matters, and no other representations and warranties shall be deemed
to
apply to such matters.
4.3.4
Insurance.
The
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, SBI
or
through SBI for 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 material 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 Disclosure Memorandum, such policies and bonds
provide coverage to insure the properties and businesses of SBI and the
activities of its officers, directors and employees against such risks and
in
such amounts as are customary. SBI 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. SBI 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 January 1, 2001 with respect to the business and
affairs of SBI.
4.4 Properties
and Assets.
4.4.1
Contracts
and Commitments.
The
Disclosure Memorandum contains a list identifying and briefly describing all
written contracts, purchase orders, agreements, security deeds, guaranties
or
commitments (other than loans, loan commitments and deposits made by or with
SBI
in the ordinary course of business), to which SBI 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
SBI
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. SBI has complied 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.
-17-
4.4.2
Licenses;
Intellectual Property.
SBI 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 Disclosure Memorandum, SBI 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 SBI or presently expected to be used by it in the future. All
patents, copyrights, trademarks, service marks, trade names, and applications
therefor or registrations thereof, owned or used by SBI, are listed in the
Disclosure Memorandum. SBI has complied with all applicable laws relating to
the
filing or registration of “fictitious
names”
or
trade names.
4.4.3
Personal
Property.
SBI has
good and marketable title to all of its personal property, tangible and
intangible, reflected in the most recent SBI 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: (a) those referred to in the notes to the SBI Financial Statements
as
securing specified liabilities (with respect to which no default exists or,
to
the knowledge of SBI, is claimed to exist); (b) those described in the
Disclosure Memorandum; and (c) liens for taxes not due and payable.
4.4.4
SBI
Leases.
(a)
All
leases (the “SBI
Leases”)
pursuant to which SBI 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 SBI Leases, to the knowledge of SBI, any default or any claimed default
by
SBI, or event of default or event which with notice or lapse of time, or both,
would constitute a default by SBI and in respect of which adequate steps have
not been taken to prevent a default on its part from occurring.
(b) The
copies of the SBI Leases heretofore or hereafter furnished or made available
by
SBI to United are true, correct and complete, and the SBI 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 Disclosure Memorandum, there are no contractual obligations,
agreements in principle or present plans for SBI to enter into new leases of
real property or to renew or amend existing SBI Leases prior to the Closing
Date.
4.4.5
Real
Property.
(a) SBI does not own any interest in any real property (other than
as lessee) except as set forth in the Disclosure Memorandum (such properties
being
-18-
referred
to herein as “SBI
Realty”).
Except as disclosed in the Disclosure Memorandum, SBI has good title to the
SBI
Realty and the titles to the SBI 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
Disclosure Memorandum. SBI has not encumbered the SBI Realty since the effective
dates of the respective title insurance policies.
(b) Except
as
set forth in the Disclosure Memorandum, the interests of SBI in the SBI Realty
and in and under each of the SBI 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 SBI, threatened action at law or in equity.
(c) The
present and past use and operations of, and improvements upon, the SBI Realty
and all real properties included in the Leased Properties (the “SBI
Leased Real Properties”)
are in
compliance 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 there
are
no proposed changes therein that would affect the SBI Realty, the SBI Leased
Real Properties or their uses.
(d) Except
as
set forth in the 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, SBI with respect to any Lease pursuant to which it is lessor or
lessee.
(e) SBI
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 SBI Realty or
the
SBI Leased Real Properties which may adversely affect the SBI Realty or the
SBI
Leased Real Properties or the current or currently contemplated use
thereof.
(f) The
buildings and structures owned, leased or used by SBI 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 SBI.
4.5 Employees
and Benefits.
4.5.1
Directors
or Officers of Other Corporations.
Except
as set forth in the Disclosure Memorandum, no director, officer, or employee
of
SBI serves, or in the past five (5) years has served, as a director or officer
of any other corporation on behalf of or as a designee of SBI.
4.5.2
Employee
Benefits.
(a)
Except
as
set forth in the Disclosure Memorandum, (i) SBI does not provide and is not
obligated to provide, directly or indirectly, any
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benefits
for employees, including, without limitation, any pension, profit sharing,
stock
option, retirement, bonus, hospitalization, medical, insurance, vacation or
other employee benefits under any practice, agreement or understanding, and
(ii)
SBI does not have any employment, severance, change in control or similar
agreements with any of its employees.
(b) The
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, maintained or contributed to by SBI (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
(3)
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) SBI
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. SBI does not
maintain or contribute to, nor within the past six (6) 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) Each
ERISA Plan has been operated and administered in accordance with, and has been
amended to comply in all material respects with (unless such amendment is not
yet required), all applicable laws, rules and regulations, including, without
limitation, ERISA, the 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 SBI,
threatened involving such ERISA Plan or any of its fiduciaries. With respect
to
each ERISA Plan, neither SBI nor any of its directors, officers, employees
or
agents, nor any “party
in interest”
or
“disqualified
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. 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, only the SBI ESOP is an “employee
pension benefit plan”
within
the meaning of Section 3(2) of ERISA. With respect to the SBI ESOP, except
as
set forth on the Disclosure Memorandum: (i) the SBI ESOP constitutes a qualified
plan
-20-
within
the meaning of Section 401(a) of the Code and the trust is exempt from federal
income tax under Section 501(a) of the Code; (ii) the SBI ESOP has been
maintained and operated in compliance in all material respects with all
applicable provisions of Sections 409 and 4975 of the Code and the regulations
and rulings thereunder, including the provisions relating to employee stock
ownership plans maintained by S corporations as defined in Section 1361(a)(1)
of
the Code; (iii) all contributions required by such plan have been made or will
be made on a timely basis; and (iv) 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, SBI 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 GAAP, based on an actuarial valuation
satisfactory to the actuaries of SBI representing a projection of claims
expected to be incurred under such ERISA Plan.
(g) Except
as
disclosed on the Disclosure Memorandum, SBI 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 SBI beyond their retirement or other termination of service with
SBI 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
set forth in the Disclosure Memorandum, neither this Agreement nor any
transaction contemplated hereby will: (i) entitle any current or former
employee, officer or director of SBI 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.
4.5.3
Labor-Related
Matters.
Except
as described in the Disclosure Memorandum, SBI 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, SBI. SBI 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. SBI 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. Except as described in the Disclosure
Memorandum, there are no unfair labor practice charges pending or threatened
against SBI, and there are, and in
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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, SBI 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 SBI 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 SBI with other persons who are not affiliated with
SBI, 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 SBI at the
time
such deposits were entered into; and (c) transactions specifically described
in
the Disclosure Memorandum, there are no contracts with or commitments to present
or former five percent (5%) or greater shareholders, directors, officers, or
employees involving the expenditure 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 SBI).
4.6 Other
Matters.
4.6.1
Approvals,
Consents and Filings.
Except
for the Federal Reserve, the Federal Deposit Insurance Corporation (the
“FDIC”)
and
the Georgia Department, the notice filing to be made with the OCC, or as set
forth in the Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
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 SBI, or any of SBI’s assets.
4.6.2
Default.
(a)
Except
for those consents described in or set forth pursuant to Section
4.6.1
above
and as described in the Disclosure Memorandum, 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 SBI is a party
or by which any of SBI’s 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 SBI; or
-22-
(iii)
constitutes
an event permitting termination of any agreement or the acceleration of any
indebtedness of SBI.
(b) SBI
is
not in violation of its charter documents or bylaws or in default under any
term
or provision of any material security deed, mortgage, indenture or security
agreement, or of any other material contract or instrument to which SBI is
a
party or by which it or any of its material properties is bound.
4.6.3
Representations
and Warranties.
No
representation or warranty contained in this Article
IV
or in
any written statement delivered by or at the direction of SBI pursuant hereto
or
in connection with the transactions contemplated hereby contains or will contain
any untrue statement, nor will 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 SBI PENDING CLOSING
Except
as
expressly otherwise provided herein or in the Disclosure Memorandum, SBI
covenants and agrees that, without the prior written consent of United between
the date hereof and the Closing Date:
5.1 Conduct
of Business.
SBI
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).
5.2 Maintenance
of Properties.
SBI
will maintain its properties and assets in good operating condition, ordinary
wear and tear excepted.
5.3 Insurance.
SBI
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.
5.4 Capital
Structure.
Except
for the exercise of currently outstanding SBI Stock Options and SBI Warrants,
no
change will be made in the authorized or issued capital stock or other
securities of SBI, and SBI will not issue or grant any right or option to
purchase or otherwise acquire any of the capital stock or other securities
of
SBI. This Section
5.4
prohibits, without limitation, the issuance or sale by SBI of any SBI Stock
to
the SBI ESOP.
5.5 Dividends.
No
dividend, distribution or payment will be declared or made in respect to the
SBI
Stock and SBI will not, directly or indirectly, redeem, purchase or otherwise
acquire any of its capital stock.
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5.6 Amendment
of Articles of Incorporation or Bylaws; Corporate
Existence.
SBI
will not amend its articles of incorporation or bylaws, and SBI will maintain
its corporate existence and powers.
5.7 No
Acquisitions.
SBI
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
SBI.
5.8 No
Real Estate Acquisitions or Dispositions.
SBI
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 SBI 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.
SBI
will not, without the express written consent of United, enter into any, renew
or cancel or terminate any contract of the kind described in Section
4.4.1
hereof.
5.11
Books
and Records.
The
books and records of SBI will be maintained in the usual, regular and ordinary
course.
5.12
Advice
of Changes.
SBI
shall promptly advise United orally and in writing of any change or event
having, or which could reasonably be expected to have, a material adverse effect
on the assets, liabilities, business, operations or financial condition of
SBI.
5.13
Reports.
SBI
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.
5.14
Benefit
Plans and Programs; Severance or Termination Payments.
SBI
shall not adopt any new benefit plans or programs or amend any existing benefit
plans or programs, the effect of which is to increase benefits to employees
or
the liabilities of the SBI or its successors.
5.15
Loan
Participations.
SBI
shall not enter into any loan participations or syndications.
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ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF UNITED
As
an
inducement to SBI 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 corporation duly organized, validly existing and in good standing under the
laws of the State of Georgia. United is entitled to own or lease its properties
and to carry on its business in the places where such properties are now owned,
leased or operated and such business is now conducted.
6.2 Authority.
Subject
to the required regulatory approvals and notice filing, as stated in
Section
4.6.1,
and the
approval of SBI 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 United, the violation of
which could be reasonably expected to have an 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 an 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 United is a party, or
by
which United or any of its assets or properties are bound.
Assuming
this Agreement constitutes the valid and binding obligation of SBI, 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 100,000,000 shares of common stock, par value $1.00 per share, of
which 40,245,123 shares are issued and outstanding as of the date hereof,
exclusive of 372,000 shares reserved for issuance upon conversion of United’s
prime plus one-quarter percent (¼%) Convertible Subordinated Debentures due
December 31, 2006 (the “2006
Debentures”),
-25-
22671
shares issuable to participants in United’s Deferred Compensation Plan and
2,657,515 shares reserved for issuance upon the exercise of outstanding options
and vesting of restricted stock (the “United
Stock Options and Awards”)
and
10,000,000 shares of preferred stock, par value $1.00 per share (the
“Preferred
Stock”),
of
which 32,200 shares are issued and outstanding as of the date hereof. All of
the
issued and outstanding shares of United Stock are duly and validly issued,
fully
paid and nonassessable and were 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 previously issued. None of
the
shares of United Stock have been issued in violation of the preemptive or other
rights of its shareholders.
(b) Except
for the 2006 Debentures and the United Stock Options and Awards, United does
not
have outstanding any securities which are either by their terms or by contract
convertible or exchangeable into United Stock or Preferred 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 material agreement, arrangement or understanding to which United is a party
restricting or otherwise relating to the transfer of any shares of United Stock
other than restrictions required by applicable federal and state securities
laws.
(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 Disclosure
Reports.
United
has a class of securities registered pursuant to Section 12(g) of the 1934
Act.
United’s (a) Annual Report on Form 10-K for its fiscal year ended December 31,
2005; (b) Proxy Statement for its 2006 Annual Meeting of Shareholders; (c)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006 and
June 30, 2006; and (d) other reports filed by United pursuant to Sections 13(a)
or 15(d) of the Exchange Act since December 31, 2005 (collectively, the
“United
SEC Reports”),
taken
together, correctly describe, among other things, the business, operations
and
principal properties of United in accordance
-26-
with
the
requirements of the applicable report forms of the SEC. As of the respective
dates of filing (or, if amended or superseded by a filing prior to the date
of
this Agreement, then on the date of such amended or superceded filing), none
of
the United SEC Reports contained any untrue statement of a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
6.5 No
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 or other
changes in the operations of United which, in any case, have had, or are
reasonably likely to have, an adverse effect on United on a consolidated basis
taken as a whole.
6.6 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 will
contain any untrue statement, nor will 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
SBI
in connection with this Agreement or pursuant hereto are or shall be true,
correct and complete.
6.7 Proxy
Materials.
Neither
the SBI Proxy Materials nor other materials furnished by United to the SBI
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
SBI Stock and through the acquisition of shares of United Stock by SBI pursuant
to the Merger, contain with respect to United 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, not
misleading.
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 SBI contained herein or in any certificate,
schedule or other document delivered pursuant to the provisions hereof, or
in
connection herewith, shall be true 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 at and as
of
such time, except as a result of changes or events expressly permitted or
contemplated herein or where the failure to be so, either individually or in
the
aggregate, is not reasonably likely to have a material adverse effect on the
business, operations or financial condition of SBI on a consolidated
basis.
-27-
7.2 Performance
of Agreements.
SBI
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 Compliance
by SBI Executive Officers and Directors.
The
directors and executive officers of SBI shall have complied in full with the
requirements of Section
3.10
hereof.
7.4 Exercise
of Warrants.
All SBI
Warrants shall have been exercised at least fifteen (15) days prior to the
Closing Date.
7.5 Certificates,
Resolutions, Opinion.
SBI
shall have delivered to United:
(a) a
certificate executed by the Chief Executive Officer or President of SBI, 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) a
certificate executed by the Secretary of SBI, dated as of the Closing Date,
certifying and attesting to the: (i) articles of incorporation of SBI; (ii)
bylaws of SBI; and (iii) duly adopted resolutions of the Board of Directors
and
shareholders of SBI (1) authorizing and approving the execution of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated herein and therein in accordance with their respective terms,
and
(2) authorizing all other necessary and proper corporate action to enable SBI
to
comply with the terms hereof and thereof;
(c) certificates
executed by the Secretary or equivalent officer of the Bank, dated as of the
Closing Date, certifying and attesting to the: (i) charter of the bank; (ii)
bylaws of the bank; and (iii) duly adopted resolutions of the Board of Directors
and sole shareholder of the bank (1) authorizing and approving the execution
of
the Bank Merger Agreement and the consummation of the transactions contemplated
herein and therein, and (2) authorizing all other necessary and proper corporate
action to enable the bank to comply with the terms hereof and
thereof.
(d) certificates
of the valid existence of SBI and the Bank under the laws of Georgia and of
the
United States, respectively, executed by the Secretary of State of Georgia
and
the OCC, and dated not more than ten (10) business days prior to the Closing
Date;
(e) certificates
from the appropriate public officials of the State of Georgia, dated not more
than ten (10) business days prior to the Closing Date, certifying that SBI
has
filed all corporate tax returns required by the laws of such state and has
paid
all taxes shown thereon to be due; and
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(f) an
opinion of Xxxxxx Xxxxxxxxx LLP, counsel for SBI, dated the Closing Date, in
the
form attached hereto as Exhibit
D.
7.6 Accountants’
Letter.
United
shall have received a letter from Xxxxxxx & Xxxxxxx Certified Public
Accountants, LLC, dated the Closing Date, to the effect that: At the request
of
SBI they have carried out procedures to a specified date not more than five
(5)
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 SBI, as follows:
(a) read
the
unaudited consolidated balance sheets, consolidated statements of earnings,
consolidated statements of cash flows, consolidated statements of comprehensive
income and consolidated statements of changes in shareholders’ equity, of SBI
from December 31, 2005 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 SBI from
December 31, 2005 to said date not more than five (5) business days prior
to the Closing Date; and
(c) consulted
with certain officers and employees of SBI 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 financial statements are not fairly presented in conformity with
GAAP;
(ii)
as
of
said date not more than five (5) business days prior to the Closing Date, the
shareholders’ equity, long-term debt, reserve for possible loan losses and total
assets of SBI, in each case as compared with the amounts shown in the December
31, 2005 SBI Financial Statements, are not different except as set forth in
such
letter, or
(iii)
for
the
period from December 31, 2005 to said date not more than five (5) business
days
prior to the Closing Date, the net interest income, total and per-share amounts
of consolidated income and net income of SBI, as compared with the corresponding
portion of the preceding twelve (12) month period, are not different except
as
set forth in such letter.
7.7 Sale
of Listed OREO.
SBI
shall have sold all Listed OREO.
-29-
ARTICLE
VIII
CONDITIONS
TO OBLIGATIONS OF SBI
All
of
the obligations of SBI 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 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 at and as
of
such time, except as a result of changes or events expressly permitted or
contemplated herein or where the failure to be so, either individually or in
the
aggregate, is not reasonably likely to have a material adverse effect on the
business, operations or financial condition of United on a consolidated
basis.
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 SBI:
(a) a
certificate executed by the President or an Executive Vice President of United,
dated the Closing Date, certifying in such detail as SBI may reasonably request
to the fulfillment of the conditions specified in Sections
8.1
and
8.2
hereof;
(b) a
certificate executed by the Secretary or an Assistant Secretary of United,
dated
as of the Closing Date, certifying and attesting to the: (i) articles of
incorporation of United; (ii) bylaws of United; and (iii) duly adopted
resolutions of the board of directors of United (1) 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 (2) authorizing all other necessary
and proper corporate actions to enable United to comply with the terms hereof
and thereof;
(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) an
opinion of Xxxxxxxxxx Xxxxxxxx LLP, counsel for United, dated the Closing Date,
in the form attached hereto as Exhibit
E;
and
-30-
(e) 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.
8.4 Tax
Opinion.
SBI
shall have received from Xxxxxxxxxx Xxxxxxxx LLP its opinion, in form and
substance reasonably satisfactory to SBI, to the effect that:
(a) 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;
(b) No
gain
or loss will be recognized by holders of SBI Stock upon the exchange of such
stock for United Stock as a result of the Merger;
(c) Gain
or
loss will be recognized by holders of SBI Stock upon their receipt of cash,
including cash (i) in lieu of fractional shares of United Stock, and (ii) upon
their exercise of dissenters’ rights;
(d) No
gain
or loss will be recognized by SBI as a result of the Merger or the Bank
Merger;
(e) The
aggregate tax basis of United Stock received by shareholders of SBI pursuant
to
the Merger will be the same as the tax basis of the shares of SBI Stock
exchanged therefor (i) decreased by any portion of such tax basis allocated
to
fractional shares of United Stock that are treated as redeemed by United, (ii)
decreased by the amount of cash received by a SBI shareholder in the Merger
(other than cash received with respect to fractional shares), and (iii)
increased by the amount of gain recognized by a SBI shareholder in the Merger
(other than gain recognized with respect to fractional shares); and
(f) The
holding period of the shares of United Stock received by the shareholders of
SBI
will include the holding period of the shares of SBI Stock exchanged therefor,
provided that the stock of SBI is held as a capital asset on the date of the
consummation of the Merger.
ARTICLE
IX
CONDITIONS
TO OBLIGATIONS OF BOTH PARTIES
9.1 Shareholder
Approval.
The
Merger Agreement shall have been approved by the vote of the holders of at
least
a majority of the issued and outstanding shares of SBI Stock.
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9.2 Regulatory
Approvals.
Any and
all governmental authorities, bodies or agencies having jurisdiction over the
transactions contemplated by this Agreement, the Merger Agreement and the Bank
Merger Agreement, including, but not limited to the Federal Reserve, the FDIC
and the Georgia Department 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.
9.3 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.
9.4 Certificate
of Merger.
The
Secretary of State of the State of Georgia shall have issued a certificate
of
merger, with respect to the Merger, in accordance with the provisions of the
Georgia Business Corporation Code, and with respect to the Bank Merger, in
accordance with the Financial Institution Code of Georgia and the National
Bank
Act.
9.5 Termination
Agreements.
Each of
Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx shall have executed a change
in
control termination agreement in the form of Exhibit
F
attached
hereto with total “Termination Payments” (as defined in the form) of $1,101,600,
$280,956 and $195,000, respectively.
9.6 Stock
Option Award Agreements.
Each of
Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx shall have executed a stock option award
agreement in the form of Exhibit
G
attached
hereto.
9.7 Change
in Control Agreements.
Each of
Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx shall have executed a change in control
agreement in the form of Exhibit
H
attached
hereto. The payment to Xx. Xxxxxxx under Section 1(c) thereof shall be two
(2)
times the amount described therein and the term of the covenant in Section
3(c)
shall be two (2) years. The payment to Xx. Xxxxxxx under Section 1(c) thereof
shall be one (1) times the amount described therein and the term of the covenant
in Section 3(c) shall be one (1) year.
9.8 SBI
Stock Options.
Each
holder of an SBI Stock Option shall have executed an agreement in form and
content satisfactory to United to exercise all of his or her SBI Stock Options
effective as of the Closing Date.
ARTICLE
X
WARRANTIES,
NOTICES, ETC.
10.1 Warranties.
All
statements contained in any certificate or other instrument delivered by or
on
behalf of SBI 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 SBI shall be required to be made, and shall be considered made,
on
behalf of SBI and the Bank.
-32-
10.2 Survival
of Provisions.
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:
(a) the
opinions of counsel referred to in Sections
7.3(f)
and
8.3(d)
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.
10.3 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
Section
10.3
on the
date of such facsimile), or five (5) 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. 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.
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To
SBI:
|
Southern
Bancorp, Inc.
000
Xxxxxxxx Xxxxxx
Xxxxxxxx,
Xxxxxxx 00000
Attention: Xxxxxx
Xxxxxx and Xxxxxx Xxxxxxx
Facsimile:
(000) 000-0000
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-33-
|
With
copies to:
|
Xxxxxx
Xxxxxxxxx LLP
One
Atlantic Center - Fourteenth Floor
0000
Xxxx Xxxxxxxxx Xxxxxx, XX
Xxxxxxx,
Xxxxxxx 00000
Attention: Xxxx
Xxxxxxx and Xxxxxxx Xxxxxxx
Facsimile:
(000) 000-0000
|
|
|
To
United:
|
United
Community Banks, Inc.
X.X.
Xxx 000
Xxxxxxxxxxx,
Xxxxxxx 00000
Attention: Xxxxx
X. Xxxxxxx
Facsimile:
(000) 000-0000
|
|
|
With
copies to:
|
Xxxxxxxxxx
Xxxxxxxx LLP
Suite
2800
0000
Xxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 000000-0000
Attention:
Xxxxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
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10.4 Entire
Agreement.
This
Agreement and the Merger Agreement supersede all prior discussions and
agreements between SBI 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 SBI and United with
respect to the transactions contemplated herein and therein.
10.5 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 SBI, to waive or extend the
time for the fulfillment by SBI of any or all of SBI’s 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, SBI 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 SBI 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 Section
9.2
requiring regulatory approval shall not be amended by the parties hereto without
regulatory approval.
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ARTICLE
XI
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:
11.1
Material
Adverse Change.
(a) By
United, if, after the date hereof, a material adverse change in the financial
condition or business of SBI shall have occurred, or if SBI shall have suffered
a material loss or damage to any of its properties or assets, which change,
loss
or damage materially affects or impairs its ability to conduct its
business.
(b) By
SBI,
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 effect 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.
11.2
Noncompliance.
(a) By
United, (i) if the terms, covenants or conditions of this Agreement to be
complied with or performed by SBI 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; or (ii) in the event of a material breach by SBI of any covenant,
agreement, or obligation contained in this Agreement which breach not been
cured
within twenty (20) days after the giving of written notice to United of such
breach or, if such breach is not capable of being cured within twenty (20)
days,
SBI has not begun to cure such breach within twenty (20) days after such written
notice.
(b) By
SBI,
(i) 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 SBI; or (ii)
in
the event of a material breach by United of any covenant, agreement, or
obligation contained in this Agreement which breach has not been cured within
twenty (20) days after the giving of written notice to SBI of such breach or,
if
such breach is not capable of being cured within twenty (20) days, United has
not begun to cure such breach within twenty (20) days after such written
notice..
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11.3 Failure
to Disclose.
(a) By
United, if it learns of any fact or condition not disclosed in this Agreement,
the Disclosure Memorandum, or the SBI Financial Statements, which was required
to be disclosed by SBI pursuant to the provisions of this Agreement with respect
to the business, properties, assets or earnings of SBI which materially and
adversely affects such business, properties, assets or earnings or the
ownership, value or continuance thereof.
(b) By
SBI,
if it learns of any fact or condition not disclosed in this Agreement or the
United Financial Statements, which was required to be disclosed by United
pursuant to the provisions of this Agreement with respect to the business,
properties, assets or earnings of United which materially and adversely affects
such business, properties, assets or earnings or the ownership, value or
continuance thereof.
11.4 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 the
terminating party makes consummation of the transactions herein contemplated
inadvisable.
11.5 Termination
Date.
By
either party, if the Closing Date shall not have occurred on or before February
28, 2007.
11.6 Dissenters.
By
United, if the holders of more than five percent (5%) of the shares of the
outstanding SBI Stock elect to exercise their statutory right to dissent from
the Merger and demand payment in cash for the “fair
value”
of
their shares.
11.7 Shareholders
Vote.
By
either party, if the Merger Agreement is not approved by the vote of the holders
of SBI Stock as required by applicable law.
11.8 Termination
Fee.
(a)
If,
while a Competing Offer (as defined in (b) below) is outstanding or after such
an offer has been accepted, (i) either party terminates this Agreement pursuant
to Section
11.7,
(ii)
SBI terminates this Agreement other than pursuant to Section
11.1(b),
11.2(b),
11.3(b)
or
11.4,
or
(iii) United terminates this agreement pursuant to Section 11.2(a)
or
11.3(a),
then
SBI shall pay, or cause to be paid to United, at the time of the termination
of
this Agreement, an amount equal to $3.3
million (the “Termination
Fee”),
which
shall be the sole and exclusive remedy of United for all claims under this
Agreement.
(b) “Competing
Offer”
means
any inquiry, proposal or offer, whether in writing or otherwise, from anyone
other than United to acquire beneficial ownership (as determined under Rule
13d-3 of the 0000 Xxx) of all or a material portion of the assets of SBI or
the
Bank or 15% or more of any class of equity securities of SBI or the Bank
pursuant to a
-36-
merger,
consolidation or other business combination, sale of shares of capital stock,
sale of assets, tender offer, exchange offer or similar transaction with respect
to either SBI or the Bank, including any single or multi-step transaction or
series of related transactions, which is structured to permit such party to
acquire beneficial ownership of any material portion of the assets of, or 15%
or
more of the equity interest in either SBI or the Bank.
11.9 Effect
of Termination.
Except
as set forth in Section
11.8,
in the
event of the termination of this Agreement pursuant to this Article
XI,
this
Agreement shall become void and have no effect, and neither party shall have
any
liability of any nature whatsoever under this Agreement or in connection with
the transactions contemplated by this Agreement except that (i) the provisions
of this Article
XI
and
Section
3.5
shall
survive any such termination and (ii) such termination shall not relieve any
party from liability arising from any willful breach of any provision of this
Agreement
ARTICLE
XII
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
XIII
NO
THIRD PARTY BENEFICIARY
No
provision of this Agreement shall be deemed to create any third party
beneficiary rights in any anyone, including any employee or former employee
of
SBI (including any beneficiary or dependent thereof).
ARTICLE
XIV
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.
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ARTICLE
XV
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.
-38-
IN
WITNESS WHEREOF,
SBI 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.
|
(CORPORATE
SEAL)
ATTEST:
/s/
Xxxxxxxxx X.
Xxxxxxx
Secretary
|
SOUTHERN
BANCORP, INC.
By:
/s/ J. Xxxxxx Xxxxxx,
Xx.
J.
Xxxxxx Xxxxxx, Xx.
Chairman
|
|
(CORPORATE
SEAL)
ATTEST:
/s/
Xxxx
XxXxx
Assistant
Secretary
|
UNITED
COMMUNITY BANKS, INC.
By:
/s/ Xxxxx X.
Xxxxxxx
Xxxxx
X. Xxxxxxx
President
& Chief Executive Officer
|
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