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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE SAVANNAH BANCORP, INC.
AND
XXXXX BANCORP OF GEORGIA, INC.
Dated as of February 11, 1998
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of February 11, 1998, by and between THE SAVANNAH BANCORP,
INC. ("Savannah"), a Georgia corporation; and XXXXX BANCORP OF GEORGIA, INC.
("Xxxxx"), a Georgia corporation.
Preamble
The respective Boards of Directors of Xxxxx and Savannah are
of the opinion that the transactions described herein are in the best interests
of the parties to this Agreement and their respective shareholders. This
Agreement provides for the merger of Xxxxx with and into Savannah. At the
effective time of such merger, the outstanding shares of the capital stock of
Xxxxx shall be converted into the right to receive shares of the common stock of
Savannah (except as provided herein). As a result, shareholders of Xxxxx shall
become shareholders of Savannah and Savannah shall continue to conduct the
business and operations of Xxxxx. The transactions described in this Agreement
are subject to the approvals of the shareholders of Xxxxx, the shareholders of
Savannah, the Board of Governors of the Federal Reserve System, Department of
Banking and Finance of the State of Georgia, and the satisfaction of certain
other conditions described in this Agreement. It is the intention of the parties
to this Agreement that the Merger for federal income tax purposes shall qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code, and for accounting purposes shall qualify for treatment as a
pooling of interests.
Immediately after the execution and delivery of this
Agreement, as a condition and inducement to Savannah's willingness to enter into
this Agreement, Xxxxx and Savannah are entering into a stock option agreement
pursuant to which Xxxxx is granting to Savannah an option to purchase shares of
Xxxxx Common Stock. Immediately after the execution and delivery of this
Agreement, as a condition and inducement to Bryan's willingness to enter into
this Agreement, Savannah and Xxxxx are entering into a stock option agreement
pursuant to which Savannah is granting to Xxxxx an option to purchase shares of
Savannah Common Stock.
Certain terms used in this Agreement are defined in Section
11.1 of this Agreement.
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NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Xxxxx shall be merged with and into Savannah
in accordance with the provisions of Section 14-2-1101 of the GBCC and with the
effect provided in Sections 14-2-1106 and 14-2-1107 of the GBCC (the "Merger").
Savannah shall be the Surviving Corporation resulting from the Merger and shall
continue to be governed by the Laws of the State of Georgia. The Merger shall be
consummated pursuant to the terms of this Agreement, which has been approved and
adopted by the respective Boards of Directors of Xxxxx and Savannah.
1.2 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The Closing shall
be held at such location as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Certificate of Merger reflecting the Merger shall become effective with
the Secretary of State of the State of Georgia (the "Effective Time"). Subject
to the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur on or before the fifth
business day following the last to occur of (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the shareholders of Xxxxx and Savannah
approve this Agreement to the extent such approval is required by applicable
Law.
1.4 Execution of Stock Option Agreements.[A&B1] Simultaneously
with the execution of this Agreement by the Parties and as a condition thereto,
Xxxxx is executing and delivering to Savannah a stock option agreement (the
"Xxxxx Stock Option Agreement"), in substantially the form of Exhibit 1 hereto,
pursuant to which Xxxxx is granting to Savannah an option to purchase shares of
Xxxxx Common Stock, and Savannah is executing and delivering to Xxxxx a stock
option agreement (the "Savannah Stock Option Agreement"), in substantially the
form of Exhibit 2 hereto, pursuant to which Savannah is granting to Xxxxx an
option to purchase shares of Savannah Common Stock.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Articles of Incorporation of Savannah in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until duly amended or repealed.
2.2 Bylaws. The Bylaws of Savannah in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
duly amended or repealed.
2.3 Directors and Officers. The directors of Savannah in
office immediately prior to the Effective Time, together with E. Xxxxx Xxxxxxx
and four other directors of Xxxxx selected by the Xxxxx Board of Directors prior
to the Effective Time, shall serve as the initial directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of Savannah in office immediately prior
to the Effective Time, together with such additional persons as may thereafter
be elected, shall serve as the officers of the Surviving Corporation from and
after the Effective Time in accordance with the Bylaws of the Surviving
Corporation; provided, that E. Xxxxx Xxxxxxx shall be elected Vice Chairman of
the Surviving Corporation. Of the five directors of Xxxxx who shall serve as
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directors of the Surviving Corporation, two shall be elected for an initial term
of one year, two shall be elected for an initial term of two years, and E. Xxxxx
Xxxxxxx shall be elected for an initial term of three years.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of Savannah, Bryan, or the shareholders of either of the foregoing,
the shares of the constituent corporations shall be converted as follows:
(a) Each share of capital stock of Savannah issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of Xxxxx Common Stock (excluding shares held by
any Xxxxx Entity or any Savannah Entity, in each case other than in a fiduciary
capacity or as a result of debts previously contracted, and excluding shares
held by shareholders who perfect their statutory dissenters' rights as provided
in Section 3.4) issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for the
right to receive 1.85 shares of Savannah Common Stock (the "Exchange Ratio").
3.2 Anti-Dilution Provisions. In the event Savannah changes
the number of shares of Savannah Common Stock issued and outstanding prior to
the Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted (to the nearest one-thousandth of a share).
3.3 Shares Held by Xxxxx or Savannah. Each of the shares of
Xxxxx Common Stock held by any Xxxxx Entity or by any Savannah Entity, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 Dissenting Shareholders. Any holder of shares of Xxxxx
Common Stock who perfects his dissenters' rights in accordance with and as
contemplated by Article 13, Part 2 of Title 14 of the GBCC shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has complied with the
applicable provisions of the GBCC and surrendered to Xxxxx the certificate or
certificates representing the shares for which payment is being made. In the
event that after the Effective Time a dissenting shareholder of Xxxxx fails to
perfect, or effectively withdraws or loses, his right to appraisal and of
payment for his shares, Savannah shall issue and deliver the consideration to
which such holder of shares of Xxxxx Common Stock is entitled under this Article
3 (without interest) upon surrender by such holder of the certificate or
certificates representing shares of Xxxxx Common Stock held by him. If and to
the extent required by applicable Xxx, Xxxxx will establish (or cause to be
established) an escrow account with an amount sufficient to satisfy the maximum
aggregate payment that may be required to be paid to dissenting shareholders.
Upon satisfaction of all claims of dissenting shareholders, the remaining
escrowed amount, reduced by payment of the fees and expenses of the escrow
agent, will be returned to the Surviving Corporation.
3.5 Fractional Shares. Notwithstanding any other provision of
this Agreement, each holder of shares of Xxxxx Common Stock exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of Savannah Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Savannah
Common Stock multiplied by the market value of one share of Savannah Common
Stock at the Effective Time. The market value of one share of Savannah Common
Stock at the Effective Time shall be the last sale price of such common stock on
the Nasdaq National Market (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Savannah) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.
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3.6 Conversion of Stock Options.
(a) At the Effective Time, each option or other Equity Right
to purchase shares of Xxxxx Common Stock pursuant to stock options ("Xxxxx
Options") granted by Xxxxx, which are outstanding at the Effective Time, whether
or not exercisable, shall be converted into and become rights with respect to
Savannah Common Stock, and Savannah shall assume each Xxxxx Option, in
accordance with the terms of the stock option agreement by which it is
evidenced, except that from and after the Effective Time, (i) Savannah and its
Compensation Committee shall be substituted for Xxxxx and the Committee of
Bryan's Board of Directors (including, if applicable, the entire Board of
Directors of Xxxxx) administering such Xxxxx Options, (ii) each Xxxxx Option
assumed by Savannah may be exercised solely for shares of Savannah Common Stock
(or cash, if so provided under the terms of such Xxxxx Option), (iii) the number
of shares of Savannah Common Stock subject to such Xxxxx Option shall be equal
to the number of shares of Xxxxx Common Stock subject to such Xxxxx Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, and
(iv) the per share exercise price under each such Xxxxx Option shall be adjusted
by dividing the per share exercise price under each such Xxxxx Option by the
Exchange Ratio and rounding up to the nearest cent. Notwithstanding the
provisions of clause (iii) of the preceding sentence, Savannah shall not be
obligated to issue any fraction of a share of Savannah Common Stock upon
exercise of Xxxxx Options and any fraction of a share of Savannah Common Stock
that otherwise would be subject to a converted Xxxxx Option shall represent the
right to receive a cash payment upon exercise of such converted Xxxxx Option
equal to the product of such fraction and the difference between the market
value of one share of Savannah Common Stock at the time of exercise of such
Option and the per share exercise price of such Option. The market value of one
share of Savannah Common Stock at the time of exercise of an Option shall be the
last sale price of such common stock on the Nasdaq National Market (as reported
by The Wall Street Journal or, if not reported thereby, any other authoritative
source selected by Savannah) on the last trading day preceding the date of
exercise. In addition, notwithstanding the provisions of clauses (iii) and (iv)
of the first sentence of this Section 3.6, each Xxxxx Option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Internal Revenue Code, and the regulations promulgated thereunder, so as not to
constitute a modification, extension or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code. Each of Xxxxx and
Savannah agrees to take all necessary steps to effectuate the foregoing
provisions of this Section 3.6, including using its reasonable efforts to obtain
from each holder of a Xxxxx Option any Consent or Contract that may be deemed
necessary or advisable in order to effect the transactions contemplated by this
Section 3.6. Anything in this Agreement to the contrary notwithstanding,
Savannah shall have the right, in its sole discretion, not to deliver the
consideration provided in this Section 3.6 to a former holder of a Xxxxx Option
who has not delivered such Consent or Contract.
(b) As soon as practicable after the Effective Time, Savannah
shall deliver to each holder of a Xxxxx Option an appropriate notice setting
forth such holder's rights pursuant thereto and the grants subject to such Xxxxx
Option shall continue in effect on the same terms and conditions (subject to the
adjustments required by Section 3.6(a) after giving effect to the Merger). At or
prior to the Effective Time, Savannah shall take all corporate action necessary
to reserve for issuance sufficient shares of Savannah Common Stock for delivery
upon exercise of Xxxxx Options assumed by it in accordance with this Section
3.6.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time,
Savannah and Xxxxx shall cause Reliance Trust Company, Savannah's transfer
agent, acting as the exchange agent (the "Exchange Agent"), to mail to each
holder of record of a certificate or certificates which represented shares of
Xxxxx Common Stock immediately prior to the Effective Time (the "Certificates")
appropriate transmittal materials and instructions (which shall specify that
delivery shall be effected, and risk of loss and title to such Certificates
shall pass, only upon proper delivery of such Certificates to the Exchange
Agent). The Certificate or Certificates of Xxxxx Common Stock so delivered shall
be duly endorsed as the Exchange Agent may require. In the event of a transfer
of ownership of shares of Xxxxx Common Stock represented by Certificates that
are not registered in the transfer records of Xxxxx, the consideration provided
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in Section 3.1 may be issued to a transferee if the Certificates representing
such shares are delivered to the Exchange Agent, accompanied by all documents
required to evidence such transfer and by evidence satisfactory to the Exchange
Agent that any applicable stock transfer taxes have been paid. If any
Certificate shall have been lost, stolen, mislaid or destroyed, upon receipt of
(i) an affidavit of that fact from the holder claiming such Certificate to be
lost, mislaid, stolen or destroyed, (ii) such bond, security or indemnity as
Savannah and the Exchange Agent may reasonably require and (iii) any other
documents necessary to evidence and effect the bona fide exchange thereof, the
Exchange Agent shall issue to such holder the consideration into which the
shares represented by such lost, stolen, mislaid or destroyed Certificate shall
have been converted. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it may deem
appropriate. After the Effective Time, each holder of shares of Xxxxx Common
Stock (other than shares to be canceled pursuant to Section 3.3 or as to which
statutory dissenters' rights have been perfected as provided in Section 3.4)
issued and outstanding at the Effective Time shall surrender the Certificate or
Certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1, together with all undelivered dividends or distributions in
respect of such shares (without interest thereon) pursuant to Section 4.2. To
the extent required by Section 3.5, each holder of shares of Xxxxx Common Stock
issued and outstanding at the Effective Time also shall receive, upon surrender
of the Certificate or Certificates, cash in lieu of any fractional share of
Savannah Common Stock to which such holder may be otherwise entitled (without
interest). Savannah shall not be obligated to deliver the consideration to which
any former holder of Xxxxx Common Stock is entitled as a result of the Merger
until such holder surrenders such holder's Certificate or Certificates for
exchange as provided in this Section 4.1. Any other provision of this Agreement
notwithstanding, neither Savannah nor the Exchange Agent shall be liable to a
holder of Xxxxx Common Stock for any amounts paid or property delivered in good
faith to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
4.2 Rights of Former Xxxxx Shareholders. At the Effective
Time, the stock transfer books of Xxxxx shall be closed as to holders of Xxxxx
Common Stock immediately prior to the Effective Time and no transfer of Xxxxx
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1, each
Certificate theretofore representing shares of Xxxxx Common Stock (other than
shares to be canceled pursuant to Sections 3.3 and 3.4) shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.5 in exchange therefor, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time which
have been declared or made by Xxxxx in respect of such shares of Xxxxx Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. To the extent permitted by Law, former shareholders of
record of Xxxxx shall be entitled to vote after the Effective Time at any
meeting of Savannah shareholders the number of whole shares of Savannah Common
Stock into which their respective shares of Xxxxx Common Stock are converted,
regardless of whether such holders have exchanged their Certificates for
certificates representing Savannah Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by Savannah on the Savannah Common Stock, the record date for which is
at or after the Effective Time, the declaration shall include dividends or other
distributions on all shares of Savannah Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of Savannah Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any Certificate until such holder surrenders
such Certificate for exchange as provided in Section 4.1. However, upon
surrender of such Certificate, both the Savannah Common Stock certificate
(together with all such undelivered dividends or other distributions without
interest) and any undelivered dividends and cash payments payable hereunder
(without interest) shall be delivered and paid with respect to each share
represented by such Certificate.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx hereby represents and warrants to Savannah as follows:
5.1 Organization, Standing, and Power. Xxxxx is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Georgia, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets.
Xxxxx is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Xxxxx Material
Adverse Effect. The minute book and other organizational documents for Xxxxx
have been made available to Savannah for its review and, except as disclosed in
Section 5.1 of the Xxxxx Disclosure Memorandum, are true and complete in all
material respects as in effect as of the date of this Agreement and accurately
reflect in all material respects all amendments thereto and all proceedings of
the Board of Directors and shareholders thereof.
5.2 Authority of Xxxxx; No Breach By Agreement.
(a) Xxxxx has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Xxxxx,
subject to the approval of this Agreement by the holders of two-thirds of the
outstanding shares of Xxxxx Common Stock, which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by Xxxxx.
Subject to such requisite shareholder approval, this Agreement represents a
legal, valid, and binding obligation of Xxxxx, enforceable against Xxxxx in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Xxxxx, nor the consummation by Xxxxx of the transactions contemplated hereby,
nor compliance by Xxxxx with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Bryan's Articles of Incorporation
or Bylaws or the certificate or articles of incorporation or bylaws of any Xxxxx
Subsidiary or any resolution adopted by the board of directors or the
shareholders of any Xxxxx Entity, or (ii) except as disclosed in Section 5.2 of
the Xxxxx Disclosure Memorandum, constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Xxxxx Entity under, any Contract or Permit of any Xxxxx Entity,
where such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Xxxxx Material Adverse
Effect, or, (iii) subject to receipt of the requisite Consents referred to in
Section 9.1(b), constitute or result in a Default under, or require any Consent
pursuant to, any Law or Order applicable to any Xxxxx Entity or any of their
respective material Assets (including any Savannah Entity or any Xxxxx Entity
becoming subject to or liable for the payment of any Tax or any of the Assets
owned by any Savannah Entity or any Xxxxx Entity being reassessed or revalued by
any Taxing authority).
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(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
other than Consents required from Regulatory Authorities, and other than notices
to or filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, and other than Consents,
filings, or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Xxxxx Material Adverse
Effect, no notice to, filing with, or Consent of, any public body or authority
is necessary for the consummation by Xxxxx of the Merger and the other
transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Xxxxx consists of
10,000,000 shares of Xxxxx Common Stock, of which 528,258 shares are issued,
503,008 shares are outstanding and 25,250 shares are held in treasury as of the
date of this Agreement. All of the issued and outstanding shares of capital
stock of Xxxxx are duly and validly issued and outstanding and are fully paid
and nonassessable under the GBCC. None of the outstanding shares of capital
stock of Xxxxx has been issued in violation of any preemptive rights of the
current or past shareholders of Xxxxx.
(b) Except as set forth in Section 5.3(a), or as provided in
the Xxxxx Stock Option Agreement, or as disclosed in Section 5.3(b) of the Xxxxx
Disclosure Memorandum, there are no shares of capital stock or other equity
securities of Xxxxx outstanding and no outstanding Equity Rights relating to the
capital stock of Xxxxx.
5.4 Xxxxx Subsidiaries. Xxxxx has disclosed in Section 5.4 of
the Xxxxx Disclosure Memorandum all of the Xxxxx Subsidiaries that are
corporations (identifying its jurisdiction of incorporation, each jurisdiction
in which in which the character of its Assets or the nature or conduct of its
business requires it to be qualified and/or licensed to transact business, and
the number of shares owned and percentage ownership interest represented by such
share ownership) and all of the Xxxxx Subsidiaries that are general or limited
partnerships, limited liability companies, or other non-corporate entities
(identifying the Law under which such entity is organized, each jurisdiction in
which the character of its Assets or the nature or conduct of its business
requires it to be qualified and/or licensed to transact business, and the amount
and nature of the ownership interest therein). Except as disclosed in Section
5.4 of the Xxxxx Disclosure Memorandum, Xxxxx or one of its wholly owned
Subsidiaries owns all of the issued and outstanding shares of capital stock (or
other equity interests) of each Xxxxx Subsidiary. No capital stock (or other
equity interest) of any Xxxxx Subsidiary is or may become required to be issued
(other than to another Xxxxx Entity) by reason of any Equity Rights, and there
are no Contracts by which any Xxxxx Subsidiary is bound to issue (other than to
another Xxxxx Entity) additional shares of its capital stock (or other equity
interests) or Equity Rights or by which any Xxxxx Entity is or may be bound to
transfer any shares of the capital stock (or other equity interests) of any
Xxxxx Subsidiary (other than to another Xxxxx Entity). There are no Contracts
relating to the rights of any Xxxxx Entity to vote or to dispose of any shares
of the capital stock (or other equity interests) of any Xxxxx Subsidiary. All of
the shares of capital stock (or other equity interests) of each Xxxxx Subsidiary
held by a Xxxxx Entity are fully paid and (except pursuant to 12 USC Section 55
in the case of national banks and comparable, applicable state Law, if any, in
the case of state depository institutions) nonassessable and are owned by the
Xxxxx Entity free and clear of any Lien. Except as disclosed in Section 5.4 of
the Xxxxx Disclosure Memorandum, each Xxxxx Subsidiary is either a bank or a
corporation, and each such Subsidiary is duly organized, validly existing, and
(as to corporations) in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each Xxxxx Subsidiary is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Xxxxx Material Adverse Effect. Each Xxxxx Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder.
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5.5 SEC Filings; Financial Statements.
(a) Xxxxx has timely filed and made available to Savannah all
SEC Documents required to be filed by Xxxxx since December 31, 1994 (the "Xxxxx
SEC Reports"). The Xxxxx SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Xxxxx SEC Reports or
necessary in order to make the statements in such Xxxxx SEC Reports, in light of
the circumstances under which they were made, not misleading. No Xxxxx
Subsidiary is required to file any SEC Documents.
(b) Each of the Xxxxx Financial Statements (including, in each
case, any related notes) contained in the Xxxxx SEC Reports, including any Xxxxx
SEC Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of Xxxxx
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
5.6 Absence of Undisclosed Liabilities. No Xxxxx Entity has
any Liabilities of a nature required to be reflected on a balance sheet prepared
in accordance with GAAP that are reasonably likely to have, individually or in
the aggregate, a Xxxxx Material Adverse Effect, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Xxxxx as of
December 31, 1997, included in the Xxxxx Financial Statements delivered prior to
the date of this Agreement or reflected in the notes thereto. No Xxxxx Entity
has incurred or paid any Liability since December 31, 1997, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Xxxxx Material Adverse Effect or (ii) in
connection with the transactions contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since December 31,
1997, except as disclosed in the Xxxxx Financial Statements delivered prior to
the date of this Agreement or as disclosed in Section 5.7 of the Xxxxx
Disclosure Memorandum, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Xxxxx Material Adverse Effect, and (ii) the Xxxxx Entities have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of Xxxxx provided in Article 7.
5.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of
any of the Xxxxx Entities have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 1996, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Xxxxx
Material Adverse Effect, and all Tax Returns filed are complete and accurate in
all material respects. All Taxes shown on filed Tax Returns have been paid.
There is no audit examination, deficiency, or refund Litigation with respect to
any Taxes that is reasonably likely to result in a determination that would
have, individually or in the aggregate, a Xxxxx Material Adverse Effect, except
as reserved against in the Xxxxx Financial Statements delivered prior to the
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date of this Agreement or as disclosed in Section 5.8 of the Xxxxx Disclosure
Memorandum. Bryan's federal income Tax Returns have not been audited by the IRS.
All Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid. There are no Liens with
respect to Taxes upon any of the Assets of the Xxxxx Entities, except for any
such Liens which are not reasonably likely to have a Xxxxx Material Adverse
Effect.
(b) None of the Xxxxx Entities has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) The provision for any Taxes due or to become due for any
of the Xxxxx Entities for the period or periods through and including the date
of the respective Xxxxx Financial Statements that has been made and is reflected
on such Xxxxx Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the Xxxxx Entities have been provided
for in accordance with GAAP.
(e) Except for a Tax Allocation Agreement between Xxxxx and
Xxxxx Bank & Trust, none of the Xxxxx Entities is a party to any Tax allocation
or sharing agreement and none of the Xxxxx Entities has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which was Xxxxx) or has any Liability for Taxes of
any Person (other than Xxxxx and its Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign Law) as a
transferee or successor or by Contract or otherwise.
(f) Each of the Xxxxx Entities is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements underfederal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Xxxxx Material Adverse Effect.
(g) Except as disclosed in Section 5.8 of the Xxxxx Disclosure
Memorandum, none of the Xxxxx Entities has made any payments, is obligated to
make any payments, or is a party to any Contract that could obligate it to make
any payments that would be disallowed as a deduction under Section 280G or
162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Xxxxx Entities that occurred during
or after any Taxable Period in which the Xxxxx Entities incurred a net operating
loss that carries over to any Taxable Period ending after December 31, 1996.
5.9 Allowance for Possible Loan Losses. In the opinion of
management of Xxxxx, the allowance for possible loan or credit losses (the
"Allowance") shown on the consolidated balance sheets of Xxxxx included in the
most recent Xxxxx Financial Statements dated prior to the date of this Agreement
was, and the Allowance shown on the consolidated balance sheets of Xxxxx
included in the Xxxxx Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof, adequate (within
the meaning of GAAP and applicable regulatory requirements or guidelines) to
provide for all known or reasonably anticipated losses relating to or inherent
in the loan and lease portfolios (including accrued interest receivables) of the
Xxxxx Entities and other extensions of credit (including letters of credit and
commitments to make loans or extend credit) by the Xxxxx Entities as of the
dates thereof, except where the failure of such Allowance to be so adequate is
not reasonably likely to have a Xxxxx Material Adverse Effect.
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5.10 Assets.
(a) Except as disclosed in Section 5.10 of the Xxxxx
Disclosure Memorandum or as disclosed or reserved against in the Xxxxx Financial
Statements delivered prior to the date of this Agreement, the Xxxxx Entities
have good and marketable title, free and clear of all Liens, to all of their
respective Assets, except for any such Liens or other defects of title which are
not reasonably likely to have a Xxxxx Material Adverse Effect. All tangible
properties used in the businesses of the Xxxxx Entities are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with Bryan's past practices.
(b) All Assets which are material to Bryan's business on a
consolidated basis, held under leases or subleases by any of the Xxxxx Entities,
are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect.
(c) The Xxxxx Entities currently maintain insurance similar in
amounts, scope, and coverage to that maintained by other peer banking
organizations. None of the Xxxxx Entities has received notice from any insurance
carrier that (i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no claims for amounts exceeding in any individual case $10,000 pending under
such policies of insurance and no notices of claims in excess of such amounts
have been given by any Xxxxx Entity under such policies.
(d) The Assets of the Xxxxx Entities include all Assets
required to operate the business of the Xxxxx Entities as presently conducted.
5.11 Intellectual Property. Each Xxxxx Entity owns or has a
license to use all of the Intellectual Property used by such Xxxxx Entity in the
course of its business. Each Xxxxx Entity is the owner of or has a license to
any Intellectual Property sold or licensed to a third party by such Xxxxx Entity
in connection with such Xxxxx Entity's business operations, and such Xxxxx
Entity has the right to convey by sale or license any Intellectual Property so
conveyed. No Xxxxx Entity is in Default under any of its Intellectual Property
licenses. No proceedings have been instituted, or are pending or to the
Knowledge of Xxxxx threatened, which challenge the rights of any Xxxxx Entity
with respect to Intellectual Property used, sold or licensed by such Xxxxx
Entity in the course of its business, nor has any person claimed or alleged any
rights to such Intellectual Property. The conduct of the business of the Xxxxx
Entities does not infringe any Intellectual Property of any other person. Except
as disclosed in Section 5.11 of the Xxxxx Disclosure Memorandum, no Xxxxx Entity
is obligated to pay any recurring royalties to any Person with respect to any
such Intellectual Property. Except as disclosed in Section 5.11 of the Xxxxx
Disclosure Memorandum, no officer, director or employee of any Xxxxx Entity is
party to any Contract which restricts or prohibits such officer, director or
employee from engaging in activities competitive with any Person, including any
Xxxxx Entity.
5.12 Environmental Matters.
(a) To the Knowledge of Xxxxx, each Xxxxx Entity, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Xxxxx Material
Adverse Effect.
(b) To the Knowledge of Xxxxx, there is no Litigation pending
or threatened before any court, governmental agency, or authority or other forum
in which any Xxxxx Entity or any of its Operating Properties or Participation
Facilities (or Xxxxx in respect of such Operating Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release, discharge, spillage, or
disposal into the environment of any Hazardous Material, whether or not
occurring at, on, under,
11
adjacent to, or affecting (or potentially affecting) a site owned, leased, or
operated by any Xxxxx Entity or any of its Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Xxxxx Material
Adverse Effect, nor is there any reasonable basis for any Litigation of a type
described in this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a Xxxxx Material Adverse Effect.
(c) During the period of (i) any Xxxxx Entity's ownership or
operation of any of their respective current properties, (ii) any Xxxxx Entity's
participation in the management of any Participation Facility, or (iii) any
Xxxxx Entity's holding of a security interest in a Operating Property, there
have been no releases, discharges, spillages, or disposals of Hazardous Material
in, on, under, adjacent to, or affecting (or potentially affecting) such
properties, except such as are not reasonably likely to have, individually or in
the aggregate, a Xxxxx Material Adverse Effect. Prior to the period of (i) any
Xxxxx Entity's ownership or operation of any of their respective current
properties, (ii) any Xxxxx Entity's participation in the management of any
Participation Facility, or (iii) any Xxxxx Entity's holding of a security
interest in a Operating Property, to the Knowledge of Xxxxx, there were no
releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Xxxxx Material Adverse Effect.
5.13 Compliance with Laws. Xxxxx is duly registered as a bank
holding company under the BHC Act. Each Xxxxx Entity has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Xxxxx
Material Adverse Effect, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Xxxxx Material Adverse Effect. Except as
disclosed in Section 5.13 of the Xxxxx Disclosure Memorandum, none of the Xxxxx
Entities:
(a) is in Default under any of the provisions of its Articles
of Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Xxxxx Material Adverse Effect; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any Xxxxx Entity is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Xxxxx Material Adverse Effect, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Xxxxx Material Adverse Effect, or (iii) requiring any Xxxxx Entity
to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment, or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts materially
the conduct of its business or in any manner relates to its capital adequacy,
its credit or reserve policies, its management, or the payment of dividends.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to
Savannah.
5.14 Labor Relations. No Xxxxx Entity is the subject of any
Litigation asserting that it or any other Xxxxx Entity has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Xxxxx Entity to
bargain with any labor organization as to wages or conditions of employment, nor
is any Xxxxx Entity party to any collective bargaining agreement, nor is there
any strike or other labor dispute involving any Xxxxx Entity, pending or
12
threatened, or to the Knowledge of Xxxxx, is there any activity involving any
Xxxxx Entity's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.15 Employee Benefit Plans.
(a) Xxxxx has disclosed in Section 5.15 of the Xxxxx
Disclosure Memorandum, and has delivered or made available to Savannah prior to
the execution of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any Xxxxx Entity or ERISA Affiliate
thereof for the benefit of employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "Xxxxx Benefit
Plans"). Any of the Xxxxx Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is referred to herein
as a "Xxxxx ERISA Plan." Each Xxxxx ERISA Plan which is also a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue Code) is referred to
herein as a "Xxxxx Pension Plan." No Xxxxx Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All Xxxxx Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Xxxxx Material Adverse Effect. Each Xxxxx
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and Xxxxx is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No Xxxxx Entity
has engaged in a transaction with respect to any Xxxxx Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject any Xxxxx Entity to a Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts which are reasonably
likely to have, individually or in the aggregate, a Xxxxx Material Adverse
Effect.
(c) No Xxxxx Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial valuation.
Since the date of the most recent actuarial valuation, there has been (i) no
material change in the financial position of any Xxxxx Pension Plan, (ii) no
change in the actuarial assumptions with respect to any Xxxxx Pension Plan, and
(iii) no increase in benefits under any Xxxxx Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Xxxxx Material Adverse Effect or materially
adversely affect the funding status of any such plan. Neither any Xxxxx Pension
Plan nor any "single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any Xxxxx Entity, or the
single-employer plan of any entity which is considered one employer with Xxxxx
under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, which is reasonably likely to
have a Xxxxx Material Adverse Effect. No Xxxxx Entity has provided, or is
required to provide, security to a Xxxxx Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Internal
Revenue Code.
(d) Within the six-year period preceding the Effective Time,
no Liability under Subtitle C or D of Title IV of ERISA has been or is expected
to be incurred by any Xxxxx Entity with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Xxxxx Material Adverse
Effect. No Xxxxx Entity has incurred any withdrawal Liability with respect to a
multiemployer plan under Subtitle B of Title IV of ERISA (regardless of whether
13
based on contributions of an ERISA Affiliate), which Liability is reasonably
likely to have a Xxxxx Material Adverse Effect. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Xxxxx Pension Plan or by any ERISA Affiliate within the 12-month period ending
on the date hereof.
(e) Except as disclosed in Section 5.15 of the Xxxxx
Disclosure Memorandum, no Xxxxx Entity has any Liability for retiree health and
life benefits under any of the Xxxxx Benefit Plans and there are no restrictions
on the rights of such Xxxxx Entity to amend or terminate any such retiree health
or benefit Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a Xxxxx Material Adverse Effect.
(f) Except as disclosed in Section 5.15 of the Xxxxx
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Xxxxx Entity from
any Xxxxx Entity under any Xxxxx Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Xxxxx Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit, where such
payment, increase, or acceleration is reasonably likely to have, individually or
in the aggregate, a Xxxxx Material Adverse Effect.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Xxxxx Entity and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the Xxxxx Financial Statements to the extent
required by and in accordance with GAAP.
5.16 Material Contracts. Except as disclosed in Section 5.16
of the Xxxxx Disclosure Memorandum or otherwise reflected in the Xxxxx Financial
Statements, none of the Xxxxx Entities, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract, (ii) any Contract relating to the borrowing of money by
any Xxxxx Entity or the guarantee by any Xxxxx Entity of any such obligation
(other than Contracts evidencing deposit liabilities, purchases of federal
funds, fully-secured repurchase agreements, and Federal Home Loan Bank advances
of depository institution Subsidiaries, trade payables and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (iii) any
Contract which prohibits or restricts any Xxxxx Entity from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among Xxxxx
Entities, (v) any Contract involving Intellectual Property (other than Contracts
entered into in the ordinary course with customers and "shrink-wrap" software
licenses), (vi) any Contract relating to the provision of data processing,
network communication, or other technical services to or by any Xxxxx Entity,
(vii) any Contract relating to the purchase or sale of any goods or services
(other than Contracts entered into in the ordinary course of business and
involving payments under any individual Contract not in excess of $25,000),
(viii) any exchange-traded or over-the-counter swap, forward, future, option,
cap, floor, or collar financial Contract, or any other interest rate or foreign
currency protection Contract not included on its balance sheet which is a
financial derivative Contract, and (ix) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a Form 10-KSB filed by Xxxxx
with the SEC as of the date of this Agreement that has not been filed as an
exhibit to Bryan's Form 10-K filed for the fiscal year ended December 31, 1996,
or in an SEC Document and identified to Savannah (together with all Contracts
referred to in Sections 5.10 and 5.15(a), the "Xxxxx Contracts"). With respect
to each Xxxxx Contract and except as disclosed in Section 5.16 of the Xxxxx
Disclosure Memorandum: (i) the Contract is in full force and effect; (ii) no
Xxxxx Entity is in Default thereunder, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Xxxxx Material
Adverse Effect; (iii) no Xxxxx Entity has repudiated or waived any material
provision of any such Contract; and (iv) no other party to any such Contract is,
to the Knowledge of Xxxxx, in Default in any respect, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Xxxxx
14
Material AdverseEffect, or has repudiated or waived any material provision
thereunder. All of the indebtedness of any Xxxxx Entity for money borrowed is
prepayable at any time by such Xxxxx Entity without penalty or premium.
5.17 Legal Proceedings. There is no Litigation instituted or
pending, or, to the Knowledge of Xxxxx, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Xxxxx Entity, or against any
director, employee or employee benefit plan of any Xxxxx Entity, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Xxxxx Material Adverse Effect, nor are there
any Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any Xxxxx Entity, that are reasonably likely to
have, individually or in the aggregate, a Xxxxx Material Adverse Effect. Section
5.17 of the Xxxxx Disclosure Memorandum contains a summary of all Litigation as
of the date of this Agreement to which any Xxxxx Entity is a party and which
names a Xxxxx Entity as a defendant or cross-defendant or for which any Xxxxx
Entity has any potential Liability.
5.18 Reports. Since January 1, 1993, or the date of
organization if later, each Xxxxx Entity has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities (except, in
the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Xxxxx Material
Adverse Effect). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its respective
date, each such report and document did not, in all material respects, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
5.19 Statements True and Correct. None of the information
supplied or to be supplied by any Xxxxx Entity or any Affiliate thereof for
inclusion in the Registration Statement to be filed by Savannah with the SEC
will, when the Registration Statement becomes effective, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
to make the statements therein not misleading. None of the information supplied
or to be supplied by any Xxxxx Entity or any Affiliate thereof for inclusion in
the Joint Proxy Statement to be mailed to each Party's shareholders in
connection with the Shareholders' Meetings, and any other documents to be filed
by a Xxxxx Entity or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Joint Proxy
Statement, when first mailed to the shareholders of Xxxxx and Savannah, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Joint Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meetings, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meetings. All documents that any Xxxxx Entity or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
5.20 Accounting, Tax and Regulatory Matters. No Xxxxx Entity
or any Affiliate thereof has taken or agreed to take any action or has any
Knowledge of any fact or circumstance that is reasonably likely to (i) prevent
the Merger from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
5.21 State Takeover Laws. Each Xxxxx Entity has taken all
necessary action to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the validity or applicability of, any applicable
"moratorium," "fair price," "business combination," "control share," or other
anti-takeover Laws (collectively, "Takeover Laws"), including Sections 14-2-1111
and 14-2-1132 of the GBCC.
15
5.22 Charter Provisions. Each Xxxxx Entity has taken all
action so that the entering into of this Agreement and the Xxxxx Stock Option
Agreement and the consummation of the Merger and the other transactions
contemplated hereby and thereby, including the acquisition of shares pursuant
to, or other exercise of rights under, the Xxxxx Stock Option Agreement, do not
and will not result in the grant of any rights to any Person under the Articles
of Incorporation, Bylaws or other governing instruments of any Xxxxx Entity or
restrict or impair the ability of Savannah or any of its Subsidiaries to vote,
or otherwise to exercise the rights of a shareholder with respect to, shares of
any Xxxxx Entity that may be directly or indirectly acquired or controlled by
them.
5.23 Directors' Agreements. Each of the directors of Xxxxx
(except Xxxxxxx Xxxxxxxx) has executed and delivered to Savannah an agreement in
substantially the form of Exhibit 3 (the "Xxxxx Directors' Agreements"). In the
event Savannah removes, or fails to re-elect a director to the board of Xxxxx
Bank during the 24 month period following the Closing Date, Savannah will pay
such director, immediately, an amount equal to the directors fees he or she
would have earned during the remainder of such 24 month period.
5.24 Board Recommendation. The Board of Directors of Xxxxx, at
a meeting duly called and held, has by unanimous vote of the directors present
(who constituted all of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, and
the Xxxxx Stock Option Agreement and the Xxxxx Directors' Agreements and the
transactions contemplated thereby, taken together, are fair to and in the best
interests of the shareholders and (ii) resolved to recommend that the holders of
the shares of Xxxxx Common Stock approve this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SAVANNAH
Savannah hereby represents and warrants to Xxxxx as follows:
6.1 Organization, Standing, and Power. Savannah is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Georgia, and has the corporate power and authority to carry
on its business as now conducted and to own, lease and operate its material
Assets. Savannah is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Savannah Material
Adverse Effect. The minute book and other organizational documents for Savannah
have been made available to Xxxxx for its review and, except as disclosed in
Section 6.1 of the Savannah Disclosure Memorandum, are true and complete in all
material respects as in effect as of the date of this Agreement and accurately
reflect in all material respects all amendments thereto and all proceedings of
the Board of Directors and shareholders thereof.
6.2 Authority; No Breach By Agreement.
(a) Savannah has the corporate power and authority necessary
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Savannah,
subject to approval of the issuance of the shares of Savannah Common Stock
pursuant to the Merger by a majority of the votes cast at the Savannah
16
Shareholders' Meeting, which is the only shareholder vote required for approval
of this Agreement and consummation of the Merger by Savannah. Subject to such
requisite shareholder approval, this Agreement represents a legal, valid, and
binding obligation of Savannah, enforceable against Savannah in accordance with
its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Savannah, nor the consummation by Savannah of the transactions contemplated
hereby, nor compliance by Savannah with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Savannah's Articles of
Incorporation or Bylaws or the certificate or articles of incorporation or
bylaws of any Savannah Subsidiary or any resolution adopted by the board of
directors or the shareholders of any Savannah Entity, or (ii) except as
disclosed in Section 6.2 of the Savannah Disclosure Memorandum, constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any Savannah Entity under, any Contract or
Permit of any Savannah Entity, where such Default or Lien, or any failure to
obtain such Consent, is reasonably likely to have, individually or in the
aggregate, a Savannah Material Adverse Effect, or, (iii) subject to receipt of
the requisite Consents referred to in Section 9.1(b), constitute or result in a
Default under, or require any Consent pursuant to, any Law or Order applicable
to any Savannah Entity or any of their respective material Assets (including any
Savannah Entity or any Xxxxx Entity becoming subject to or liable for the
payment of any Tax or any of the Assets owned by any Savannah Entity or any
Xxxxx Entity being reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the Nasdaq National Market, and other than Consents required from
Regulatory Authorities, and other than notices to or filings with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, and other than Consents, filings, or notifications
which, if not obtained or made, are not reasonably likely to have, individually
or in the aggregate, a Savannah Material Adverse Effect, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by Savannah of the Merger and the other transactions contemplated
in this Agreement.
6.3 Capital Stock.
(a) The authorized capital stock of Savannah consists of (i)
20,000,000 shares of Savannah Common Stock, of which 1,782,598 shares are
issued, 1,709,548 shares are outstanding and 73,050 shares are held in treasury
as of the date of this Agreement, and (ii) 10,000,000 shares of preferred stock,
none of which are issued and outstanding. All of the issued and outstanding
shares of Savannah Common Stock are, and all of the shares of Savannah Common
Stock to be issued in exchange for shares of Xxxxx Common Stock upon
consummation of the Merger, when issued in accordance with the terms of this
Agreement, will be, duly and validly issued and outstanding and fully paid and
nonassessable under the GBCC. None of the outstanding shares of Savannah Common
Stock has been, and none of the shares of Savannah Common Stock to be issued in
exchange for shares of Xxxxx Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
shareholders of Savannah.
(b) Except as set forth in Section 6.3(a), or as provided in
the Savannah Stock Option Agreement, or as disclosed in Section 6.3 of the
Savannah Disclosure Memorandum, there are no shares of capital stock or other
equity securities of Savannah outstanding and no outstanding Equity Rights
relating to the capital stock of Savannah
6.4 Savannah Subsidiaries. Savannah has disclosed in Section
6.4 of the Savannah Disclosure Memorandum all of the Savannah Subsidiaries as of
the date of this Agreement that are corporations (identifying its jurisdiction
of incorporation, each jurisdiction in which the character of its Assets or the
nature or conduct of its business requires it to be qualified and/or licensed to
transact business, and the number of shares owned and percentage ownership
interest represented by such share ownership) and all of the Savannah
Subsidiaries that are general or limited partnerships, limited liability
companies, or other non-corporate entities (identifying the
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Law under which such entity is organized, each jurisdiction in which the
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the amount and nature of
the ownership interest therein). Except as disclosed in Section 6.4 of the
Savannah Disclosure Memorandum, Savannah or one of its wholly owned Subsidiaries
owns all of the issued and outstanding shares of capital stock (or other equity
interests) of each Savannah Subsidiary. No capital stock (or other equity
interest) of any Savannah Subsidiary are or may become required to be issued
(other than to another Savannah Entity) by reason of any Equity Rights, and
there are no Contracts by which any Savannah Subsidiary is bound to issue (other
than to another Savannah Entity) additional shares of its capital stock (or
other equity interests) or Equity Rights or by which any Savannah Entity is or
may be bound to transfer any shares of the capital stock (or other equity
interests) of any Savannah Subsidiary (other than to another Savannah Entity).
There are no Contracts relating to the rights of any Savannah Entity to vote or
to dispose of any shares of the capital stock (or other equity interests) of any
Savannah Subsidiary. All of the shares of capital stock (or other equity
interests) of each Savannah Subsidiary held by a Savannah Entity are fully paid
and (except pursuant to 12 USC Section 55 in the case of national banks and
comparable, applicable state Law, if any, in the case of state depository
institutions) nonassessable and are owned by the Savannah Entity free and clear
of any Lien. Except as disclosed in Section 6.4 of the Savannah Disclosure
Memorandum, each Savannah Subsidiary is either a bank or a corporation, and each
such Subsidiary is duly organized, validly existing, and (as to corporations) in
good standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease and operate its Assets and to carry on its business as now conducted. Each
Savannah Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Savannah Material
Adverse Effect. Each Savannah Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder.
6.5 SEC Filings; Financial Statements.
(a) Savannah has timely filed and made available to Xxxxx all
SEC Documents required to be filed by Savannah since December 31, 1994 (the
"Savannah SEC Reports"). The Savannah SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at the time they
were filed (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Savannah SEC Reports or necessary in order to make the statements in such
Savannah SEC Reports, in light of the circumstances under which they were made,
not misleading. No Savannah Subsidiary is required to file any SEC Documents.
(b) Each of the Savannah Financial Statements (including, in
each case, any related notes) contained in the Savannah SEC Reports, including
any Savannah SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited interim statements, as permitted by Form 10-Q of
the SEC), and fairly presented in all material respects the consolidated
financial position of Savannah and its Subsidiaries as
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at the respective dates and the consolidated results of operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount or effect.
6.6 Absence of Undisclosed Liabilities. No Savannah Entity has
any Liabilities of a nature required to be reflected on a balance sheet prepared
in accordance with GAAP that are reasonably likely to have, individually or in
the aggregate, a Savannah Material Adverse Effect, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Savannah as of
December 31, 1997, included in the Savannah Financial Statements delivered prior
to the date of this Agreement or reflected in the notes thereto. No Savannah
Entity has incurred or paid any Liability since December 31, 1997, except for
such Liabilities incurred or paid (i) in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Savannah Material Adverse Effect or
(ii) in connection with the transactions contemplated by this Agreement.
6.7 Absence of Certain Changes or Events. Since December 31,
1997, except as disclosed in the Savannah Financial Statements delivered prior
to the date of this Agreement or as disclosed in Section 6.7 of the Savannah
Disclosure Memorandum, (i) there have been no events, changes or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Savannah Material Adverse Effect, and (ii) the Savannah Entities
have not taken any action, or failed to take any action, prior to the date of
this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any of
the covenants and agreements of Savannah provided in Article 7.
6.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of
any of the Savannah Entities have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1996, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that all
such failures to file, taken together, are not reasonably likely to have a
Savannah Material Adverse Effect, and all Tax Returns filed are complete and
accurate in all material respects. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that is reasonably likely to result in a determination that
would have, individually or in the aggregate, a Savannah Material Adverse
Effect, except as reserved against in the Savannah Financial Statements
delivered prior to the date of this Agreement or as disclosed in Section 6.8 of
the Savannah Disclosure Memorandum. Savannah's federal income Tax Returns have
not been audited by the IRS. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid. There
are no Liens with respect to Taxes upon any of the Assets of the Savannah
Entities, except for any such Liens which are not reasonably likely to have a
Savannah Material Adverse Effect.
(b) None of the Savannah Entities has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) The provision for any Taxes due or to become due for any
of the Savannah Entities for the period or periods through and including the
date of the respective Savannah Financial Statements that has been made and is
reflected on such Savannah Financial Statements is sufficient to cover all such
Taxes.
(d) Deferred Taxes of the Savannah Entities have been provided
for in accordance with GAAP.
(e) None of the Savannah Entities is a party to any Tax
allocation or sharing agreement and none of the Savannah Entities has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Savannah) or has any
Liability for Taxes of any Person (other than Savannah and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law) as a transferee or successor or by Contract or otherwise.
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(f) Each of the Savannah Entities is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Savannah Material Adverse Effect.
(g) Except as disclosed in Section 6.8 of the Savannah
Disclosure Memorandum, none of the Savannah Entities has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Savannah Entities that occurred
during or after any Taxable Period in which the Savannah Entities incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
1996.
6.9 Allowance for Possible Loan Losses. In the opinion of
management of Savannah, the Allowance shown on the consolidated balance sheets
of Savannah included in the most recent Savannah Financial Statements dated
prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of Savannah included in the Savannah Financial
Statements as of dates subsequent to the execution of this Agreement will be, as
of the dates thereof, adequate (within the meaning of GAAP and applicable
regulatory requirements or guidelines) to provide for all known or reasonably
anticipated losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the Savannah Entities and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the Savannah Entities as of the dates thereof, except where
the failure of such Allowance to be so adequate is not reasonably likely to have
a Savannah Material Adverse Effect.
6.10 Assets.
(a) Except as disclosed in Section 6.10 of the Savannah
Disclosure Memorandum or as disclosed or reserved against in the Savannah
Financial Statements delivered prior to the date of this Agreement, the Savannah
Entities have good and marketable title, free and clear of all Liens, to all of
their respective Assets, except for any such Liens or other defects of title
which are not reasonably likely to have a Savannah Material Adverse Effect. All
tangible properties used in the businesses of the Savannah Entities are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Savannah's past practices.
(b) All Assets which are material to Savannah's business on a
consolidated basis, held under leases or subleases by any of the Savannah
Entities, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect.
(c) The Savannah Entities currently maintain insurance similar
in amounts, scope and coverage to that maintained by other peer banking
organizations. None of the Savannah Entities has received notice from any
insurance carrier that (i)any policy of insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There are
presently no claims pending under such policies of insurance for amounts
exceeding in any individual case $20,000 pending under such policies of
insurance and no notices of claims in excess of such amounts have been given by
any Savannah Entity under such policies.
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(d) The Assets of the Savannah Entities include all assets
required to operate the business of the Savannah Entities as presently
conducted.
6.11 Intellectual Property. Each Savannah Entity owns or has a
license to use all of the Intellectual Property used by such Savannah Entity in
the course of its business. Each Savannah Entity is the owner of or has a
license to any Intellectual Property sold or licensed to a third party by such
Savannah Entity in connection with such Savannah Entity's business operations,
and such Savannah Entity has the right to convey by sale or license any
Intellectual Property so conveyed. No Savannah Entity is in Default under any of
its Intellectual Property licenses. No proceedings have been instituted, or are
pending or to the Knowledge of Savannah threatened, which challenge the rights
of any Savannah Entity with respect to Intellectual Property used, sold or
licensed by such Savannah Entity in the course of its business, nor has any
person claimed or alleged any rights to such Intellectual Property. The conduct
of the business of the Savannah Entities does not infringe any Intellectual
Property of any other person. Except as disclosed in Section 6.11 of the
Savannah Disclosure Memorandum, no Savannah Entity is obligated to pay any
recurring royalties to any Person with respect to any such Intellectual
Property. Except as disclosed in Section 6.11 of the Savannah Disclosure
Memorandum, no officer, director or employee of any Savannah Entity is party to
any Contract which restricts or prohibits such officer, director or employee
from engaging in activities competitive with any Person, including any Savannah
Entity.
6.12 Environmental Matters.
(a) To the Knowledge of Savannah, each Savannah Entity, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Savannah Material
Adverse Effect.
(b) To the Knowledge of Savannah, there is no Litigation
pending or threatened before any court, governmental agency, or authority or
other forum in which any Savannah Entity or any of its Operating Properties or
Participation Facilities (or Savannah in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by any Savannah Entity
or any of its Operating Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Savannah Material Adverse Effect, nor is
there any reasonable basis for any Litigation of a type described in this
sentence, except such as is not reasonably likely to have, individually or in
the aggregate, a Savannah Material Adverse Effect.
(c) During the period of (i) any Savannah Entity's ownership
or operation of any of their respective current properties, (ii) any Savannah
Entity's participation in the management of any Participation Facility, or (iii)
any Savannah Entity's holding of a security interest in a Operating Property,
there have been no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, adjacent to, or affecting (or potentially affecting)
such properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Savannah Material Adverse Effect. Prior to the period of
(i) any Savannah Entity's ownership or operation of any of their respective
current properties, (ii) any Savannah Entity's participation in the management
of any Participation Facility, or (iii) any Savannah Entity's holding of a
security interest in a Operating Property, to the Knowledge of Savannah, there
were no releases, discharges, spillages, or disposals of Hazardous Material in,
on, under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Savannah Material Adverse Effect.
6.13 Compliance with Laws. Savannah is duly registered as a
bank holding company under the BHC Act. Each Savannah Entity has in effect all
21
Permits necessary for it to own, lease or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Savannah Material Adverse Effect, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Savannah Material Adverse Effect. Except as
disclosed in Section 6.13 of the Savannah Disclosure Memorandum, none of the
Savannah Entities:
(a) is in Default under any of the provisions of its Articles
of Incorporation or Bylaws (or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for Defaults which
are not reasonably likely to have, individually or in the aggregate, a Savannah
Material Adverse Effect; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any Savannah Entity is not in compliance with any of the Laws or Orders which
such governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Savannah Material Adverse Effect, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Savannah Material Adverse Effect, or (iii) requiring any Savannah
Entity to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts materially
the conduct of its business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management, or the payment of dividends.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to Xxxxx.
6.14 Labor Relations. No Savannah Entity is the subject of any
Litigation asserting that it or any other Savannah Entity has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Savannah Entity to
bargain with any labor organization as to wages or conditions of employment, nor
is any Savannah Entity party to any collective bargaining agreement, nor is
there any strike or other labor dispute involving any Savannah Entity, pending
or threatened, or to the Knowledge of Savannah, is there any activity involving
any Savannah Entity's employees seeking to certify a collective bargaining unit
or engaging in any other organization activity.
6.15 Employee Benefit Plans.
(a) Savannah has disclosed in Section 6.15 of the Savannah
Disclosure Memorandum, and has delivered or made available to Xxxxx prior to the
execution of this Agreement copies in each case of all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any Savannah Entity or ERISA
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Savannah
Benefit Plans"). Any of the Savannah Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Savannah ERISA Plan." Each Savannah ERISA Plan which is also a
22
"defined benefit plan" (as defined in Section 414(j) of the Internal Revenue
Code) is referred to herein as a "Savannah Pension Plan." No Savannah Pension
Plan is or has been a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) All Savannah Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Savannah Material Adverse Effect. Each
Savannah ERISA Plan which is intended to be qualified under Section 401(a) of
the Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and Savannah is not aware of any circumstances likely
to result in revocation of any such favorable determination letter. No Savannah
Entity has engaged in a transaction with respect to any Savannah Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any Savannah Entity to a Tax imposed by either Section
4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts which
are reasonably likely to have, individually or in the aggregate, a Savannah
Material Adverse Effect.
(c) No Savannah Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial valuation.
Since the date of the most recent actuarial valuation, there has been (i) no
material change in the financial position of a Savannah Pension Plan, (ii) no
change in the actuarial assumptions with respect to any Savannah Pension Plan,
and (iii) no increase in benefits under any Savannah Pension Plan as a result of
plan amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Savannah Material Adverse Effect or
materially adversely affect the funding status of any such plan. Neither any
Savannah Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any Savannah
Entity, or the single-employer plan of any ERISA Affiliate has an "accumulated
funding deficiency" within the meaning of Section 412 of the Internal Revenue
Code or Section 302 of ERISA, which is reasonably likely to have a Savannah
Material Adverse Effect. No Savannah Entity has provided, or is required to
provide, security to a Savannah Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time,
no Liability under Subtitle C or D of Title IV of ERISA has been or is expected
to be incurred by any Savannah Entity with respect to any ongoing, frozen or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Savannah Material
Adverse Effect. No Savannah Entity has incurred any withdrawal Liability with
respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Savannah Material Adverse Effect. No
notice of a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required to
be filed for any Savannah Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
(e) Except as disclosed in Section 6.15 of the Savannah
Disclosure Memorandum, no Savannah Entity has any Liability for retiree health
and life benefits under any of the Savannah Benefit Plans and there are no
restrictions on the rights of such Savannah Entity to amend or terminate any
such retiree health or benefit Plan without incurring any Liability thereunder,
which Liability is reasonably likely to have a Savannah Material Adverse Effect.
(f) Except as disclosed in Section 6.15 of the Savannah
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Savannah Entity
from any Savannah Entity under any Savannah Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Savannah Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably likely to
have, individually or in the aggregate, a Savannah Material Adverse Effect.
23
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Savannah Entity and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the Savannah Financial Statements to the
extent required by and in accordance with GAAP.
6.16 Material Contracts. Except as disclosed in Section 6.16
of the Savannah Disclosure Memorandum or otherwise reflected in the Savannah
Financial Statements, none of the Savannah Entities, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting
or retirement Contract, (ii) any Contract relating to the borrowing of money by
any Savannah Entity or the guarantee by any Savannah Entity of any such
obligation (other than Contracts evidencing deposit liabilities, purchases of
federal funds, fully-secured repurchase agreements, and Federal Home Loan Bank
advances of depository institution Subsidiaries, trade payables and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
or (iii) any Contract which prohibits or restricts any Savannah Entity from
engaging in any business activities in any geographic area, line of business or
otherwise in competition with any other Person, (iv) any Contract between or
among Savannah Entities, (v) any Contract involving Intellectual Property (other
than Contracts entered into in the ordinary course with customers and
"shrink-wrap" software licenses), (vi) any Contract relating to the provision of
data processing, network communication, or other technical services to or by any
Savannah Entity, (vii) any Contract relating to the purchase or sale of any
goods or services (other than Contracts entered into in the ordinary course of
business and involving payments under any individual Contract not in excess of
$25,000), (viii) any exchange-traded or over-the-counter swap, forward, future,
option, cap, floor, or collar financial Contract, or any other interest rate or
foreign currency protection Contract not included on its balance sheet which is
a financial derivative Contract, and (ix) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a Form 10-K filed by
Savannah with the SEC as of the date of this Agreement that has not been filed
as an exhibit to Savannah's Form 10-KSB filed for the fiscal year ended December
31, 1996, or in an SEC Document and identified to Xxxxx (together with all
Contracts referred to in Sections 6.10 and 6.15(a), the "Savannah Contracts").
With respect to each Savannah Contract and except as disclosed in Section 6.16
of the Savannah Disclosure Memorandum: (i) the Contract is in full force and
effect; (ii) no Savannah Entity is in Default thereunder, other than Defaults
which are not reasonably likely to have, individually or in the aggregate, a
Savannah Material Adverse Effect; (iii) no Savannah Entity has repudiated or
waived any material provision of any such Contract; and (iv) no other party to
any such Contract is, to the Knowledge of Savannah, in Default in any respect,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Savannah Material Adverse Effect, or has repudiated or waived
any material provision thereunder. All of the indebtedness of any Savannah
Entity for money borrowed is prepayable at any time by such Savannah Entity
without penalty or premium.
6.17 Legal Proceedings. There is no Litigation instituted or
pending, or, to the Knowledge of Savannah, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Savannah Entity,
or against any director, employee or employee benefit plan of any Savannah
Entity, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Savannah Material
Adverse Effect, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Savannah
Entity, that are reasonably likely to have, individually or in the aggregate, a
Savannah Material Adverse Effect. Section 6.17 of the Savannah Disclosure
Memorandum contains a summary of all Litigation as of the date of this Agreement
to which any Savannah Entity is a party and which names a Savannah Entity as a
defendant or cross-defendant or for which any Savannah Entity has any potential
Liability.
6.18 Reports. Since January 1, 1993, or the date of
organization if later, each Savannah Entity has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities (except, in
the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Savannah Material
Adverse Effect). As of their respective dates, each of such reports and
24
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its respective
date, each such report and document did not, in all material respects, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
6.19 Statements True and Correct. None of the information
supplied or to be supplied by any Savannah Entity or any Affiliate thereof for
inclusion in the Registration Statement to be filed by Savannah with the SEC,
will, when the Registration Statement becomes effective, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
to make the statements therein not misleading. None of the information supplied
or to be supplied by any Savannah Entity or any Affiliate thereof for inclusion
in the Joint Proxy Statement to be mailed to each Party's shareholders in
connection with the Shareholders' Meetings, and any other documents to be filed
by any Savannah Entity or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Joint Proxy Statement, when first mailed to the shareholders of Xxxxx and
Savannah, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or, in the case of
the Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Shareholders' Meetings, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meetings. All documents that any Savannah Entity or
any Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
6.20 Accounting, Tax and Regulatory Matters. No Savannah
Entity or any Affiliate thereof has taken or agreed to take any action or has
any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the Merger from qualifying for pooling-of-interests accounting treatment
or as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, or (ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) or result in the imposition
of a condition or restriction of the type referred to in the last sentence of
such Section.
6.21 State Takeover Laws. Each Savannah Entity has taken all
necessary action to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the validity or applicability of, any applicable
"moratorium," "fair price," "business combination," "control share," or other
anti-takeover Laws (collectively, "Takeover Laws"), including Sections 14-2-1111
and 14-2-1132 of the GBCC.
6.22 Charter Provisions. Each Savannah Entity has taken all
action so that the entering into of this Agreement and the Savannah Stock Option
Agreement and the consummation of the Merger and the other transactions
contemplated hereby and thereby, including the acquisition of shares pursuant
to, or other exercise of rights under, the Savannah Stock Option Agreement, do
not and will not result in the grant of any rights to any Person under the
Articles of Incorporation, Bylaws or other governing instruments of any Savannah
Entity or restrict or impair the ability of Xxxxx or any Xxxxx shareholder to
vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of Savannah Common Stock that may be directly or indirectly acquired or
controlled by them.
6.23 Board Recommendation. The Board of Directors of Savannah,
at a meeting duly called and held, has by unanimous vote of the directors
present (who constituted all of the directors then in office) (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, and the Savannah Stock Option Agreement and the transactions
contemplated thereby, taken together, are fair to and in the best interests of
the shareholders and (ii) resolved to recommend that the holders of the shares
of Savannah Common Stock approve this Agreement.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Each Party. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of the other Party shall have been
obtained, and except as otherwise expressly contemplated herein, each Party
shall and shall cause each of its Subsidiaries to (a) operate its business only
in the usual, regular, and ordinary course, (b) preserve intact its business
organization and Assets and maintain its rights and franchises, and (c) take no
action which would (i) materially adversely affect the ability of either Party
to obtain any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentences of Section 9.1(b) or 9.1(c), or (ii) materially adversely affect the
ability of either Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of Xxxxx. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of Savannah shall have been
obtained, which consent shall not be unreasonably withheld, and except as
otherwise expressly contemplated herein, Xxxxx covenants and agrees that it will
not do or agree or commit to do, or permit any of its Subsidiaries to do or
agree or commit to do, any of the following:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any Xxxxx Entity, or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a Xxxxx Entity to another Xxxxx
Entity) in excess of an aggregate of $50,000 (for the Xxxxx Entities on a
consolidated basis) except in the ordinary course of the business of Xxxxx
Subsidiaries consistent with past practices (which shall include, for Xxxxx
Subsidiaries that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or Federal
Home Loan Bank, and entry into repurchase agreements fully secured by U.S.
government or agency securities), or impose, or suffer the imposition, on any
Asset of any Xxxxx Entity of any Lien or permit any such Lien to exist (other
than in connection with deposits, repurchase agreements, bankers acceptances,
"treasury tax and loan" accounts established in the ordinary course of business,
the satisfaction of legal requirements in the exercise of trust powers, and
Liens in effect as of the date hereof that are disclosed in the Xxxxx Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any Xxxxx Entity, or declare or pay any dividend
or make any other distribution in respect of Bryan's capital stock; provided,
that Xxxxx xxx (to the extent legally and contractually permitted to do so), but
shall not be obligated to, declare and pay a regular annual cash dividend on the
shares of Xxxxx Common Stock in accordance with pas practice disclosed in
Section 7.2(c) of the Xxxxx Disclosure Memorandum, but not in excess of $1.00
per share of Xxxxx Common Stock; or
(d) except for this Agreement, or pursuant to the Xxxxx Stock
Option Agreement, or pursuant to the exercise of stock options outstanding as of
the date hereof and pursuant to the terms thereof in existence on the date
hereof, or as disclosed in Section 7.2(d) of the Xxxxx Disclosure Memorandum,
issue, sell, pledge, encumber, authorize the issuance of, enter into any
Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of Xxxxx Common
Stock or any other capital stock of any Xxxxx Entity, or any stock appreciation
rights, or any option, warrant, or other Equity Right; or
(e) adjust, split, combine or reclassify any shares of Xxxxx
Common Stock or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Xxxxx Common Stock, or sell, lease,
mortgage or otherwise dispose of or otherwise encumber (x) any shares of capital
stock of any Xxxxx Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another Xxxxx Entity) or (y) any Asset having a book
26
value in excess of $25,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities, U.S.
Government agency securities or obligations of the State of Georgia, or any
subdivisions thereof, which have maturities of seven years or less, purchase any
securities or make any material investment, either by purchase of stock of
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Xxxxx Subsidiary, or otherwise
acquire direct or indirect control over any Person, other than in connection
with (i) internal reorganizations or consolidations involving existing
Subsidiaries, (ii) foreclosures in the ordinary course of business, (iii)
acquisitions of control by a depository institution Subsidiary in its fiduciary
capacity, or (iv)the creation of new wholly owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Xxxxx Entity, except in accordance with past
practice disclosed in Section 7.2(g) of the Xxxxx Disclosure Memorandum or as
required by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 7.2(g) of the Xxxxx Disclosure Memorandum;
and enter into or amend any severance agreements with officers of any Xxxxx
Entity; grant any material increase in fees or other increases in compensation
or other benefits to directors of any Xxxxx Entity except in accordance with
past practice disclosed in Section 7.2(g) of the Xxxxx Disclosure Memorandum; or
voluntarily accelerate the vesting of any stock options or other stock-based
compensation or employee benefits or other Equity Rights; or
(h) enter into or amend any employment Contract between any
Xxxxx Entity and any Person (unless such amendment is required by Law) that the
Xxxxx Entity does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time on
or after the Effective Time; or
(i) adopt any new employee benefit plan of any Xxxxx Entity or
terminate or withdraw from, or make any material change in or to, any existing
employee benefit plans of any Xxxxx Entity other than any such change that is
required by Law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan, or make any distributions
from such employee benefit plans, except as required by Law, the terms of such
plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in accordance with past
practice, or settle any Litigation involving any Liability of any Xxxxx Entity
for material money damages or restrictions upon the operations of any Xxxxx
Entity; or
(l) except in the ordinary course of business, enter into,
modify, amend or terminate any material Contract (including any loan Contract
with an unpaid balance exceeding $25,000) or waive, release, compromise or
assign any material rights or claims.
7.3 Negative Covenants of Savannah. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of Xxxxx shall have been obtained,
which consent shall not be unreasonably withheld, and except as otherwise
expressly contemplated herein, Savannah covenants and agrees that it will not do
or agree or commit to do, or permit any of its Subsidiaries to do or agree or
commit to do, any of the following:
(a) amend the Articles of Incorporation or Bylaws of Savannah,
in each case, in any manner adverse to the holders of Xxxxx Common Stock, or
27
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a Savannah Entity to another
Savannah Entity) in excess of an aggregate of $100,000 (for the Savannah
Entities on a consolidated basis) except in the ordinary course of the business
of Savannah Subsidiaries consistent with past practices (which shall include,
for Savannah Subsidiaries that are depository institutions, creation of deposit
liabilities, purchases of federal funds, advances from the Federal Reserve Bank
or Federal Home Loan Bank, and entry into repurchase agreements fully secured by
U.S. government or agency securities), or impose, or suffer the imposition, on
any Asset of any Savannah Entity of any Lien or permit any such Lien to exist
(other than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business, the satisfaction of legal requirements in the exercise of trust
powers, and Liens in effect as of the date hereof that are disclosed in the
Savannah Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any Savannah Entity, or declare or pay any
dividend or make any other distribution in respect of Savannah's capital stock,
provided that Savannah may (to the extent legally and contractually permitted to
do so), but shall not be obligated to, declare and pay regular quarterly cash
dividends on the shares of Savannah Common Stock in accordance with past
practice disclosed in Section 7.3(c) of the Savannah Disclosure Memorandum, but
not in excess of $0.12 per share of Savannah Common Stock; or
(d) except for this Agreement, or pursuant to the Savannah
Stock Option Agreement, or pursuant to the exercise of stock options outstanding
as of the date hereof and pursuant to the terms thereof in existence on the date
hereof, or as disclosed in Section 7.3(d) of the Savannah Disclosure Memorandum,
issue, sell, pledge, encumber, authorize the issuance of, enter into any
Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of Savannah Common
Stock or any other capital stock of any Savannah Entity, or any stock
appreciation rights, or any option, warrant, conversion, or other Equity Right;
or
(e) adjust, split, combine or reclassify any shares of
Savannah Common Stock or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of Savannah Common Stock or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any shares of
capital stock of any Savannah Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another Savannah Entity) or any Asset having a
book value in excess of $25,000 other than in the ordinary course of business
for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities, U.S.
Government agency securities or obligations of the State of Georgia, or any
subdivisions thereof, which have maturities of seven years or less, purchase any
securities or make any material investment, either by purchase of stock of
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Savannah Subsidiary, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (i) internal reorganizations or consolidations involving
existing Subsidiaries, (ii) foreclosures in the ordinary course of business,
(iii) acquisitions of control by a depository institution Subsidiary in its
fiduciary capacity, or (iv) the creation of new wholly owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Savannah Entity, except in accordance with past
practice disclosed in Section 7.3(g) of the Savannah Disclosure Memorandum or as
required by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 7.3(g) of the Savannah Disclosure Memorandum
or the provisions of any applicable program or plan adopted by its Board of
Directors prior to the date of this Agreement; enter into or amend any severance
28
agreements with officers of any Savannah Entity; grant any material increase in
fees or other increases in compensation or other benefits to directors of any
Savannah Entity except in accordance with past practice disclosed in Section
7.3(g) of the Savannah Disclosure Memorandum; or voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits or other Equity Rights; or
(h) enter into or amend any employment Contract between any
Savannah Entity and any Person (unless such amendment is required by Law) that
the Savannah Entity does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time on
or after the Effective Time;
(i) adopt any new employee benefit plan of any Savannah Entity
or terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any Savannah Entity other than any such
change that is required by Law or that, in the opinion of counsel, is necessary
or advisable to maintain the tax qualified status of any such plan, or make any
distributions from such employee benefit plans except as required by Law, the
terms of such plans, or consistent with past practice; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in applicable Tax Laws or regulatory accounting
requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, or settle any Litigation involving any Liability of any Savannah
Entity for material money damages or restrictions upon the operations of any
Savannah Entity; or
(l) except in the ordinary course of business, enter into,
modify, amend or terminate any material Contract (including any loan Contract
with an unpaid balance exceeding $25,000) or waive, release, compromise or
assign any material rights or claims.
7.4 Adverse Changes in Condition. Each Party agrees to give
written noticepromptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Xxxxx Material Adverse Effect or a Savannah Material Adverse
Effect, as applicable, or (ii) would cause or constitute a material breach of
any of its representations, warranties, or covenants contained herein, and to
use its reasonable efforts to prevent or promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present the consolidated financial position of the entity
filing such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder
Approval. As soon as reasonably practicable after execution of this Agreement,
29
Savannah shall prepare and file the Registration Statement with the SEC, and
shall use its reasonable efforts to cause the Registration Statement to become
effective under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of Savannah Common Stock upon consummation of the Merger. Xxxxx shall
cooperate in the preparation and filing of the Registration Statement and shall
furnish all information concerning it and the holders of its capital stock as
Savannah may reasonably request in connection with such action. Xxxxx shall call
a Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. Savannah shall call a Shareholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of the issuance of
shares of Savannah Common Stock pursuant to the Merger and such other related
matters as it deems appropriate. In connection with the Shareholders' Meetings,
(i) Xxxxx and Savannah shall prepare and file with the SEC a Joint Proxy
Statement and mail such Joint Proxy Statement to their respective shareholders,
(ii) the Parties shall furnish to each other all information concerning them
that they may reasonably request in connection with such Joint Proxy Statement,
(iii) the Board of Directors of Xxxxx and Savannah shall recommend to their
respective shareholders the approval of the matters submitted for approval, and
(iv) the Board of Directors and officers of Xxxxx and Savannah shall use their
reasonable efforts to obtain such shareholders' approval. Savannah and Xxxxx
shall make all necessary filings with respect to the Merger under the Securities
Laws.
8.2 Exchange Listing. Savannah shall use its reasonable
efforts to list, prior to the Effective Time, on the Nasdaq National Market the
shares of Savannah Common Stock to be issued to the holders of Xxxxx Common
Stock pursuant to the Merger, and Savannah shall give all notices and make all
filings with the Nasdaq National Market required in connection with the
transactions contemplated herein.
8.3 Applications. Savannah shall prepare and file, and Xxxxx
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. The
Parties shall deliver to each other copies of all filings, correspondence and
orders to and from all Regulatory Authorities in connection with the
transactions contemplated hereby.
8.4 Filings with State Offices. Upon the terms and subject to
the conditions of this Agreement, Savannah shall execute and file the
Certificate of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the
terms and conditions of this Agreement, each Party agrees to use, and to cause
its Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement or the respective Stock
Option Agreements. Each Party shall use, and shall cause each of its
Subsidiaries to use, its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
30
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under
the Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon
as practicable after any determination by it of any fact or occurrence relating
to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent, either
a material breach of any representation, warranty, covenant or agreement of the
other Party or which has had or is reasonably likely to have a Xxxxx Material
Adverse Effect or a Savannah Material Adverse Effect, as applicable.
8.7 Press Releases. Prior to the Effective Time, Xxxxx and
Savannah shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, that nothing in this Section
8.7 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.
8.8 Certain Actions. Except with respect to this Agreement and
the transactions contemplated hereby, neither Party nor any Affiliate thereof
nor any Representatives thereof retained by either Party shall directly or
indirectly solicit any Acquisition Proposal by any Person. Neither Party nor any
Affiliate or Representative thereof shall furnish any non-public information
that it is not legally obligated to furnish, negotiate with respect to, or enter
into any Contract with respect to, any Acquisition Proposal, but a Party may
communicate information about such an Acquisition Proposal to its shareholders
if and to the extent that it is required to do so in order to comply with
obligations under Section 14 of the 1934 Act. Each Party shall promptly advise
the other Party following the receipt of any Acquisition Proposal and the
details thereof, and advise the other Party of any developments with respect to
such Acquisition Proposal promptly upon the occurrence thereof.
8.9 Accounting and Tax Treatment. Each of the Parties
undertakes and agrees to use its reasonable efforts to cause the Merger, and to
take no action which would cause the Merger not, to qualify for treatment as a
pooling of interests for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes.
8.10 State Takeover Laws. Each Xxxxx Entity shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the validity or applicability of, any applicable
Takeover Law, including Sections 14-2-1111 and 14-2-1132 of the GBCC.
8.11 Charter Provisions. Each Xxxxx Entity shall take all
necessary action to ensure that the entering into of this Agreement and the
Xxxxx Stock Option Agreement and the consummation of the Merger and the other
transactions contemplated hereby do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws or other
governing instruments of any Xxxxx Entity or restrict or impair the ability of
Savannah or any of its Subsidiaries to vote, or otherwise to exercise the rights
of a shareholder with respect to, shares of any Xxxxx Entity that may be
directly or indirectly acquired or controlled by them.
31
8.12 Agreement of Affiliates. Xxxxx has disclosed in Section
8.12 of the Xxxxx Disclosure Memorandum all Persons whom it reasonably believes
is an "affiliate" of Xxxxx for purposes of Rule 145 under the 1933 Act. Xxxxx
shall use its reasonable efforts to cause each such Person to deliver to
Savannah not later than 30 days after the date of this Agreement, a written
agreement, substantially in the form of Exhibit 4, providing that such Person
will not sell, pledge, transfer, or otherwise dispose of the shares of Xxxxx
Common Stock held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of Savannah Common Stock to be received by such Person upon consummation
of the Merger except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder and, if the Merger is accounted for by
the pooling-of-interests method of accounting, until such time as financial
results covering at least 30 days of combined operations of Savannah and Xxxxx
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. If the Merger is accounted for
using the pooling-of-interests method of accounting, shares of Savannah Common
Stock issued to such affiliates of Xxxxx in exchange for shares of Xxxxx Common
Stock shall not be transferable until such time as financial results covering at
least 30 days of combined operations of Savannah and Xxxxx have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such affiliate has provided the
written agreement referred to in this Section 8.12 (and Savannah shall be
entitled to place restrictive legends upon certificates for shares of Savannah
Common Stock issued to affiliates of Xxxxx pursuant to this Agreement to enforce
the provisions of this Section 8.12). Savannah shall not be required to maintain
the effectiveness of the Registration Statement under the 1933 Act for the
purposes of resale of Savannah Common Stock by such affiliates.
8.13 Employee Benefits and Contracts. Following the Effective
Time, Savannah shall provide generally to officers and employees of the Xxxxx
Entities employee benefits under employee benefit and welfare plans (other than
stock option or other plans involving the potential issuance of Savannah Common
Stock), on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the Savannah Entities to their similarly
situated officers and employees. For purposes of participation, vesting and
(except in the case of Savannah retirement plans) benefit accrual under
Savannah's employee benefit plans, the service of the employees of the Xxxxx
Entities prior to the Effective Time shall be treated as service with a Savannah
Entity participating in such employee benefit plans. Savannah also shall, and
shall cause its Subsidiaries to, honor in accordance with their terms all
employment, severance, consulting and other compensation Contracts disclosed in
Section 8.13 of the Xxxxx Disclosure Memorandum between any Xxxxx Entity and any
current or former director, officer, or employee thereof, and all provisions for
vested benefits or other vested amounts earned or accrued through the Effective
Time under the Xxxxx Benefit Plans.
8.14 Indemnification.
(a) For a period of six years after the Effective Time,
Savannah shall indemnify, defend and hold harmless the present and former
directors, officers, employees and agents of the Xxxxx Entities (each, an
"Indemnified Party") against all Liabilities arising out of actions or omissions
arising out of the Indemnified Party's service or services as directors,
officers, employees or agents of Xxxxx or, at Bryan's request, of another
corporation, partnership, joint venture, trust or other enterprise occurring at
or prior to the Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under Georgia Law and by Bryan's
Articles of Incorporation and Bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
Litigation and whether or not any Savannah Entity is insured against any such
matter. Without limiting the foregoing, in any case in which approval by the
Surviving Corporation is required to effectuate any indemnification, the
Surviving Corporation shall direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent counsel
mutually agreed upon between Savannah and the Indemnified Party.
(b) Savannah shall use its reasonable efforts (and Xxxxx shall
cooperate prior to the Effective Time in these efforts) to maintain in effect
for a period of three years after the Effective Time Bryan's existing directors'
and officers' liability insurance policy (provided that Savannah may substitute
therefor (i) policies of at least the same coverage and amounts containing terms
32
and conditions which are substantially no less advantageous or (ii) with the
consent of Xxxxx given prior to the Effective Time, any other policy) with
respect to claims arising from facts or events which occurred prior to the
Effective Time and covering persons who are currently covered by such insurance;
provided, that the Surviving Corporation shall not be obligated to make
aggregate premium payments for such three-year period in respect of such policy
(or coverage replacing such policy) which exceed, for the portion related to
Bryan's directors and officers, 150% of the annual premium payments on Bryan's
current policy in effect as of the date of this Agreement (the "Maximum
Amount"). If the amount of the premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, Savannah shall use its reasonable
efforts to maintain the most advantageous policies of directors' and officers'
liability insurance obtainable for a premium equal to the Maximum Amount.
(d) If the Surviving Corporation or any successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall transfer
all or substantially all of its assets to any Person, then and in each case,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
8.14.
(e) The provisions of this Section 8.14 are intended to be for
the benefit of and shall be enforceable by, each Indemnified Party and their
respective heirs and representatives.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6:
(a) Shareholder Approval. The shareholders of Xxxxx shall have
approved this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law, by the
provisions of any governing instruments, or by the rules of the Nasdaq National
Market. The shareholders of Savannah shall have approved the issuance of shares
of Savannah Common Stock pursuant to the Merger, as and to the extent required
by Law, by the provisions of any governing instruments, or by the rules of the
Nasdaq National Market.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner (including requirements relating to the raising of
additional capital or the disposition of Assets) which in the reasonable
judgment of the Board of Directors of either Party would so materially adversely
impact the economic or business benefits of the transactions contemplated by
this Agreement that, had such condition or requirement been known, such Party
would not, in its reasonable judgment, have entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b)) or for the preventing of any Default under any
Contract or Permit of such Party which, if not obtained or made, is reasonably
likely to have, individually or in the aggregate, a Xxxxx Material Adverse
Effect or a Savannah Material Adverse Effect, as applicable. No Consent so
obtained which is necessary to consummate the transactions contemplated hereby
shall be conditioned or restricted in a manner which in the reasonable judgment
of the Board of Directors of either Party would so materially adversely impact
the economic or business benefits of the transactions contemplated by this
Agreement that, had such condition or requirement been known, such Party would
not, in its reasonable judgment, have entered into this Agreement.
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(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall
be effective under the 1933 Act, no stop orders suspending the effectiveness of
the Registration Statement shall have been issued, no action, suit, proceeding
or investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
Laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of Savannah Common Stock issuable pursuant to the Merger shall have been
received.
(f) Exchange Listing. The shares of Savannah Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
Nasdaq National Market.
(g) Pooling Letters. Each of the Parties shall have received
letters, dated as of the date of filing of the Registration Statement with the
SEC and as of the Effective Time, addressed to Savannah, in form and substance
reasonably acceptable to Savannah, from Xxxxxx Xxxxxxxx LLP to the effect that
the Merger will qualify for pooling-of-interests accounting treatment. Each of
the Parties also shall have received letters, dated as of the date of filing of
the Registration Statement with the SEC and as of the Effective Time, addressed
to Savannah, in form and substance reasonably acceptable to Savannah, from
Xxxxxx, Xxxxxxx & Company, LLC to the effect that such firm is not aware of any
matters relating to Xxxxx and its Subsidiaries which would preclude the Merger
from qualifying for pooling-of-interests accounting treatment.
(h) Tax Matters. Each Party shall have received a written
opinion of counsel from Xxxxxx & Bird LLP, in form reasonably satisfactory to
such Parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, (ii) the exchange in the Merger of Xxxxx Common Stock for Savannah
Common Stock will not give rise to gain or loss to the shareholders of Xxxxx
with respect to such exchange (except to the extent of any cash received), and
(iii) none of Xxxxx or Savannah will recognize gain or loss as a consequence of
the Merger (except for amounts resulting from any required change in accounting
methods and any income and deferred gain recognized pursuant to Treasury
regulations issued under Section 1502 of the Internal Revenue Code). In
rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of Xxxxx and Savannah reasonably satisfactory in
form and substance to such counsel.
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9.2 Conditions to Obligations of Savannah. The obligations of
Savannah to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Savannah pursuant to Section 11.6(a):
(a) Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of Xxxxx set
forth in this Agreement shall be assessed as of the date of this Agreement and
as of the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties set forth in
Section 5.3 shall be true and correct (except for inaccuracies which are de
minimus in amount). The representations and warranties set forth in Sections
5.20, 5.21, and 5.22 shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of Xxxxx set
forth in this Agreement (including the representations and warranties set forth
in Sections 5.3, 5.20, 5.21, and 5.22) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Xxxxx Material Adverse
Effect; provided that, for purposes of this sentence only, those representations
and warranties which are qualified by references to "material" or "Material
Adverse Effect" or to the "Knowledge" of any Person shall be deemed not to
include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Xxxxx to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. Xxxxx shall have delivered to Savannah (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.1 as relates to Xxxxx and in Section 9.2(a)
and 9.2(b) have been satisfied, and (ii) certified copies of resolutions duly
adopted by Bryan's Board of Directors and shareholders evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Savannah and its counsel
shall request.
(d) Affiliates Agreements. Savannah shall have received from
each affiliate of Xxxxx the affiliates letter referred to in Section 8.12, to
the extent necessary to assure in the reasonable judgment of Savannah that the
transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
9.3 Conditions to Obligations of Xxxxx. The obligations of
Xxxxx to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Xxxxx pursuant to Section 11.6(b):
(a) Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of Savannah
set forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date). The representations and warranties of
Savannah set forth in Section 6.3 shall be true and correct (except for
inaccuracies which are de minimus in amount). The representations and warranties
of Savannah set forth in Section 6.20 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Savannah set forth in this Agreement (including the
representations and warranties set forth in Sections 6.3 and 6.20) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have, a
Savannah Material Adverse Effect; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
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(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Savannah to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
material respects.
(c) Certificates. Savannah shall have delivered to Xxxxx (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.1 as relates to Savannah and in Section 9.3(a)
and 9.3(b) have been satisfied, and (ii) certified copies of resolutions duly
adopted by Savannah's Board of Directors and shareholders evidencing the taking
of all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Xxxxx and its counsel
shall request.
(d) Employment Agreements. Savannah has executed employment
agreements with E. Xxxxx Xxxxxxx and Xxxxxx Xxxxxxx Xxxx, Jr. in the form
attached hereto as Exhibit 5.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Xxxxx and Savannah or both, this Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of Savannah and Xxxxx; or
(b) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by the
other Party of any representation or warranty contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach and which breach is reasonably
likely, in the opinion of the non-breaching Party, to have, individually or in
the aggregate, a Xxxxx Material Adverse Effect or a Savannah Material Adverse
Effect, as applicable, on the breaching Party; or
(c) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by the
other Party of any covenant or agreement contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final nonappealable
action of such authority or if any action taken by such authority is not
appealed within the time limit for appeal, or (ii) the shareholders of Xxxxx or
Savannah fail to vote their approval of the matters relating to this Agreement
and the transactions contemplated hereby at the Shareholders' Meetings where
such matters were presented to such shareholders for approval and voted upon; or
(e) By either Party in the event that the Merger shall not
have been consummated by September 30, 1998, if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by any
breach of this Agreement by the Party electing to terminate pursuant to this
Section 10.1(e); or
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(f) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Merger cannot be
satisfied or fulfilled by the date specified in Section 10.1(e).
10.2 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Article 11 and Section 8.6(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c) or
10.1(f) shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination. The Stock Option Agreements shall be governed by its own
terms as to its termination.
10.3 Non-Survival of Representations and Covenants. The
respective representations, warranties, obligations, covenants, and agreements
of the Parties shall not survive the Effective Time except this Section 10.3 and
Articles 1, 2, 3, 4 and 11 and Sections 8.12, 8.13 and 8.14.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition of
all of the stock or assets of, or other business combination involving the
acquisition of such Party or any of its Subsidiaries or the acquisition of a
substantial equity interest in, or a substantial portion of the assets of, such
Party or any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any 10%
or greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of
1956, as amended.
"Xxxxx Common Stock" shall mean the $1.00 par value common
stock of Xxxxx.
"Xxxxx Disclosure Memorandum" shall mean the written
information entitled "Xxxxx Bancorp of Georgia, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to Savannah describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
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"Xxxxx Entities" shall mean, collectively, Xxxxx and all Xxxxx
Subsidiaries.
"Xxxxx Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Xxxxx as of
December 31, 1996 and 1995, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for each of the three fiscal years ended December 31, 1996, 1995 and 1994,
as filed by Xxxxx in SEC Documents, (ii) the consolidated balance sheets
(including related notes and schedules, if any) of Xxxxx as of December 31, 1997
and 1996, and the related statements of income, changes in shareholders' equity,
and cash flows (including related notes and schedules, if any) for each of the
three fiscal years ended December 31, 1997, 1996 and 1995, as delivered by Xxxxx
to Savannah prior to execution of this Agreement, and (iii) the consolidated
balance sheets of Xxxxx (including related notes and schedules, if any) and
related statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC Documents
(including financial statements covering the periods in clause (ii) above) filed
with respect to periods ended subsequent to September 30, 1997.
"Xxxxx Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of Xxxxx and its Subsidiaries, taken as a
whole, or (ii) the ability of Xxxxx to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies, (c)
actions and omissions of Xxxxx (or any of its Subsidiaries) taken with the prior
informed written Consent of Savannah in contemplation of the transactions
contemplated hereby, and (d) the direct effects of compliance with this
Agreement on the operating performance of Xxxxx, including expenses incurred by
Xxxxx in consummating the transactions contemplated by this Agreement.
"Xxxxx Subsidiaries" shall mean the Subsidiaries of Xxxxx,
which shall include the Xxxxx Subsidiaries described in Section 5.4 and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of Xxxxx in the future and held as a Subsidiary by Xxxxx at the
Effective Time.
"Certificate of Merger" shall mean the Certificate of Merger
to be executed by Savannah and filed with the Secretary of State of the State of
Georgia relating to the Merger as contemplated by Section 1.1.
"Closing Date"shall mean the date on which the Closing occurs.
"Confidentiality Agreement" shall mean that certain
Confidentiality Agreement, dated January 30, 1998, between Xxxxx and Savannah.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or Permit,
(ii) any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient air, surface
water, ground water, land surface, or subsurface strata) and which are
administered, interpreted, or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases, or threatened releases of any
Hazardous Material, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of any
Hazardous Material.
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"Equity Rights" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exhibits" 1 through 4, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and any
polychlorinated biphenyls).
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications therefor,
technology rights and licenses, computer software (including any source or
object codes therefor or documentation relating thereto), trade secrets,
franchises, know-how, inventions, and other intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.
"Joint Proxy Statement" shall mean the proxy statement used by
Xxxxx and Savannah to solicit the approval of their respective shareholders of
the transactions contemplated by this Agreement, which shall include the
prospectus of Savannah relating to the issuance of the Savannah Common Stock to
holders of Xxxxx Common Stock.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean the
personal knowledge after due inquiry of the chairman, president, chief financial
officer, chief accounting officer, chief operating officer, chief credit
officer, general counsel, any assistant or deputy general counsel, or any
senior, executive or other vice president of such Person and the knowledge of
any such persons obtained or which would have been obtained from a reasonable
investigation.
"Law" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its Assets, Liabilities, or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property Taxes not yet due
and payable, (ii) for depository institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the ordinary course of the banking
business, and (iii) Liens which do not materially impair the use of or title to
the Assets subject to such Lien.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other proceeding
relating to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement, but shall
not include regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
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"Material" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question; provided that
any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Nasdaq National Market" shall mean the National Market System
of The Nasdaq Stock Market, Inc.
"Operating Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in which such
Party or Subsidiary holds a security interest or other interest (including an
interest in a fiduciary capacity), and, where required by the context, includes
the owner or operator of such property, but only with respect to such property.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility or
property.
"Party" shall mean either Xxxxx or Savannah, and "Parties"
shall mean both Xxxxx and Savannah.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
Assets, or business.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Registration Statement" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by Savannah
under the 1933 Act with respect to the shares of Savannah Common Stock to be
issued to the shareholders of Xxxxx in connection with the transactions
contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the SEC,
the Nasdaq National Market the Federal Trade Commission, the United States
Department of Justice, the Board of the Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Department of Banking and Finance of the State of Georgia, and
all other federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative engaged by a
Person.
"Savannah Common Stock" shall mean the $1.00 par value common
stock of Savannah.
"Savannah Disclosure Memorandum" shall mean the written
information entitled "The Savannah Bancorp, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to Xxxxx describing in reasonable
detail the matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under which
such disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"Savannah Entities" shall mean, collectively, Savannah and all
Savannah Subsidiaries.
"Savannah Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if any) of
Savannah as of December 31, 1996 and 1995, and the related statements of income,
changes in shareholders' equity, and cash flows (including
40
related notes and schedules, if any) for each of the three fiscal years ended
December 31, 1996, 1995 and 1994, as filed by Savannah in SEC Documents, (ii)
the consolidated balance sheets (including related notes and schedules, if any)
of Savannah as of December 31, 1997 and 1996, and the related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) for each of the three fiscal years ended December 31,
1997, 1996 and 1995, as delivered by Savannah to Xxxxx prior to execution of
this Agreement, and (iii) the consolidated balance sheets of Savannah (including
related notes and schedules, if any) and related statements of income, changes
in shareholders' equity, and cash flows (including related notes and schedules,
if any) included in SEC Documents (including financial statements covering the
periods in clause (ii) above) filed with respect to periods ended subsequent to
September 30, 1997.
"Savannah Material Adverse Effect" shall mean an event, change
or occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of Savannah and its Subsidiaries, taken as a
whole, or (ii) the ability of Savannah to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies, (c)
actions and omissions of Savannah (or any of its Subsidiaries) taken with the
prior informed written Consent of Xxxxx in contemplation of the transactions
contemplated hereby, and (d) the direct effects of compliance with this
Agreement on the operating performance of Savannah, including expenses incurred
by Savannah in consummating the transactions contemplated by this Agreement.
"Savannah Subsidiaries" shall mean the Subsidiaries of
Savannah, which shall include the Savannah Subsidiaries described in Section 6.4
and any corporation, bank, savings association, or other organization acquired
as a Subsidiary of Savannah in the future and held as a Subsidiary by Savannah
at the Effective Time.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed, or
required to be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Shareholders' Meetings" shall mean the respective meetings of
the shareholders of Xxxxx and Savannah to be held pursuant to Section 8.1,
including any adjournment or adjournments thereof.
"Subsidiaries" shall mean all those corporations,
associations, or other business entities of which the entity in question either
(i) owns or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which 50% or
more of the outstanding equity securities is owned directly or indirectly by its
parent (provided, there shall not be included any such entity the equity
securities of which are owned or controlled in a fiduciary capacity), (ii) in
the case of partnerships, serves as a general partner, (iii) in the case
of a limited liability company, serves as a managing member, or (iv) otherwise
has the ability to elect a majority of the directors, trustees or managing
members thereof.
"Surviving Corporation" shall mean Savannah as the surviving
corporation resulting from the Merger.
"Tax Return" shall mean any report, return, information
return, or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county, local,
or foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposes or required to be withheld by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, including any interest, penalties, and additions
imposed thereon or with respect thereto.
41
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Allowance Section 5.9
Xxxxx Benefit Plans Section 5.15
Xxxxx Contracts Section 5.16
Xxxxx ERISA Plan Section 5.15
Xxxxx Options Section 3.6
Xxxxx Pension Plan Section 5.15
Xxxxx SEC Reports Section 5.5(a)
Xxxxx Stock Option Agreement Section 1.4
Closing Section 1.2
Directors' Agreements Section 5.23
Effective Time Section 1.3
ERISA Affiliate Section 5.15(b)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Maximum Amount Section 8.14
Merger Section 1.1
Savannah Benefit Plans Section 6.15
Savannah Contracts Section 6.16
Savannah ERISA Plan Section 6.15
Savannah Pension Plan Section 6.15
Savannah SEC Reports Section 6.5(a)
Savannah Stock Option Agreement Section 1.4
Takeover Laws Section 5.21
Tax Opinion Section 9.1(h)
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Joint Proxy Statement and printing costs incurred in
connection with the printing of the Registration Statement and the Joint Proxy
Statement.
(b) Notwithstanding the foregoing,
(i) if this Agreement is terminated by Savannah pursuant to
any of Sections 10.1(b), 10.1(c), 10.1(d)(ii) (as relates to approval of Bryan's
shareholders) or 10.1(f) (but only on the basis of the failure of Xxxxx to
satisfy any of the conditions enumerated in Section 9.2), or
(ii) if the Merger is not consummated as a result of the
failure of Xxxxx to satisfy any of the conditions set forth in Section 9.2,
then Bryan shall promptly pay Savannah all the out-of-pocket costs and expenses
of Savannah, including costs of counsel, investment bankers, actuaries and
accountants up to but not exceeding an additional $100,000, excluding percentage
based fees payable to a consultant or broker retained by Savannah.
(c) Notwithstanding the foregoing,
(i) if this Agreement is terminated by Xxxxx pursuant to
either of Sections 10.1(b), 10.1(c), 10.1(d)(ii) (as relates to approval of
Savannah's shareholders), or 10.1(f) (but only on the basis of the failure of
42
Savannah to satisfy any of the conditions enumerated in Section 9.3), or
(ii) if the Merger is not consummated as a result of the
failure of Savannah to satisfy any of the conditions set forth in Section 9.3,
then Savannah shall promptly pay Xxxxx all the out-of-pocket costs and expenses
of Xxxxx, including costs of counsel, investment bankers, actuaries and
accountants up to but not exceeding an additional $100,000, excluding percentage
based fees payable to a consultant or broker retained by Xxxxx.
(d) In addition to the foregoing, if, after the date of this
Agreement and within twelve (12) months following
(i) any termination of this Agreement
(1) by Savannah pursuant to Sections 10.1(b), 10.1(c), 10.1(f)
(but only on the basis of the failure of Xxxxx to satisfy any of the conditions
enumerated in Section 9.2), or
(2) by either Party pursuant to Section 10.1(d)(ii) (with
respect to approval of the shareholders of Xxxxx), or
(ii) failure to consummate the Merger by reason of any failure
of Xxxxx to satisfy the conditions enumerated in Section 9.2 or in Section
9.1(a) (as such section relates to approval by the shareholders of Xxxxx),
any third-party shall acquire, merge with, combine with, purchase a significant
amount of Assets of, or engage in any other business combination with, or
purchase any equity securities involving an acquisition of 20% or more of the
voting stock of, Xxxxx, or enter into any binding agreement to do any of the
foregoing (collectively, a "Business Combination"), such third-party that is a
party to the Business Combination shall pay to Savannah, prior to the earlier of
consummation of the Business Combination or execution of any letter of intent or
definitive agreement with Xxxxx relating to such Business Combination, an amount
in cash equal to the sum of
(x) the direct costs and expenses or portion thereof referred
to in subsection (a) above incurred by or on behalf of Savannah in connection
with the transactions contemplated by this Agreement, plus
(y) 5% of the aggregate fair market value of the consideration
received by the shareholders of Xxxxx in such Business Combination, less
(z) any amounts previously paid by Xxxxx to Savannah pursuant
to subsection (b) of this Section 11.2,
which sum represents additional compensation for Savannah's loss as the result
of the transactions contemplated by this Agreement not being consummated. In the
event such third-party shall refuse to pay such amounts within ten days of
demand therefor by Savannah, the amounts shall be an obligation of Xxxxx and
shall be paid by Xxxxx promptly upon notice to Xxxxx by Savannah.
(e) In addition to the foregoing, if, after the date of this
Agreement and within twelve (12) months following
(i) any termination of this Agreement
(1) by Xxxxx pursuant to Sections 10.1(b), 10.1(c), 10.1(f)
(but only on the basis of the failure of Savannah to satisfy any of the
conditions enumerated in Section 9.3), or
43
(2) by either Party pursuant to Section 10.1(d)(ii) (with
respect to approval of the shareholders of Savannah), or
(ii) failure to consummate the Merger by reason of any failure
of Savannah to satisfy the conditions enumerated in Section 9.3 or in Section
9.1(a) (as such section relates to approval by the shareholders of Savannah),
any third-party shall acquire, merge with, combine with, purchase a significant
amount of Assets of, or engage in any other business combination with, or
purchase any equity securities involving an acquisition of 20% or more of the
voting stock of, Savannah, or enter into any binding agreement to do any of the
foregoing (collectively, a "Business Combination"), such third-party that is a
party to the Business Combination shall pay to Xxxxx, prior to the earlier of
consummation of the Business Combination or execution of any letter of intent or
definitive agreement with Savannah relating to such Business Combination, an
amount in cash equal to the sum of
(x) the direct costs and expenses or portion thereof referred
to in subsection (a) above incurred by or on behalf of Xxxxx in connection with
the transactions contemplated by this Agreement, plus
(y) 5% of the aggregate fair market value of the consideration
received by the shareholders of Savannah in such Business Combination, less
(z) any amounts previously paid by Savannah to Xxxxx pursuant
to subsection (c) of this Section 11.2,
which sum represents additional compensation for Bryan's loss as the result of
the transactions contemplated by this Agreement not being consummated. In the
event such third-party shall refuse to pay such amounts within ten days of
demand therefor by Xxxxx, the amounts shall be an obligation of Savannah and
shall be paid by Savannah promptly upon notice to Savannah by Xxxxx.
(f) The Parties acknowledge that the loss to either Party
resulting from breach of this Agreement by the other Party or other failure of
the Merger to be consummated is not susceptible of ready measurement and,
therefore, that the payments provided in this Section 11.2 are intended by the
Parties to constitute liquidated damages for any breach by a Party of the terms
of this Agreement, and not a penalty.
11.3 Brokers and Finders. Except for T. Xxxxxxx Xxxxxxx &
Associates, Inc. as to Savannah, each of the Parties represents and warrants
that neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained by
Xxxxx or by Savannah, each of Xxxxx and Savannah, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in respect
of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b), for the Confidentiality Agreement). Nothing in this Agreement expressed
or implied, is intended to confer upon any Person, other than the Parties or
their respective successors, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, other than as provided in Section 8.14.
11.5 Amendments. To the extent permitted by Law, this
Agreement may be amended by a subsequent writing signed by each of the Parties
upon the approval of each of the Parties, whether before or after shareholder
44
approval of this Agreement has been obtained; provided, that after any such
approval by the holders of Xxxxx Common Stock, there shall be made no amendment
that pursuant to Section 14-2-1106 of the GBCC requires further approval by such
shareholders without the further approval of such shareholders; and further
provided, that after any such approval by the holders of Savannah Common Stock,
the provisions of this Agreement relating to the manner or basis in which shares
of Xxxxx Common Stock will be exchanged for shares of Savannah Common Stock
shall not be amended after the Savannah Shareholders' Meeting in a manner
adverse to the holders of Savannah Common Stock without any requisite approval
of the holders of the issued and outstanding shares of Savannah Common Stock
entitled to vote thereon.
11.6 Waivers.
(a) Prior to or at the Effective Time, Savannah, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Xxxxx, to waive or extend the time for the compliance
or fulfillment by Xxxxx of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
Savannah under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of Savannah.
(b) Prior to or at the Effective Time, Xxxxx, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by Savannah, to waive or extend the time for the compliance or
fulfillment by Savannah of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of Xxxxx
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Xxxxx.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
Xxxxx: Xxxxx Bancorp of Georgia, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: E. Xxxxx Xxxxxxx
With a copy to: Martin, Snow, Grant & Xxxxxx, LLP
000 Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
45
Savannah: The Savannah Bancorp, Inc.
00 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxx,
President and Chief Executive Officer
With copies to: Ellis, Painter, Xxxxxxxxx & Bart, LLP
Xxx Xxxx Xxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: X. Xxxxx Xxxxx
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telecopy Number: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Xx.
11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Georgia, without regard to
any applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.11 Captions; Articles and Sections. The captions contained
in this Agreement are for reference purposes only and are not part of this
Agreement. Unless otherwise indicated, all references to particular Articles or
Sections shall mean and refer to the referenced Articles and Sections of this
Agreement.
11.12 Interpretations. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The parties acknowledge and agree
that this Agreement has been reviewed, negotiated, and accepted by all parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
11.13 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
46
11.14 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf by its duly authorized officers as of the
day and year first above written.
THE SAVANNAH BANCORP, INC.
By: /S/ XXXXXX X. XXXXX
-----------------------
President
XXXXX BANCORP OF GEORGIA, INC.
By: /S/ E. XXXXX XXXXXXX
------------------------
President
TABLE OF CONTENTS
Page
PARTIES 1
PREAMBLE 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER 1
1.1 Merger 1
1.2 Time and Place of Closing 2
1.3 Effective Time 2
1.4 Execution of Stock Option Agreements 2
ARTICLE 2 - TERMS OF MERGER 2
2.1 Charter 2
2.2 Bylaws 2
2.3 Directors and Officers 2
ARTICLE 3 - MANNER OF CONVERTING SHARES 3
3.1 Conversion of Shares 3
3.2 Anti-Dilution Provisions 3
3.3 Shares Held by Bryan or Savannah 3
3.4 Dissenting Shareholders 4
3.5 Fractional Shares 4
3.6 Conversion of Stock Options 4
ARTICLE 4 - EXCHANGE OF SHARES 5
4.1 Exchange Procedures 5
4.2 Rights of Former Xxxxx Shareholders 6
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF XXXXX 7
5.1 Organization, Standing, and Power 7
5.2 Authority of Xxxxx; No Breach By Agreement 7
5.3 Capital Stock 8
5.4 Xxxxx Subsidiaries 9
5.5 SEC Filings; Financial Statements 9
5.6 Absence of Undisclosed Liabilities 10
5.7 Absence of Certain Changes or Events 10
5.8 Tax Matters 10
47
5.9 Allowance for Possible Loan Losses 12
5.10 Assets 12
5.11 Intellectual Property 13
5.12 Environmental Matters 13
5.13 Compliance with Laws 14
5.14 Labor Relations 14
5.15 Employee Benefit Plans 15
5.16 Material Contracts 16
5.17 Legal Proceedings 17
5.18 Reports 18
5.19 Statements True and Correct 18
5.20 Accounting, Tax and Regulatory Matters 18
5.21 State Takeover Laws 18
5.22 Charter Provisions 19
5.23 Directors' Agreements 19
5.24 Board Recommendation 19
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF SAVANNAH 19
6.1 Organization, Standing, and Power 19
6.2 Authority; No Breach By Agreement 20
6.3 Capital Stock 21
6.4 Savannah Subsidiaries 21
6.5 SEC Filings; Financial Statements 22
6.6 Absence of Undisclosed Liabilities 22
6.7 Absence of Certain Changes or Events 23
6.8 Tax Matters 23
6.9 Allowance for Possible Loan Losses 24
6.10 Assets 24
6.11 Intellectual Property 25
6.12 Environmental Matters 25
6.13 Compliance With Laws 26
6.14 Labor Relations 27
6.15 Employee Benefit Plans 27
6.16 Material Contracts 29
6.17 Legal Proceedings 30
6.18 Reports 30
6.19 Statements True and Correct 30
6.20 Accounting, Tax and Regulatory Matters 31
6.21 State Takeover Laws 31
6.22 Charter Provisions 31
6.23 Board Recommendation 31
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION 32
7.1 Affirmative Covenants of Each Party 32
7.2 Negative Covenants of Xxxxx 32
7.3 Negative Covenants of Savannah 34
7.4 Adverse Changes in Condition 36
7.5 Reports 36
ARTICLE 8 - ADDITIONAL AGREEMENTS 37
8.1 Registration Statement;Proxy Statement;Shareholder Approval 37
8.2 Exchange Listing 37
8.3 Applications 38
8.4 Filings with State Offices 38
8.5 Agreement as to Efforts to Consummate 38
8.6 Investigation and Confidentiality 38
8.7 Press Releases 39
8.8 Certain Actions 39
8.9 Accounting and Tax Treatment 39
48
8.10 State Takeover Laws 39
8.11 Charter Provisions 39
8.12 Agreements of Affiliates 40
8.13 Employee Benefits and Contracts 40
8.14 Indemnification 40
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE 42
9.1 Conditions to Obligations of Each Party 42
9.2 Conditions to Obligations of Savannah 44
9.3 Conditions to Obligations of Xxxxx 44
ARTICLE 10 - TERMINATION 45
10.1 Termination 45
10.2 Effect of Termination 46
10.3 Non-Survival of Representations and Covenants 47
ARTICLE 11 - MISCELLANEOUS 47
11.1 Definitions 47
11.2 Expenses 55
11.3 Brokers and Finders 58
11.4 Entire Agreement 58
11.5 Amendments 58
11.6 Waivers 59
11.7 Assignment 59
11.8 Notices 59
11.9 Governing Law 60
1.10 Counterparts 60
11.11 Captions; Articles and Sections 60
11.12 Interpretations 61
11.13 Enforcement of Agreement 61
11.14 Severability 61
SIGNATURES 61
LIST OF EXHIBITS
Exhibit Number Description
1. Form of Xxxxx Stock Option Agreement. (SS 1.4).
2. Form of Savannah Stock Option Agreement. (SS 1.4).
3. Form of Directors' Agreement. (SS 5.23).
4. Form of agreement of affiliates of Xxxxx. (SS 8.12, 9.2(d)).
5. Form of Employment Agreements with E. Xxxxx Xxxxxxx and
Xxxxxx Xxxxxxx Xxxx, Jr.
Page: 2
[A&B1]Sections 1.4, 6.8 and 11.2(b) through (d) of this Agreement illustrate
various "lock-up" or "bust-up" techniques, including a "lock-up" option,
"no-shop" covenant and termination provision, and expense reimbursement. These
may be thought of as a "Chinese menu" and there should be no implication that
all (or any) of these should (or may prudently) be used on a single transaction.
This is an area that requires careful consideration. Where decision is made to
use a "lock-up" provision, current interpretation of Delaware law requires an
express "fiduciary out" for directors to respond to alternative offers,
including (in the view of some) an express right to terminate the Agreement to
go with another transaction. Termination in order to go with another transaction
may entitle AC to compensation. See Section 11.2(d).
- 3 -
AD980300.210
49
EXHIBIT 1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of February 11, 1998, by and between Xxxxx Bancorp of Georgia, Inc., a
Georgia corporation ("Issuer"), and The Savannah Bancorp, Inc., a Georgia
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Merger, dated as of February 11, 1998 (the "Merger Agreement"),
providing for, among other things, the merger of Issuer with and into Grantee,
with Grantee as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed,
to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 100,098 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, $1.00 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to the product of 1.85 and the
closing price per share of the common stock of Grantee on February 11, 1998, as
reported on Nasdaq.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of its agreements or
covenants contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, Holder may exercise the Option, in whole
or in part, at any time and from time to time following the occurrence of a
Purchase Event; provided that the Option shall terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time, (B)
termination of the Merger Agreement in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Merger Agreement by Grantee pursuant to Section
10.1(b) (but only if such termination was a result of a willful breach by
Issuer) or Section 10.1(c) thereof or by Grantee and Issuer pursuant to Section
10.1(a) thereof if Grantee shall at that time have been entitled to terminate
the Merger Agreement pursuant to Section 10.1(b) (but only if such termination
was a result of a willful breach by Issuer) or Section 10.1(c) thereof (each a
"Default Termination")), (C) 12 months after a Default Termination (provided,
that if, within 12 months after such termination of the Merger Agreement, a
Purchase Event or a Preliminary Purchase Event shall occur, then notwithstanding
anything to the contrary contained herein (including clause (D) of this
sentence), this Option shall terminate 12 months after the first occurrence of
such an event), and (D) 12 months after any termination of the Merger Agreement
(other than a Default Termination) following the occurrence of a Purchase Event
or a Preliminary Purchase Event; provided further, that any purchase of shares
upon exercise of the Option shall be subject to compliance with applicable law.
The term "Holder" shall mean the holder or holders of the Option from time to
time, and which initially is the Grantee. The rights set forth in Section 8
50
shall terminate when the right to exercise the Option terminates (other than as
a result of a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any person
(other than Grantee or any Subsidiary of Grantee) to effect an Acquisition
Transaction (as defined below). As used herein, the term Acquisition Transaction
shall mean (A) a merger, consolidation or similar transaction involving Issuer
or any of its Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.1 of the Merger
Agreement, the disposition, by sale, lease, exchange or otherwise, of Assets of
Issuer or any of its Subsidiaries representing in either case 25% or more of the
consolidated assets of Issuer and its Subsidiaries, or (C) the issuance, sale or
other disposition of (including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 25% or more of the voting
power of Issuer or any of its Subsidiaries (any of the foregoing, an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act), other than a group of which Grantee or any of its Subsidiaries of
Grantee is a member, shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 25% or more of the then-outstanding
shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the Securities
Act with respect to, a tender offer or exchange offer to purchase any shares of
Issuer Common Stock such that, upon consummation of such offer, such person
would own or control 25% or more of the then-outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have been held
or shall have been canceled prior to termination of the Merger Agreement, or
Issuer's Board of Directors shall have withdrawn or modified in a manner adverse
to Grantee the recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Grantee or any
Subsidiary of Grantee) shall have (A) made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction, (B) commenced a Tender Offer
or filed a registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any federal or state statute or regulation (including
a notice filed under the HSR Act) seeking the Consent to an Acquisition
Transaction from any federal or state governmental or regulatory authority or
agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the Notice
Date for the closing (the "Closing") of such purchase (the "Closing Date"). If
prior Consent of any governmental or regulatory agency or authority is required
51
in connection with such purchase, Issuer shall cooperate with Holder in the
filing of the required notice or application for such Consent and the obtaining
of such Consent and the Closing shall occur immediately following receipt of
such Consents (and expiration of any mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to
the contrary, in no event shall:
(i) Holder's (taking into account all other Holders) Total
Profit (as defined below) exceed $2,000,000 and, if it otherwise would exceed
such amount, Holder, at its sole election, shall either (A) reduce the number of
shares of Issuer Common Stock subject to the Option, (B) deliver to Issuer for
cancellation without consideration Option Shares previously purchased by Holder,
(C) pay cash to Issuer, or (D) any combination of the foregoing, so that
Holder's actually realized Total Profit (together with the Total Profit realized
by all other Holders) shall not exceed $2,000,000 after taking into account the
foregoing actions; and
(ii) the Option be exercised for a number of shares of Issuer
Common Stock as would, as of the date of exercise, result in Holder's (taking
into account all other Holders) Notional Total Profit (as defined below) of more
than $2,000,000; provided, that nothing in this clause (ii) shall restrict any
exercise of the Option permitted hereby on any subsequent date.
As used in this Agreement, the term "Total Profit" shall mean the
aggregate sum (prior to the payment of taxes) of the following: (i) the amount
received by Holder pursuant to Issuer's repurchase of the Option (or any portion
thereof) pursuant to Section 8; (ii) (x) the amount received by Holder pursuant
to Issuer's repurchase of Option Shares pursuant to Section 8, less (y) Holder's
purchase price for such Option Shares; (iii) (x) the net cash amounts received
by Holder pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
person, less (y) Holder's purchase price of such Option Shares; and (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with
respect to any number of shares of Issuer Common Stock as to which Holder may
propose to exercise the Option shall be the Total Profit determined as of the
date of such proposed exercise, assuming that the Option were exercised on such
date for such number of shares and assuming that such shares, together with all
other Option Shares held by Holder and its affiliates as of such date, were sold
for cash at the closing sale price per share of Issuer Common Stock as quoted on
the Nasdaq National Market (or, if Issuer Common Stock is not then quoted on the
Nasdaq National Market, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such shares are traded
as reported by a recognized source chosen by Holder) as of the close of business
on the preceding trading day (less customary brokerage commissions).
The provisions of this Section 3(e) shall apply to any Substitute
Option (as defined below).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
52
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY __, 1998. A COPY
OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
5. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due exercise of
the Option, including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid, and nonassessable, and
shall be delivered free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever, including any preemptive rights
of any stockholder of Issuer.
6. Representations and Warrants of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Laws.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by
53
reason of a stock dividend, stock split, split-up, recapitalization,
combination, exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a)), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement:
(i) to consolidate with or merge into any person, other than Grantee or one of
its Subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger; (ii) to permit any person, other than Grantee or
one of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company; or (iii) to sell or
otherwise transfer all or substantially all of its Assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Holder, of either (x) the
Acquiring Corporation (as defined below), (y) any person that controls the
Acquiring Corporation, or (z) in the case of a merger described in clause (ii),
the Issuer (in each case, such person being referred to as the "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Holder. The Substitute Option Issuer shall
also enter into an agreement with each Holder of the Substitute Option in
substantially the same form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (y) Issuer in a merger in which Issuer is the continuing or surviving
person, and (z) the transferee of all or any substantial part of the Issuer's
assets (or the Assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
having the greatest voting rights to be issued by the Substitute Option Issuer
upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price
54
per share of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee or any Subsidiary of
Grantee), (y) the price per share of the Issuer Common Stock to be paid by any
person (other than Grantee or any Subsidiary of Grantee) pursuant to an
agreement with Issuer, and (z) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if Issuer Common
Stock is not quoted on the Nasdaq National Market, the highest bid price per
share on any day as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) within the six-month period immediately preceding the
agreement; provided, that in the event of a sale of less than all of Issuer's
assets, the Assigned Value shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm selected by Holder
(or by a majority in interest of the Holders if there shall be more than one
Holder (a "Holder Majority")), divided by the number of shares of the Issuer
Common Stock outstanding at the time of such sale. In the event that an exchange
offer is made for the Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the value of
the securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized investment
banking firm mutually selected by Holder and Issuer (or if applicable, Acquiring
Corporation), provided that if a mutual selection cannot be made as to such
investment banking firm, it shall be selected by Holder. (If there shall be more
than one Holder, any such selection shall be made by a Holder Majority.)
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merger person, as Holder may
elect.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make a
cash payment to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Holder (or a Holder Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9 and 10 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to Section 3(e) and the last sentence of Section
3(a), at the request of Holder at any time commencing upon the first occurrence
55
of a Purchase Event and ending 12 months immediately thereafter, Issuer shall
repurchase from Holder the Option and all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired by Holder pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in the
case of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Holder for each share of Issuer
Common Stock with respect to which the Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied by the number
of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or Consent of any governmental or regulatory
agency or authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 8, in whole or
in part, or to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for Consent and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
Consent). If any governmental or regulatory agency or authority disapproves of
any part of Issuer's proposed repurchase pursuant to this Section 8, Issuer
shall promptly give notice of such fact to Holder. If any governmental or
regulatory agency or authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the sum of the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been repurchased. Holder
shall notify Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the repurchase.
(c) For purposes of this Agreement, the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section 8(d)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 60 business days preceding the
56
Request Date; provided, however, that in the event of a sale of less than all of
Issuer's Assets, the Applicable Price shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by an independent nationally recognized investment banking
firm selected by Holder and reasonably acceptable to Issuer (which determination
shall be conclusive for all purposes of this Agreement), divided by the number
of shares of the Issuer Common Stock outstanding at the time of such sale. If
the consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Holder and reasonably acceptable
to Issuer, which determination shall be conclusive for all purposes of this
Agreement.
9. Registration Rights.
(a) Following termination of the Merger Agreement, Issuer
shall, subject to the conditions of subparagraph (c) below, if requested by any
Holder, including Grantee and any permitted transferee ("Selling Holder"), as
expeditiously as possible prepare and file a registration statement under the
Securities Laws if necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Selling Holder upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Holder in such request, including, without limitation, a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision,
and Issuer shall use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) If Issuer at any time after the exercise of the Option
proposes to register any shares of Issuer Common Stock under the Securities Laws
in connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to not cause any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registrations of resales;
provided, further, that such election pursuant to clause (i) may only be made
two times. If some but not all the shares of Issuer Common Stock, with respect
to which Issuer shall have received requests for registration pursuant to this
subparagraph (b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Selling Holders and any
other person (other than Issuer or any person exercising demand registration
rights in connection with such registration) who or which is permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subparagraph (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided, that
Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided Issuer shall
in good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subparagraph (a) above:
(i) prior to the earliest of (a) termination of the Merger
Agreement pursuant to Section 10.1 thereof, (b) failure to obtain the requisite
stockholder approval pursuant to Section 9.1(a) of the Merger Agreement, and (c)
a Purchase Event or a Preliminary Purchase Event;
(ii) on more than two occasions;
57
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of Option Shares
then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration statement after the
expiration of nine months from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings, and take
all steps, under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares, provided,
that Issuer shall not be required to consent to general jurisdiction or qualify
to do business in any state where it is not otherwise required to so consent to
such jurisdiction or to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and xpenses (including the fees and expenses
of counsel), accounting expenses, legal expenses including the reasonable fees
and expenses of one counsel to the Selling Holders, printing expenses, expenses
of underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by Selling Holders) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b) above.
Underwriting discounts and commissions relating to Option Shares, fees and
disbursements of counsel to the Selling Holders and any other expenses incurred
by such Selling Holders in connection with any such registration shall be borne
by such Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission,
or alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Holder, or by such underwriter, as the case may be,
for all such expenses, losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
58
of any liability which it may otherwise have to any indemnified party under this
subparagraph (e). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party shall
be entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party falls to assume the defense
of such action with counsel' satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subparagraph
(e) is unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein, then
the indemnifying party, in lieu of indemnifying such party otherwise entitled to
be indemnified, shall contribute to the amount paid or payable by such party to
be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, all selling shareholders and the underwriters from
the offering of the securities and also the relative fault of Issuer, all
selling shareholders and the underwriters in connection with the statements or
omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The amount
paid or payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, that in no case shall
any Selling Holder be responsible, in the aggregate, for any amount in excess of
the net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
In connection with any registration pursuant to
subparagraph (a) or (b) above, Issuer and each Selling Holder (other than
Grantee) shall enter into an agreement containing the indemnification provisions
of this subparagraph (e).
(f) Issuer shall comply with all reporting requirements and
will do all such other things as may be necessary to permit the expeditious sale
at any time of any Option Shares by Holder in accordance with and to the extent
permitted by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rules 144 and 144A. Issuer shall at its expense
provide Holder with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Laws, or required pursuant to any state securities laws or the rules
of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other securities
to be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the Nasdaq National Market or any other securities exchange or
any automated quotations system maintained by a self-regulatory organization and
will use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
59
11. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 10, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This Agreement,
together with the Merger Agreement and the other documents and instruments
referred to herein and therein, between Grantee and Issuer (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (b) is not intended to confer upon any person other than the parties hereto
(other than any transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to Section 12(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or a federal or state governmental or regulatory
agency or authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
If for any reason such court or regulatory agency determines that the Option
does not permit Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to allow
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Georgia without regard to
any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Merger
Agreement(or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
60
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: XXXXX BANCORP OF GEORGIA, INC.
By:.____________________ By: ___________________________
[CORPORATE SEAL]
ATTEST: THE SAVANNAH BANCORP, INC.
By:.____________________ By: ___________________________
[CORPORATE SEAL]
- 6 -
AD980400.314
61
EXHIBIT 2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of February 11, 1998, by and between The Savannah Bancorp, Inc., a Georgia
corporation ("Issuer"), and Xxxxx Bancorp of Georgia, Inc., a Georgia
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Merger, dated as of February 11, 1998 (the "Merger Agreement"),
providing for, among other things, the merger of Grantee with and into Issuer,
with Issuer as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed,
to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 340,200 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, $1.00 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to the closing price per share
of the common stock of Grantee on February 11, 1998, as reported on Nasdaq.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of its agreements or
covenants contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, Holder may exercise the Option, in whole
or in part, at any time and from time to time following the occurrence of a
Purchase Event; provided that the Option shall terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time, (B)
termination of the Merger Agreement in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Merger Agreement by Grantee pursuant to Section
10.1(b) (but only if such termination was a result of a willful breach by
Issuer) or Section 10.1 (c) thereof or by Grantee and Issuer pursuant
to Section 10.1(a) thereof if Grantee shall at that time have been entitled to
terminate the Merger Agreement pursuant to Section 10.1(b) (but only if such
termination was a result of a willful breach by Issuer) or Section 10.1(c)
thereof (each a "Default Termination")), (C) 12 months after a Default
Termination (provided, that if, within 12 months after such termination of the
Merger Agreement, a Purchase Event or a Preliminary Purchase Event shall occur,
then notwithstanding anything to the contrary contained herein (including clause
(D) of this sentence), this Option shall terminate 12 months after the first
occurrence of such an event), and (D) 12 months after any termination of the
Merger Agreement (other than a Default Termination) following the occurrence of
a Purchase Event or a Preliminary Purchase Event; provided further, that any
purchase of shares upon exercise of the Option shall be subject to compliance
with applicable law. The term "Holder" shall mean the holder or holders of the
Option from time to time, and which initially is the Grantee. The rights set
forth in Section 8 shall terminate when the right to exercise the Option
62
terminates (other than as a result of a complete exercise of the Option) as set
forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any person
(other than Grantee or any Subsidiary of Grantee) to effect an Acquisition
Transaction (as defined below). As used herein, the term Acquisition Transaction
shall mean (A) a merger, consolidation or similar transaction involving Issuer
or any of its Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.1 of the Merger
Agreement, the disposition, by sale, lease, exchange or otherwise, of Assets of
Issuer or any of its Subsidiaries representing in either case 25% or more of the
consolidated assets of Issuer and its Subsidiaries, or (C) the issuance, sale or
other disposition of (including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 25% or more of the voting
power of Issuer or any of its Subsidiaries (any of the foregoing, an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act), other than a group of which Grantee or any of its Subsidiaries of
Grantee is a member, shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 25% or more of the then-outstanding
shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any Subsidiary of Grantee) shall have
commenced (as such term is defined in Rule 14d-2 under the Exchange Act), or
shall have filed a registration statement under the Securities Act with respect
to, a tender offer or exchange offer to purchase any shares of Issuer Common
Stock such that, upon consummation of such offer, such person would own or
control 25% or more of the then-outstanding shares of Issuer Common Stock (such
an offer being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have been held
or shall have been canceled prior to termination of the Merger Agreement, or
Issuer's Board of Directors shall have withdrawn or modified in a manner adverse
to Grantee the recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Grantee or any
Subsidiary of Grantee) shall have (A) made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction, (B) commenced a Tender Offer
or filed a registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any federal or state statute or regulation (including
a notice filed under the HSR Act) seeking the Consent to an Acquisition
Transaction from any federal or state governmental or regulatory authority or
agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the Notice
Date for the closing (the "Closing") of such purchase (the "Closing Date"). If
prior Consent of any governmental or regulatory agency or authority is required
in connection with such purchase, Issuer shall cooperate with Holder in the
63
filing of the required notice or application for such Consent and the obtaining
of such Consent and the Closing shall occur immediately following receipt of
such Consents (and expiration of any mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to
the contrary, in no event shall:
(i) Holder's (taking into account all other Holders) Total
Profit (as defined below) exceed $2,000,000 and, if it otherwise would exceed
such amount, Holder, at its sole election, shall either (A) reduce the number of
shares of Issuer Common Stock subject to the Option, (B) deliver to Issuer for
cancellation without consideration Option Shares previously purchased by Holder,
(C) pay cash to Issuer, or (D) any combination of the foregoing, so that
Holder's actually realized Total Profit (together with the Total Profit realized
by all other Holders) shall not exceed $2,000,000 after taking into account the
foregoing actions; and
(ii) the Option be exercised for a number of shares of Issuer Common Stock
as would, as of the date of exercise, result in Holder's (taking into account
all other Holders) Notional Total Profit (as defined below) of more than
$2,000,000; provided, that nothing in this xxxxx (ii) shall restrict any
exercise of the Option permitted hereby on any subsequent date.
As used in this Agreement, the term "Total Profit" shall mean the
aggregate sum (prior to the payment of taxes) of the following: (i) the amount
received by Holder pursuant to Issuer's repurchase of the Option (or any portion
thereof) pursuant to Section 8; (ii) (x) the amount received by Holder pursuant
to Issuer's repurchase of Option Shares pursuant to Section 8, less (y) Holder's
purchase price for such Option Shares; (iii) (x) the net cash amounts received
by Holder pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
person, less (y) Holder's purchase price of such Option Shares; and (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with
respect to any number of shares of Issuer Common Stock as to which Holder may
propose to exercise the Option shall be the Total Profit determined as of the
date of such proposed exercise, assuming that the Option were exercised on such
date for such number of shares and assuming that such shares, together with all
other Option Shares held by Holder and its affiliates as of such date, were sold
for cash at the closing sale price per share of Issuer Common Stock as quoted on
the Nasdaq National Market (or, if Issuer Common Stock is not then quoted on the
Nasdaq National Market, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such shares are traded
as reported by a recognized source chosen by Holder) as of the close of business
on the preceding trading day (less customary brokerage commissions).
The provisions of this Section 3(e) shall apply to any Substitute
Option (as defined below).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
64
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY __, 1998. A COPY
OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
5. Representations and Warranties o Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due exercise of
the Option, including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid, and nonassessable, and
shall be delivered free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever, including any preemptive rights
of any stockholder of Issuer.
6. Representations and Warrants of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Laws.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by
65
reason of a stock dividend, stock split, split-up, recapitalization,
combination, exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a)), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement:
(i) to consolidate with or merge into any person, other than Grantee or one of
its Subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger; (ii) to permit any person, other than Grantee or
one of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company; or (iii) to sell or
otherwise transfer all or substantially all of its Assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Holder, of either (x) the
Acquiring Corporation (as defined below), (y) any person that controls the
Acquiring Corporation, or (z) in the case of a merger described in clause (ii),
the Issuer (in each case, such person being referred to as the "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Holder. The Substitute Option Issuer shall
also enter into an agreement with each Holder of the Substitute Option in
substantially the same form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (y) Issuer in a merger in which Issuer is the continuing or surviving
person, and (z) the transferee of all or any substantial part of the Issuer's
assets (or the Assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
having the greatest voting rights to be issued by the Substitute Option Issuer
upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price
66
per share of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee or any Subsidiary of
Grantee), (y) the price per share of the Issuer Common Stock to be paid by any
person (other than Grantee or any Subsidiary of Grantee) pursuant to an
agreement with Issuer, and (z) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if Issuer Common
Stock is not quoted on the Nasdaq National Market, the highest bid price per
share on any day as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source
chosen by Holder) within the six-month period immediately preceding the
agreement; provided, that in the event of a sale of less than all of Issuer's
assets, the Assigned Value shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm selected by Holder
(or by a majority in interest of the Holders if there shall be more than one
Holder (a "Holder Majority")), divided by the number of shares of the Issuer
Common Stock outstanding at the time of such sale. In the event that an exchange
offer is made for the Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the value of
the securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized investment
banking firm mutually selected by Holder and Issuer (or if applicable, Acquiring
Corporation), provided that if a mutual selection cannot be made as to such
investment banking firm, it shall be selected by Holder. (If there shall be more
than one Holder, any such selection shall be made by a Holder Majority.)
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merger person, as Holder may
elect.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make a
cash payment to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Holder (or a Holder Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9 and 10 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to Section 3(e) and the last sentence of Section
3(a), at the request of Holder at any time commencing upon the first occurrence
67
of a Purchase Event and ending 12 months immediately thereafter, Issuer shall
repurchase from Holder the Option and all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired by Holder pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in the
case of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Holder for each share of Issuer
Common Stock with respect to which the Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied by the number
of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or Consent of any governmental or regulatory
agency or authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 8, in whole or
in part, or to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for Consent and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
Consent). If any governmental or regulatory agency or authority disapproves of
any part of Issuer's proposed repurchase pursuant to this Section 8, Issuer
shall promptly give notice of such fact to Holder. If any governmental or
regulatory agency or authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the sum of the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been repurchased. Holder
shall notify Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the repurchase.
(c) For purposes of this Agreement , the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section 8(d)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 60 business days preceding the
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Request Date; provided, however, that in the event of a sale of less than all of
Issuer's Assets, the Applicable Price shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by an independent nationally recognized investment banking
firm selected by Holder and reasonably acceptable to Issuer (which determination
shall be conclusive for all purposes of this Agreement), divided by the number
of shares of the Issuer Common Stock outstanding at the time of such sale. If
the consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Holder and reasonably acceptable
to Issuer, which determination shall be conclusive for all purposes of this
Agreement.
9. Registration Rights.
(a) Following termination of the Merger Agreement, Issuer
shall, subject to the conditions of subparagraph (c) below, if requested by any
Holder, including Grantee and any permitted transferee ("Selling Holder"), as
expeditiously as possible prepare and file a registration statement under the
Securities Laws if necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Selling Holder upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Holder in such request, including, without limitation, a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision,
and Issuer shall use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) If Issuer at any time after the exercise of the Option
proposes to register any shares of Issuer Common Stock under the Securities Laws
in connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to not cause any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registrations of resales;
provided, further, that such election pursuant to clause (i) may only be made
two times. If some but not all the shares of Issuer Common Stock, with respect
to which Issuer shall have received requests for registration pursuant to this
subparagraph (b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Selling Holders and any
other person (other than Issuer or any person exercising demand registration
rights in connection with such registration) who or which is permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subparagraph (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided, that
Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided Issuer shall
in good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subparagraph (a) above:
(i) prior to the earliest of (a) termination of the Merger
Agreement pursuant to Section 10.1 thereof, (b) failure to obtain the requisite
stockholder approval pursuant to Section 9.1(a) of the Merger Agreement, and (c)
a Purchase Event or a Preliminary Purchase Event;
(ii) on more than two occasions;
69
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of Option Shares
then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration statement after the
expiration of nine months from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings, and take
all steps, under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares, provided,
that Issuer shall not be required to consent to general jurisdiction or qualify
to do business in any state where it is not otherwise required to so consent to
such jurisdiction or to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and xpenses (including the fees and expenses
of counsel), accounting expenses, legal expenses including the reasonable fees
and expenses of one counsel to the Selling Holders, printing expenses, expenses
of underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by Selling Holders) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b) above.
Underwriting discounts and commissions relating to Option Shares, fees and
disbursements of counsel to the Selling Holders and any other expenses incurred
by such Selling Holders in connection with any such registration shall be borne
by such Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission,
or alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Holder, or by such underwriter, as the case may be,
for all such expenses, losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
subparagraph (e). In case notice of commencement of any such action shall be
70
given to the indemnifying party as above provided, the indemnifying party shall
be entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying arty either
agrees to pay the same, (ii) the indemnifying party falls to assume the defense
of such action with counsel' satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subparagraph
(e) is unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein, then
the indemnifying party, in lieu of indemnifying such party otherwise entitled to
be indemnified, shall contribute to the amount paid or payable by such party to
be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, all selling shareholders and the underwriters from
the offering of the securities and also the relative fault of Issuer, all
selling shareholders and the underwriters in connection with the statements or
omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The amount
paid or payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, that in no case shall
any Selling Holder be responsible, in the aggregate, for any amount in excess of
the net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
In connection with any registration pursuant to
subparagraph (a) or (b) above, Issuer and each Selling Holder (other than
Grantee) shall enter into an agreement containing the indemnification provisions
of this subparagraph (e).
(f) Issuer shall comply with all reporting requirements and
will do all such other things as may be necessary to permit the expeditious sale
at any time of any Option Shares by Holder in accordance with and to the extent
permitted by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rules 144 and 144A. Issuer shall at its expense
provide Holder with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Laws, or required pursuant to any state securities laws or the rules
of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are then authorized for
quotation or trading or listing on the Nasdaq National Market or any other
securities exchange or any automated quotations system maintained by a
self-regulatory organization, Issuer, upon the request of Holder, will promptly
file an application, if required, to authorize for quotation or trading or
listing the shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the Nasdaq National Market or any other
securities exchange or any automated quotations system maintained by a
self-regulatory organization and will use its best efforts to obtain approval,
if required, of such quotation or listing as soon as practicable.
71
11. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 10, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary;
Severability. This Agreement, together with the Merger Agreement and the other
documents and instruments referred to herein and therein, between Grantee and
Issuer (a) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof and (b) is not intended to confer upon any person
other than the parties hereto (other than any transferees of the Option Shares
or any permitted transferee of this Agreement pursuant to Section 12(h)) any
rights or remedies hereunder. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or a federal or
state governmental or regulatory agency or authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Holder to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided in Sections 3 and 8 (as adjusted pursuant to Section
7), it is the express intention of Issuer to allow Holder to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Georgia without regard to
any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Merger
Agreement(or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
72
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: THE SAVANNAH BANCORP, INC.
By:.____________________ By: ___________________________
[CORPORATE SEAL]
ATTEST: XXXXX BANCORP OF GEORGIA, INC.
By:.____________________ By: ___________________________
[CORPORATE SEAL]
- 6 -
AD980410.274
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EXHIBIT 3
DIRECTOR'S AGREEMENT
THIS DIRECTOR'S AGREEMENT ("Agreement") is made and entered
into as of the 11th day of February, 1998, by and between the undersigned,
______________, a resident of __________, Georgia, and The Savannah Bancorp,
Inc., a corporation organized and existing under the laws of the State of
Georgia ("Savannah").
On even date herewith, Savannah and Xxxxx Bancorp of Georgia,
Inc., a corporation organized and existing under the laws of the State of
Georgia ("Xxxxx"), have entered into an Agreement and Plan of Merger (the
"Merger Agreement"). The Merger Agreement generally provides for the merger of
Xxxxx with and into Savannah ("Merger"), and the conversion of the issued and
outstanding shares of the $1.00 par value common stock of Xxxxx ("Xxxxx Common
Stock") into shares of the $1.00 par value common stock of Savannah. The
transactions contemplated by the Merger Agreement are subject to the affirmative
vote of the shareholders of Xxxxx, the affirmative vote of the shareholders of
Savannah, the receipt of certain regulatory approvals and the satisfaction of
other conditions.
The undersigned is a member of the Board of Directors of Xxxxx
and is the owner of _________ shares of Xxxxx Common Stock and has rights by
option or otherwise to acquire _________ additional shares of Xxxxx Common Stock
("Shares"). In order to induce Savannah to enter into the Merger Agreement, the
undersigned is entering into this Agreement with Savannah to set forth certain
terms and conditions governing the actions to be taken by the undersigned with
respect to the Shares until consummation of the Merger.
NOW, THEREFORE, in consideration of the transactions
contemplated by the Merger Agreement and the mutual promises and covenants
contained herein, the parties agree as follows:
1. Without the prior written consent of Savannah, the
undersigned shall not transfer, sell, assign, convey or encumber any of the
Shares during the term of this Agreement except to Savannah pursuant to the
terms of the Merger Agreement. Without limiting the generality of the foregoing,
the undersigned shall not grant to any party any option or right to purchase the
Shares or any interest therein. Further, except with respect to the Merger, the
undersigned shall not approve or ratify any agreement or contract pursuant to
which the Shares would be transferred to any other party as a result of a
consolidation, merger, reorganization or acquisition.
2. The undersigned intends to, and will, vote all of the
Shares beneficially owned by him (and with respect to which he has sole voting
power) in favor of the Merger. The undersigned will also recommend that the
shareholders of Xxxxx approve the Merger when the same is presented to the
shareholders for consideration in properly prepared proxy materials, subject
only to the undersigned's legal obligations (if any) as a director of Xxxxx, and
will use his or her best efforts to effect consummation of the Merger and the
other transactions contemplated by the Merger Agreement . Further, the
undersigned intends to, and will, surrender the certificate or certificates
representing his or her Shares which are beneficially owned by him (and with
respect to which he has sole dispositive power) to Savannah upon consummation of
the Merger as described in the Merger Agreement.
3. The undersigned covenants and agrees with Savannah that for
a period of two years after the effective time of the Merger, the undersigned
shall not, without the prior written consent of Savannah, directly or indirectly
serve as a consultant to, serve as a management official of, or be or become a
major shareholder of any financial institution having an office in Xxxxx County,
Georgia or Chatham County, Georgia. It is expressly understood that the
covenants contained in this paragraph 4 do not apply to (i) "management
official" positions which the undersigned holds with financial institutions
other than Xxxxx and its subsidiary as of the date of this Agreement, (ii)
securities holdings which cause the undersigned to be deemed a major shareholder
74
of a financial institution, other than Xxxxx and its subsidiary, as of the date
of this Agreement, or (iii) advisory relationships with a financial institution
which the undersigned has as of the date of this Agreement or may have after the
date hereof solely in the capacity as legal counsel. For the purposes of the
covenants contained in this paragraph 4, the following terms shall have the
following respective meanings:
(a) The term "management official" shall refer to service of
any type which gives the undersigned the authority to participate, directly or
indirectly, in policy-making functions of the financial institution. This
includes, but is not limited to, service as an organizer, officer, director, or
advisory director of the financial institution. It is expressly understood that
the undersigned may be deemed a management official of the financial
institution, whether or not he holds any official, elected, or appointed
position with such financial institution.
(b) The term "financial institution" shall refer to any bank
or savings association which engages in the business of accepting deposits or
which owns or controls a company which engages in the business of accepting
deposits.
(c) The term "major shareholder" shall refer to the beneficial
ownership of 2% or more of any class of voting securities of such company or the
ownership of 2% of the total equity interest in such company, however
denominated.
In the case of an undersigned who is as of the date of this Agreement an officer
or director of Xxxxx, the provisions of this paragraph 3 shall be of no further
force and effect if the undersigned is not offered employment as an officer or
director of Savannah or any of its subsidiaries at the effective time of the
Merger or, if the undersigned is so employed, the undersigned's employment is
involuntarily terminated by Savannah after the effective time of the Merger
other than for cause.
4. The undersigned acknowledges and agrees that Savannah could
not be made whole by monetary damages in the event of any default by the
undersigned of the terms and conditions set forth in this Agreement. It is
accordingly agreed and understood that Savannah in addition to any other remedy
which it may have at law or in equity, shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and specifically to enforce
the terms and provisions hereof in any action instituted in any court of the
United States or in any state having appropriate jurisdiction.
5. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
6. Except with respect to the covenants contained in paragraph
3, which shall be governed by the terms set forth therein and shall be effective
only upon consummation of the Merger, the covenants and obligations set forth in
this Agreement shall expire and be of no further force and effect on the later
of September 30, 1998, or the date upon which the Board of Directors of Xxxxx
shall have the right to terminate the Merger Agreement and the transactions
contemplated thereby if the Merger is not consummated by such date.
IN WITNESS WHEREOF, this Agreement has been duly executed
under seal and delivered by the undersigned as of the day and year first above
written.
As to the Undersigned, signed in the presence of:
________________________ _______________________________(SEAL)
Name:__________________________
(Please print or type)
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ATTEST: THE SAVANNAH BANCORP, INC.
By:______________________ By:_____________________________________
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
- 3 -
AD980330.100
76
EXHIBIT 4
AFFILIATE AGREEMENT
The Savannah Bancorp, Inc.
00 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
President and Chief Executive Officer
Gentlemen:
The undersigned is a shareholder of Xxxxx Bancorp of Georgia, Inc.
("Xxxxx"), a corporation organized and existing under the laws of the State of
Georgia, and will become a shareholder of The Savannah Bancorp, Inc.
("Savannah"), a corporation organized and existing under the laws of the State
of Georgia, pursuant to the transactions described in the Agreement and Plan of
Merger, dated as of February 11, 1998 (the "Agreement"), by and between Savannah
and Xxxxx. Under the terms of the Agreement, Xxxxx will be merged into and with
Savannah (the "Merger"), and the shares of the $1.00 par value common stock of
Xxxxx ("Xxxxx Common Stock") will be converted into and exchanged for shares of
the $1.00 par value common stock of Savannah ("Savannah Common Stock"). This
Affiliate Agreement represents an agreement between the undersigned and Savannah
regarding certain rights and obligations of the undersigned in connection with
the shares of Savannah to be received by the undersigned as a result of the
Merger.
In consideration of the Merger and the mutual covenants contained
herein, the undersigned and Savannah hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
Xxxxx he is an "affiliate" under Rule 145(c) as defined in Rule 405 of the Rules
and Regulations of the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended ("1933 Act"), and the undersigned anticipates
that he will be such an "affiliate" at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees that he
will not sell, transfer, or otherwise dispose of his interests in, or reduce his
risk relative to, any of the shares of Savannah Common Stock into which his
shares of Xxxxx Common Stock are converted upon consummation of the Merger until
such time as Savannah notifies the undersigned that the requirements of SEC
Accounting Series Release Nos. 130 and 135 ("ASR 130 and 135") have been met.
The undersigned understands that ASR 130 and 135 relate to publication of
financial results of post-Merger combined operations of Savannah and Xxxxx.
Savannah agrees that it will publish such results within 45 days after the end
of the first fiscal quarter of Savannah containing the required period of
post-Merger combined operations and that it will notify the undersigned promptly
following such publication.
3. Covenants and Warranties of Undersigned.The undersigned represents,
warrants and agrees that:
(a) The Savannah Common Stock received by the undersigned as a result
of the Merger will be taken for his own account and not for others, directly or
indirectly, in whole or in part.
(b) Savannah has informed the undersigned that any distribution by the
undersigned of Savannah Common Stock has not been registered under the 1933 Act
and that shares of Savannah Common Stock received pursuant to the Merger can
only be sold by the undersigned (1) following registration under the 1933 Act,
or (2) in conformity with the volume and other requirements of Rule 145(d)
promulgated by the SEC as the same now exist or may hereafter be amended, or (3)
77
to the extent some other exemption from registration under the 1933 Act might be
available. The undersigned understands that Savannah is under no obligation to
file a registration statement with the SEC covering the disposition of the
undersigned's shares of Savannah Common Stock or to take any other action
necessary to make compliance with an exemption from such registration available.
(c) The undersigned will, and will cause each of the other parties
whose shares are deemed to be beneficially owned by the undersigned pursuant to
Section 8 hereof to, have all shares of Xxxxx Common Stock beneficially owned by
the undersigned registered in the name of the undersigned or such parties, as
applicable, prior to the effective date of the Merger and not in the name of any
bank, broker-dealer, nominee or clearinghouse.
(d) During the 30 days immediately preceding the Effective Time of the
Merger, the undersigned will not sell, transfer, or otherwise dispose of his
interests in, or reduce his risk relative to, any of the shares of Xxxxx Common
Stock beneficially owned by the undersigned as of the record date for
determination of shareholders entitled to vote at the Shareholders' Meeting of
Xxxxx held to approve the Merger.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of Savannah Common
Stock received by the undersigned pursuant to the Merger will be given to
Savannah's Transfer Agent and that there will be placed on the certificates for
such shares, or shares issued in substitution thereof, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a business
combination which is accounted for as a "pooling of interests" and may not be
sold, nor may the owner thereof reduce his risks relative thereto in any way,
until such time as The Savannah Bancorp, Inc. ("Savannah") has published the
financial results covering at least 30 days of combined operations after the
effective date of the merger through which the business combination was
effected. In addition, the shares represented by this certificate may not be
sold, transferred or otherwise disposed of except or unless (1) covered by an
effective registration statement under the Securities Act of 1933, as amended,
(2) in accordance with (i) Rule 145(d) (in the case of shares issued to an
individual who is not an affiliate of Savannah) or (ii) Rule 144 (in the case of
shares issued to an individual who is an affiliate of Savannah) of the Rules and
Regulations of such Act, or (3) in accordance with a legal opinion satisfactory
to counsel for Savannah that such sale or transfer is otherwise exempt from the
registration requirements of such Act."
Such legend will also be placed on any certificate representing Savannah
securities issued subsequent to the original issuance of the Savannah Common
Stock pursuant to the Merger as a result of any transfer of such shares or any
stock dividend, stock split, or other recapitalization as long as the Savannah
Common Stock issued to the undersigned pursuant to the Merger has not been
transferred in such manner to justify the removal of the legend therefrom. Upon
the request of the undersigned, Savannah shall cause the certificates
representing the shares of Savannah Common Stock issued to the undersigned in
connection with the Merger to be reissued free of any legend relating to
restrictions on transfer by virtue of ASR 130 and 135 as soon as practicable
after the requirements of ASR 130 and 135 have been met. In addition, if the
provisions of Rules 144 and 145 are amended to eliminate restrictions applicable
to the Savannah Common Stock received by the undersigned pursuant to the Merger,
or at the expiration of the restrictive period set forth in Rule 145(d),
Savannah, upon the request of the undersigned, will cause the certificates
representing the shares of Savannah Common Stock issued to the undersigned in
connection with the Merger to be reissued free of any legend relating to the
restrictions set forth in Rules 144 and 145(d) upon receipt by Savannah of an
opinion of its counsel to the effect that such legend may be removed.
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his ability to sell, transfer, or otherwise dispose
of the shares of Savannah Common Stock received by the undersigned, to the
extent he believes necessary, with his counsel or counsel for Xxxxx.
6. Filing of Reports by Savannah. Savannah agrees, for a period of
78
three years after the effective date of the Merger, to file on a timely basis
all reports required to be filed by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, so that the public information provisions of
Rule 145(d) promulgated by the SEC as the same are presently in effect will be
available to the undersigned in the event the undersigned desires to transfer
any shares of Savannah Common Stock issued to the undersigned pursuant to the
Merger.
7. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of Savannah Common Stock received by him in
connection with the Merger at any time during the restrictive period set forth
in Rule 145(d), the undersigned will provide the necessary representation letter
to the transfer agent for Savannah Common Stock together with such additional
information as the transfer agent may reasonably request. If Savannah's counsel
concludes that such proposed sale or transfer complies with the requirements of
Rule 145(d), Savannah shall cause such counsel to provide such opinions as may
be necessary to Savannah's Transfer Agent so that the undersigned may complete
the proposed sale or transfer.
8. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to all shares of the capital stock of Xxxxx and
Savannah that are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws, which the undersigned agrees may include,
without limitation, shares owned or held in the name of (i) the undersigned's
spouse, (ii) any relative of the undersigned or of the undersigned's spouse who
has the same home as the undersigned, (iii) any trust or estate in which the
undersigned, the undersigned's spouse, and any such relative collectively own at
least a 10% beneficial interest or of which any of the foregoing serves as
trustee, executor, or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, the undersigned's spouse and any such
relative collectively own at least 10% of any class of equity securities or of
the equity interest. The undersigned further recognizes that, in the event that
the undersigned is a director or officer of Savannah or becomes a director or
officer of Savannah upon consummation of the Merger, among other things, any
sale of Savannah Common Stock by the undersigned within a period of less than
six months following the effective time of the Merger may subject the
undersigned to liability pursuant to Section 16(b) of the Securities Exchange
Act of 1934, as amended.
9. Miscellaneous. This Affiliate Agreement is the complete agreement
between Savannah and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by registered or
certified mail, return receipt requested, using the addresses set forth herein
or such other address as shall be furnished in writing by the parties. This
Affiliate Agreement shall be governed by the laws of the State of
Georgia/Georgia.
This Affiliate Agreement is executed as of the ____ day of February,
1998.
Very truly yours,
---------------------------
Signature
---------------------------
Print Name
---------------------------
---------------------------
---------------------------
Address
[add below the signatures of all registered owners
of shares deemed beneficially owned by the affiliate]
---------------------------
Name:
79
---------------------------
Name:
---------------------------
Name:
AGREED TO AND ACCEPTED as of
February __, 1998
THE SAVANNAH BANCORP, INC.
By:_________________________
- 5 -
AD980330.104
80
"Executive"
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
____________________, 1998, by and between XXXXX BANK & TRUST, a Georgia state
Bank (the "Bank") and SAVANNAH BANCORP, INC. ("Savannah") (Bank and Savannah
collectively referred to as "Employers"), and E. XXXXX XXXXXXX, a resident of
the State of Georgia (the "Executive").
WHEREAS, Savannah, a Georgia corporation, has acquired all of the equity
interest of Bank by means of a merger (the "Merger") pursuant to an Agreement
and Plan of Merger between Savannah and Xxxxx Bancorp, Inc. dated as of February
___, 1998 (the "Merger Agreement");
WHEREAS, the Executive was the President and Chief Executive Officer of the
Bank and desires to continue as the President of the Bank and Vice Chairman of
the Board of Directors of Savannah;
WHEREAS, the Employers desire that the Executive serve in such
capacities; and
WHEREAS, the Employers and the Executive, in conjunction with and pursuant
to the terms of the Merger Agreement, desire to set forth in writing the terms
and conditions of the Executive's Employment.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Employment and Duties.
(a)The Employers hereby agree to employ the Executive and Executive agrees
to serve as the President of the Bank and Vice Chairman of the Board of Savannah
and to act in accordance with the terms and conditions set forth herein. During
the term of this Agreement, the Executive agrees that he will serve the Bank
faithfully and to the best of his ability and that he will devote his full
business time, attention and skills to the operation of the business of the
Employers, subject to reasonable absences for vacation and illness, and that he
will perform such duties, unctions and responsibilities in connection with such
position and consistent with the foregoing as are from time to time delegated to
the Executive by the Boards of Directors of the Employers (the "Boards") or the
CEO of Savannah; provided, however, that the foregoing shall not be deemed to
restrict the Executive from devoting a reasonable amount of time and attention
to the management of his personal affairs and investments, so long as such
activities do not interfere with the responsible performance of the Executive's
duties hereunder. The Executive shall provide the Boards and the CEO of Savannah
with periodic reports on, and keep it informed on a current basis concerning,
the business and affairs of the Bank.
81
(b)The Bank shall provide the Executive with a private office, secretarial
and administrative assistance, office equipment, supplies and other facilities
and services suitable to the Executive's position to be located at 0000 Xxxx
Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxx or at a comparable location within Xxxxx County,
Georgia.
2.Term. The term ("Term") of this Agreement shall commence on the date
hereof and shall continue until the first anniversary of the date hereof unless
earlier terminated pursuant to Section 4 hereof.
3.Compensation. In consideration of the services to be rendered by the
Executive to the Employers hereunder, the Employers hereby agree to pay or
otherwise provide the Executive the following compensation and benefits, it
being understood that the Bank shall have the right to deduct therefrom all
taxes which may be required to be deducted or withheld under any provision of
applicable law (including, without limitation, Social Security payments, income
tax withholding and other required deductions now in effect or which may become
effective by law any time during the Term):
(a)Salary. The Executive shall receive an annual salary of ("Salary") from
the Bank of $90,000.00 to be paid in equal installments in accordance with the
Bank's salary payment practices in effect from time to time for executives of
the Bank. The Bank may consider and declare from time to time increases in the
Salary.
(b)Compensation Pursuant to Plans. During the Term, the Executive shall be
included as a participant in all present and future employee benefit, retirement
and compensation plans generally available to employees of the Bank, consistent
with his Salary and his position with the Employers.
(c)Expenses. The Executive shall be entitled to receive reimbursement for
all reasonable expenses incurred by him in connection with the fulfillment of
his duties hereunder. Upon receipt of appropriate vouchers therefor, provided
that the Executive has complied with all reasonable policies and procedures
relating to the reimbursement of such expenses as shall, from time to time, be
established by the Bank.
(d)Vacation and Perquisites. For so long as the Executive is employed by
the Bank hereunder, the Executive shall be entitled to such paid vacation, sick
leave and such perquisites as are provided to other executive officers of
Savannah's banking subsidiaries.
(e)Change in Control Agreement. Employers, by executing this Agreement,
assume the obligations of Xxxxx Bancorp of Georgia, Inc. under the Change in
Control Agreement with Executive dated May 22, 1996 ("Agreement"). Executive, by
executing this Agreement, agrees to waive any rights under the Agreement to
payments resulting from the merger between Savannah and Xxxxx Bancorp of
Georgia, Inc. and agrees to accept the benefits of this Agreement in full
payment in lieu of rights under the Agreement, except in the event of a Change
in Control of Savannah.
82
(f)Stock Options. To the extent not exercised, Savannah agrees to assume
the Stock Option Agreement granting options to purchase 16,000 shares of Bryan
Bancorp stock to E. James Burnsed at a price of $9.93 per share for 4,000
shares, $10.66 per share for 4,000 shares, $11.75 per share for 4,000 shares,
and $10.65 per share for 4,000 shares, pursuant to the terms of the Merger
Agreement between Savannah and Bryan Bancorp of Georgia, Inc. Savannah further
agrees to grant to Executive pursuant to the Savannah Incentive Stock Option
Plan options to purchase 10,000 shares of Savannah stock at market price on the
same terms and conditions as other Savannah executives.
(g)Life Insurance. Employers agrees to provide for Executive life
insurance in addition to life insurance provided in the benefit package
described in paragraph (b) above necessary to increase the total life insurance
provided by Employers to total $575,000; provided however, the additional
premium to increase theinsurance above that otherwise provided in the standard
employee benefit package shall not exceed $2,000.
(h)Automobile. Executive, during his employment, shall have the use of the
vehicle now in his possession and all expenses relating to the operation of the
vehicle until December 31, 2000 and thereafter shall have the same automobile
privileges as other executives of Savannah's banking subsidiaries and on
December 31, 2000, Executive shall have the right to purchase the vehicle now in
his possession at the depreciated book value that the vehicle is shown on the
books of Bryan Bank & Trust on said date.
(i)Cash Incentive Plan. Savannah agrees for the term of this Agreement and
for any extended term of this Agreement to provide Executive with a cash
incentive payable under the same terms and conditions as were payable under
Bryan Bank & Trust Officer's Cash Incentive Plan in effect at the time of
execution of the definitive agreement.
4. Termination.
(a)This Agreement shall terminate on the earliest to occur of the first
anniversary of the date hereof or the occurrence of any of the following events:
(i) the mutual agreement of the Employees and the Executive; (ii) the death or
Disability (as hereinafter defined) of the Executive or Executive's voluntary
retirement; or (iii) immediate upon either of Employers giving written notice to
the Executive of termination for Cause (as defined herein).
(b)The Bank may terminate the Executive's employment under this Agreement
at any time for Cause. The termination shall be evidenced by written notice to
the Executive, which shall specify the cause for termination. "Cause" shall
exist if: (i) the Executive is convicted of (from which no appeal may be taken),
or pleads guilty to, any act of fraud, misappropriation or embezzlement, or any
felony; (ii) in the reasonable determination of the Boards of Employers, the
Executive has engaged in conduct or activity materially damaging to the business
of the Employers (it being understood however, that unintentional physical
damage to any property of the Employers by the Executive shall not be a ground
for such a determination by the Board); or (iii) the Executive has failed,
83
without reasonable cause, to devote his full business time and best efforts to
the business of the Bank as provided in Section 1(a) hereof and, after written
notice from the Bank of such failure, the Executive at any time thereafter again
so fails.
(c)The Executive may terminate his employment under this Agreement at any
time for Good Reason. For purposes of this Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of duties or responsibilities which are
materially inconsistent with the responsibilities of an executive officer
holding the office of the Executive; (ii) a material breach by the Bank of any
of the material provisions of this Agreement; (iii) reduction of Executive's
salary or benefits; or (iv) Employers requiring the Executive to be based at any
place outside a fifty mile radius from Richmond Hill, Georgia, except for
reasonably required travel on the Employers' business.
(d)In the event that the Executive's employment hereunder is terminated
during the initial term or any extended term of this Agreement by Executive for
reason of Good Cause or by the Employers other than for Cause, the Executive
shall be entitled to receive the Salary, health insurance benefits, and life
insurance benefits provided under this Agreement for a period of one year after
the date of such termination. For purposes of this Agreement, "Disability" shall
mean the absence of the Executive from the Executive's duties hereunder on a
full-time basis for 120 consecutive business days (or such shorter period as
will suffice for the Executive to qualify for full disability benefits under the
applicable disability insurance policy or policies of the Employers) as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Employers or its insurers and
reasonably acceptable to the Executive or the Executive's legal representative.
5. Representations and Warranties.
(a)The Executive represents and warrants to the Employers that: (i) he has
the full power and authority to execute, deliver and perform this Agreement and
that he has taken all actions necessary to secure all approvals required in
connection herewith; (ii) this Agreement has been duly authorized, executed and
delivered by him and constitutes his valid and binding agreement, enforceable
against him in accordance with its terms; and (iii) the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, any
material mortgage, lien, leases, agreement, instrument, order, arbitration
award, judgment or decree to which he is a party or by which he or any of his
assets are bound.
(b)the Employers hereby represent and warrant to the Executive that: (i)
this Agreement has been duly authorized, executed and delivered by it and
constitutes the valid and binding agreement of it, enforceable against it in
accordance with its terms; (ii) it has the full power and authority to execute,
deliver and perform this Agreement and has taken all necessary action to secure
all approvals required in connection herewith; and (iii) the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
84
or entitle any party to accelerate any obligation under or pursuant to, its
charter or bylaws or any material mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which it is a party or by which
it or any of its assets are bound.
6.Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and deemed to have been given when delivered
in person or when dispatched by telegram or electronic facsimile transfer
(confirmed in writing by mail, registered or certified, return receipt
requested, postage prepaid, simultaneously dispatched) to the addresses
specified below.
If to the Executive:E. James Burnsed
Bryan Bank & Trust
9971 Ford Avenue
Richmond Hill, GA 31224
Facsimile No.: (912) 756-4617
If to the EmployersSavannah Bancorp, Inc.
25 Bull Street
Savannah, GA 31401
Facsimile No.: (912) 651-4141
Attention: President
or to such other address or fax number as either party may from time to time
designate in writing to the other.
7.Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same. No modification, alteration, amendment or rescission of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by both parties hereto.
8.Governing Law. This Agreement and the rights and duties of the parties
hereunder shall be governed by, construed under and enforced in accordance with
the laws of the State of Georgia.
9.Assignment. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and permitted assigns. The rights, duties and obligations under this
Agreement are assignable by the Employers to a successor of all or substantially
all of the business or assets of the Employers. The rights, duties and
obligations of the Executive under this Agreement shall not be assignable.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
delivered, and the Executive has executed and delivered this Agreement, all as
of the day and year first above written.
SAVANNAH BANCORP, INC.
BY:________________________________
Its:_____________________________
85
BRYAN BANK & TRUST
BY:________________________________
Its:_____________________________
"Employers"
_____________________________(SEAL)
E. JAMES BURNSED
86
"Executive"
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
____________________, 1998, by and between BRYAN BANK & TRUST, a Georgia state
Bank (the "Bank") and SAVANNAH BANCORP, INC. ("Savannah) (Bank and Savannah
collectively referred to as "Employers"), and GEORGE MICHAEL ODOM, JR., a
resident of the State of Georgia (the "Executive").
WHEREAS, Savannah, a Georgia corporation, has acquired all of the equity
interest of Bank by means of a merger (the "Merger") pursuant to an Agreement
and Plan of Merger between Savannah and Bryan Bancorp, Inc. dated as of February
___, 1998 (the "Merger Agreement");
WHEREAS, the Executive was the Executive Vice President of the Bank and
desires to continue as the Executive Vice President of the Bank;
WHEREAS, the Employers desire that the Executive serve in such
capacities; and
WHEREAS, the Employers and the Executive, in conjunction with and pursuant
to the terms of the Merger Agreement, desire to set forth in writing the terms
and conditions of the Executive's Employment.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Employment and Duties.
(a)The Employers hereby agree to employ the Executive and Executive agrees
to serve as the Executive Vice President of the Bank and to act in accordance
with the terms and conditions set forth herein. During the term of this
Agreement, the Executive agrees that he will serve the Bank faithfully and to
the best of his ability and that he will devote his full business time,
attention and skills to the operation of the business of the Employers, subject
to reasonable absences for vacation and illness, and that he will perform such
duties, functions and responsibilities in connection with such position and
consistent with the foregoing as are from time to time delegated to the
Executive by the Boards of Directors of the Employers (the "Boards") or the CEO
of the Bank; provided, however, that the foregoing shall not be deemed to
restrict the Executive from devoting a reasonable amount of time and attention
to the management of his personal affairs and investments, so long as such
activities do not interfere with the responsible performance of the Executive's
duties hereunder. The Executive shall provide the Boards and the CEO of the Bank
with periodic reports on, and keep it informed on a current basis concerning,
the business and affairs of the Bank.
87
(b)The Bank shall provide the Executive with a private office, secretarial
and administrative assistance, office equipment, supplies and other facilities
and services suitable to the Executive's position to be located at 9971 Ford
Avenue, Richmond Hill, Georgia or at a comparable location within Bryan County,
Georgia.
2.Term. The term ("Term") of this Agreement shall commence on the date
hereof and shall continue until the first anniversary of the date hereof unless
earlier terminated pursuant to Section 4 hereof.
3.Compensation. In consideration of the services to be rendered by the
Executive to the Employers hereunder, the Employers hereby agree to pay or
otherwise provide the Executive the following compensation and benefits, it
being understood that the Bank shall have the right to deduct therefrom all
taxes which may be required to be deducted or withheld under any provision of
applicable law (including, without limitation, Social Security payments, income
tax withholding and other required deductions now in effect or which may become
effective by law any time during the Term):
(a)Salary. The Executive shall receive an annual salary of ("Salary") from
the Bank of $80,000.00 to be paid in equal installments in accordance with the
Bank's salary payment practices in effect from time to time for executives of
the Bank. The Bank may consider and declare from time to time increases in the
Salary.
(b)Compensation Pursuant to Plans. During the Term, the Executive shall be
included as a participant in all present and future employee benefit, and
retirement plans generally available to employees of the Bank, consistent with
his Salary and his position with the Employers.
(c)Expenses. The Executive shall be entitled to receive reimbursement for
all reasonable expenses incurred by him in connection with the fulfillment of
his duties hereunder. Upon receipt of appropriate vouchers therefor, provided
that the Executive has complied with all reasonable policies and procedures
relating to the reimbursement of such expenses as shall, from time to time, be
established by the Bank.
(d)Vacation and Perquisites. For so long as the Executive is employed by
the Bank hereunder, the Executive shall be entitled to such paid vacation, sick
leave and such perquisites as are provided to other executive officers of
Savannah's banking subsidiaries.
(e)Change in Control Agreement. Employers, by executing this Agreement,
assume the obligations of Bryan Bancorp of Georgia, Inc. under the Change in
Control Agreement with Executive dated May 22, 1996 ("Agreement"). Executive, by
executing this Agreement, agrees to waive any rights under the Agreement to
payments resulting from the merger between Savannah and Bryan Bancorp of
Georgia, Inc. and agrees to accept the benefits of this Agreement in full
payment in lieu of rights under the Agreement, except in the event of a Change
in Control of Savannah.
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(f)Stock Options. Savannah agrees to assume the Stock Option Agreement
granting options to purchase 5,000 shares of Bryan Bancorp stock to George
Michael Odom, Jr. at a price of $19.00 a share under the 1997 Incentive Stock
Option Plan of Bryan Bancorp of Georgia, Inc., pursuant to the terms of the
Merger Agreement between Savannah and Bryan Bancorp of Georgia, Inc. Savannah
further agrees to assume the Stock Option Agreement pursuant to the Bryan
Bancorp of Georgia, Inc. 1997 Incentive Stock Option Plan dated February 10,
1998 granting to Executive the option to purchase 2,500 shares at a price of
$47.17 per share.
(g)Life Insurance. Employers agrees to provide for Executive life
insurance in addition to life insurance provided in the benefit package
described in paragraph (b) above necessary to increase the total life insurance
provided by Employers to total $450,000; provided however, the additional
premium to increase the insurance above that otherwise provided in the standard
employee benefit package shall not exceed $1,500.
(h)Automobile. Executive, during his employment, shall have the use of the
Ford Explorer vehicle now in his possession and all expenses relating to the
operation of the vehicle until December 31, 2000 and thereafter shall have the
same automobile privileges as other executives of Savannah's banking
subsidiaries and on December 31, 2000, Executive shall have the right to
purchase the Ford Explorer at the depreciated book value that the vehicle is
shown on the books of Bryan Bank & Trust on said date.
(i)Cash Incentive Plan. Savannah agrees for the term of this Agreement and
for any extended term of this Agreement to provide Executive with a cash
incentive payable under the same terms and conditions as were payable under
Bryan Bank & Trust Officer's Cash Incentive Plan in effect at the time of
execution of the definitive agreement.
4. Termination.
(a)This Agreement shall terminate on the earliest to occur of the first
anniversary of the date hereof or the occurrence of any of the following events:
(i) the mutual agreement of the Employees and the Executive; (ii) the death or
Disability (as hereinafter defined) of the Executive or Executive's voluntary
retirement; or (iii) immediate upon either of Employers giving written notice to
the Executive of termination for Cause (as defined herein).
(b)The Bank may terminate the Executive's employment under this Agreement
at any time for Cause. The termination shall be evidenced by written notice to
the Executive, which shall specify the cause for termination. "Cause" shall
exist if: (i) the Executive is convicted of (from which no appeal may be taken),
or pleads guilty to, any act of fraud, misappropriation or embezzlement, or any
felony; (ii) in the reasonable determination of the Boards of Employers, the
Executive has engaged in conduct or activity materially damaging to the business
of the Employers (it being understood however, that unintentional physical
damage to any property of the Employers by the Executive shall not be a ground
for such a determination by the Board); or (iii) the Executive has failed,
without reasonable cause, to devote his full business time and best efforts to
the business of the Bank as provided in Section 1(a) hereof and, after written
notice from the Bank of such failure, the Executive at any time thereafter again
so fails.
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(c)The Executive may terminate his employment under this Agreement at any
time for Good Reason. For purposes of this Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of duties or responsibilities which are
materially inconsistent with the responsibilities of an executive officer
holding the office of the Executive; (ii) a material breach by the Bank of any
of the material provisions of this Agreement; (iii) reduction of Executive's
salary or benefits; or (iv) Employers requiring the Executive to be based at any
place outside a fifty mile radius from Richmond Hill, Georgia, except for
reasonably required travel on the Employers' business.
(d)In the event that the Executive's employment hereunder is terminated
during the initial term or any extended term of this Agreement by Executive for
reason of Good Cause or by the Employers other than for Cause, the Executive
shall be entitled to receive the Salary, health insurance benefits, and life
insurance benefits provided under this Agreement for a period of one year after
the date of such termination. For purposes of this Agreement, "Disability" shall
mean the absence of the Executive from the Executive's duties hereunder on a
full-time basis for 120 consecutive business days (or such shorter period as
will suffice for the Executive to qualify for full disability benefits under the
applicable disability insurance policy or policies of the Employers) as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Employers or its insurers and
reasonably acceptable to the Executive or the Executive's legal representative.
5. Representations and Warranties.
(a)The Executive represents and warrants to the Employers that: (i) he has
the full power and authority to execute, deliver and perform this Agreement and
that he has taken all actions necessary to secure all approvals required in
connection herewith; (ii) this Agreement has been duly authorized, executed and
delivered by him and constitutes his valid and binding agreement, enforceable
against him in accordance with its terms; and (iii) the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, any
material mortgage, lien, leases, agreement, instrument, order, arbitration
award, judgment or decree to which he is a party or by which he or any of his
assets are bound.
(b)the Employers hereby represent and warrant to the Executive that: (i)
this Agreement has been duly authorized, executed and delivered by it and
constitutes the valid and binding agreement of it, enforceable against it in
accordance with its terms; (ii) it has the full power and authority to execute,
deliver and perform this Agreement and has taken all necessary action to secure
all approvals required in connection herewith; and (iii) the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or default under,
result in the loss of any material benefit under, or permit the acceleration of
or entitle any party to accelerate any obligation under or pursuant to, its
charter or bylaws or any material mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which it is a party or by which
it or any of its assets are bound.
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6.Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and deemed to have been given when delivered
in person or when dispatched by telegram or electronic facsimile transfer
(confirmed in writing by mail, registered or certified, return receipt
requested, postage prepaid, simultaneously dispatched) to the addresses
specified below.
If to the Executive:George Michael Odom, Jr.
Bryan Bank & Trust
9971 Ford Avenue
Richmond Hill, GA 31224
Facsimile No.: (912) 756-4617
If to the EmployersSavannah Bancorp, Inc.
25 Bull Street
Savannah, GA 31401
Facsimile No.: (912) 651-4141
Attention: President
or to such other address or fax number as either party may from time to time
designate in writing to the other.
7.Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same. No modification, alteration, amendment or rescission of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by both parties hereto.
8.Governing Law. This Agreement and the rights and duties of the parties
hereunder shall be governed by, construed under and enforced in accordance with
the laws of the State of Georgia.
9.Assignment. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and permitted assigns. The rights, duties and obligations under this
Agreement are assignable by the Employers to a successor of all or substantially
all of the business or assets of the Employers. The rights, duties and
obligations of the Executive under this Agreement shall not be assignable.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
delivered, and the Executive has executed and delivered this Agreement, all as
of the day and year first above written.
SAVANNAH BANCORP, INC.
BY:________________________________
Its:_____________________________
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BRYAN BANK & TRUST
BY:________________________________
Its:_____________________________
"Employers"
_____________________________(SEAL)
GEORGE MICHAEL ODOM, JR.
"Executive"
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