Form of Letter Agreement
Exhibit
10.1
Form
of Letter Agreement
,
2006
Community
Banks, Inc.
CommunityBanks
000
Xxxx Xxxx Xxxxx
Xxxxxxxxxx,
XX 00000
Attn.:
President and CEO
Dear
Xx. Xxxxxxxxxxxx:
Community
Banks, Inc. (“CMTY”), CommunityBanks (“Community” and, together with CMTY, the
“Community Parties”) and East Prospect State Bank (“East Prospect”) are
considering entering into an Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which, and subject to the terms and conditions set
forth therein: (a) Community will acquire East Prospect by a merger of East
Prospect with and into Community; and (b) shareholders of East Prospect
will receive shares of CMTY common stock and/or cash in exchange for their
shares of East Prospect common stock owned on the closing date (collectively,
the “Transactions”).
I
have been advised that I may be deemed to be an “affiliate” of East Prospect for
purposes of certain rules issued by the Securities and Exchange Commission
(the
“SEC”) under the Securities Act of 1933.
I
understand that the Community Parties are requiring, as a condition to their
execution and delivery to East Prospect of the Agreement, that I execute and
deliver to the Community Parties this Letter Agreement. Intending to be legally
bound hereby, I irrevocably agree and represent as follows:
1.
I agree to vote or cause to be voted for approval of the Merger Agreement all
shares of East Prospect common stock over which I exercise sole or shared voting
power as of the record date of the East Prospect shareholder meeting at which
the Merger Agreement will be presented for approval.
2.
Through the conclusion of the Transactions, I agree not to offer, sell, transfer
or otherwise dispose of, or to permit the offer, sale, transfer or other
disposition of, any shares of East Prospect common stock over which I exercise
sole or shared voting power.
3.
I have sole or shared voting power over the number of shares of East Prospect
common stock set forth below opposite my signature line. The Community Parties
recognize that with respect to any such shares which have been pledged to a
third party (which are specifically identified below), I will not be able to
control the voting or disposition of such shares in the event of a
default.
4.
I agree not to offer, sell, transfer or otherwise dispose of any shares of
CMTY
common stock received pursuant to the Transactions, except:
(a) at
such time as a registration statement under the Securities Act of 1933, as
amended (“Securities Act”), covering sales of such CMTY common stock is
effective and a prospectus is made available under the Securities
Act;
(b) within
the limits, and in accordance with the applicable provisions of, Rule 145
under the Securities Act (“Rule 145”); or
(c) in
a transaction which, in an opinion of counsel satisfactory to CMTY or as
described in a “no-action” or interpretive letter from the staff of the SEC (a
“No Action Letter”), is not required to be registered under the Securities
Act;
5.
I acknowledge and agree that CMTY is under no obligation to register the sale,
transfer or other disposition of CMTY common stock by me or on my behalf, or
to
take any other action necessary to make an exemption from registration
available.
6.
CMTY shall take all steps necessary to ensure that CMTY is in compliance with
all those requirements of Rule 145 and Rule 144 with which CMTY must comply
in order for the resale provisions of Rule 145(d) to be available to
me.
7.
I agree that CMTY shall not be bound by any attempted sale of any shares of
CMTY
common stock acquired by me pursuant to the Transactions, and CMTY’s transfer
agent shall be given appropriate stop transfer orders and shall not be required
to register any such attempted sale, unless the sale has been effected in
compliance with the terms of this Letter Agreement; and I further agree that
the
certificate representing shares of CMTY common stock acquired by me pursuant
to
the Transactions by me may be endorsed with a restrictive legend consistent
with
the terms of this Letter Agreement, stating in substance as
follows:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH
RULE 145 APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY WITH RULE
145(d), OR (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (C) IN ACCORDANCE WITH A WRITTEN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE,
THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933,
AS AMENDED.”
The
undersigned understands and hereby further acknowledges that the legend set
forth above will be removed from any such certificate (by delivery of a
substitute certificate without such legend) and CMTY will instruct its transfer
agent to remove such legend from any such certificate, if the undersigned
delivers to CMTY (i) satisfactory written evidence that the shares of CMTY
common stock represented by any such certificate have been sold in compliance
with Rule 145(d) (as such rule may be hereafter amended) (in which case, the
substitute certificate will be issued in the name of the transferee), (ii)
a No
Action Letter, or (iii) an opinion of counsel, in form and substance
reasonably satisfactory to CMTY, to the effect that public sale of shares
represented by such certificate by the holder thereof is no longer subject
to
the restrictions imposed by Rule 145.
8.
I represent that I have no present plan or intention to offer, sell, exchange,
or otherwise dispose of any shares of CMTY common stock to be received in the
Transactions.
9.
I represent that I have the capacity to enter into this Letter Agreement and
that it is a valid and binding obligation enforceable against me in accordance
with its terms, subject to bankruptcy, insolvency and other laws affecting
creditors’ rights and general equitable principles.
I
am signing this Letter Agreement in my capacity as a shareholder of East
Prospect and not in any other capacity (including as a director). This Letter
Agreement shall be effective upon acceptance by the Community Parties.
Execution
of this Agreement by the undersigned is not an admission by the undersigned
that
he is an “affiliate” for purposes of the Rule 145 of the Securities
Act.
This
Letter Agreement shall terminate concurrently with, and automatically upon,
any
termination of the Merger Agreement in accordance with its terms, except that
any such termination shall be without prejudice to the rights of the Community
Parties arising out of any willful breach of any covenant or representation
contained herein.
Very truly yours,
_____________________________________
Name:
__________________________________
Witness
Number
of shares held:
Sole
voting power: _______
Shared
voting power: _______
Number
of pledged
shares:
_______
|
Accepted:
Community
Banks, Inc.
By:_________________________________________
Name:
Xxxxx X. Xxxxxxxxxxxx, Chairman, President and CEO
|
Accepted:
CommunityBanks
By:_______________________________
Name:
Xxxxx X. Xxxxxxxxxxxx, President and
CEO
|
