EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF DECEMBER 27, 1999
BY AND AMONG
NATIONAL COMMERCE BANCORPORATION
AND
PIEDMONT BANCORP, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
dated as of this 27th day of December, 1999, by and among NATIONAL COMMERCE
BANCORPORATION ("NCBC"), a Tennessee corporation which is registered as a bank
holding company under the Bank Holding Company Act of 1956 and whose principal
offices are located at Xxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, and
PIEDMONT BANCORP, INC. ("PBI"), a North Carolina corporation which is registered
as a bank holding company and whose principal offices are located at 000 Xx.
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxx Xxxxxxxx. XXXX and PBI are sometimes
hereinafter called the "Parties."
Certain other capitalized terms used in this Agreement and in
the related plan of Merger are defined below in Section 10.1.
A. PBI is the beneficial owner and holder of record of one
hundred percent (100%) of the issued and outstanding shares of capital stock of
Hillsborough Savings Bank, Inc., SSB (the "Savings Bank Subsidiary").
B. The Board of Directors of PBI deems it desirable and in the
best interests of PBI, the Savings Bank Subsidiary and the shareholders of PBI
that PBI be merged with and into NCBC, which would survive the merger as the
Surviving Corporation, as defined herein (the "Merger"), on the terms and
subject to the conditions set forth in this Agreement and in the manner provided
in the Plan of Merger annexed hereto as Exhibit 1 (the "Plan of Merger") and has
directed that this Agreement and the Plan of Merger be submitted to the
shareholders of PBI with the recommendation that they be approved by them.
C. The Board of Directors of NCBC deems it desirable and in
the best interests of NCBC and the shareholders of NCBC that PBI be merged with
and into NCBC on the terms and subject to the conditions set forth in this
Agreement and in the manner provided in the Plan of Merger.
D. The Parties intend that the Merger qualify as a
reorganization pursuant to Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code") and be accounted for as a pooling-of-interests for
financial accounting purposes.
E. The respective Boards of Directors of NCBC and PBI have
each adopted resolutions setting forth and adopting this Agreement and the Plan
of Merger, and have directed that this Agreement and the annexed Plan of Merger
and all resolutions adopted by said Boards of Directors related to this
Agreement, be submitted with appropriate applications to, and filed with all
applicable Regulatory Authority as may be necessary in order to obtain all
Consents required to consummate the proposed Merger and the transactions
contemplated in this Agreement in accordance with this Agreement, the Plan of
Merger and applicable law.
F. The respective boards of Directors of NCBC and PBI have
agreed to cause NCBC and PBI to enter into the stock option agreement annexed
hereto as Exhibit 2 (the "Stock Option Agreement") contemporaneously with the
signing of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual representations, warranties, covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
TERMS OF THE MERGER
1.1 Merger. Subject to the terms and conditions of this
Agreement and in the manner provided in the Plan of Merger, at the Effective
Time PBI shall be merged with and into NCBC in accordance with the provisions of
Section 55-11-01, et seq. of the North Carolina Business Corporation Act ("North
Carolina Code") and Section 00-00-000, et seq. of the Tennessee Business
Corporation Act (the "TBCA") and with the effect provided in Section 00-00-000
of the TBCA (the "Merger"). NCBC shall be the Surviving Corporation resulting
from the Merger and shall continue to be governed by the laws of the State of
Tennessee.
1.2 Time and Place of Closing. 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 may mutually agree. The Closing shall be held at the offices
of Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxx Xxxxxx,
Xxxxxxxxx 00000, or at such other place as the Parties may mutually agree.
1.3 Effective Time. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Articles of Merger reflecting the Merger shall have been filed with
both the Secretary of State of the State of North Carolina and the Secretary of
State of the State of Tennessee (the "Effective Time").
1.4 Charter. The Charter of NCBC in effect immediately prior
to the Effective Time shall be the Charter of the Surviving Corporation until
otherwise amended or repealed.
1.5 Bylaws. The Bylaws of NCBC in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
1.6 Name. The name of NCBC shall remain unchanged after the
Effective Time, unless and until otherwise renamed.
1.7 Directors and Officers. The directors and officers of NCBC
in office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected or appointed, shall serve as the directors
and officers of the Surviving Corporation from and after the Effective Time in
accordance with the Bylaws of the Surviving Corporation, unless and until their
successors shall have been elected or appointed and shall have qualified or
until they shall have been removed in the manner provided herein.
1.8 NCBC's Right to Revise the Structure of the Transaction.
NCBC shall have the unilateral right to revise the structure of the Merger in
order to achieve tax benefits or for any other reason which NCBC may deem
advisable; provided, however, that NCBC shall not have the right, without the
approval of the Board of Directors of PBI, to make any revision to the structure
of the Merger which (i) changes the amount, form or nature of the Consideration
which the PBI Record Holders are to receive as determined in the manner provided
in 2.1(b) of this Agreement; (ii) changes the intended tax-free effect of the
Merger to NCBC, PBI to any PBI Record Holder or (iii) adversely impacts the
rights or benefits of the officers, directors or employees of PBI. NCBC may
exercise this right of revision by giving written notice to PBI in the manner
provided in Section 10.9 of this Agreement, which notice shall be in the form of
an amendment to this Agreement and the Plan of Merger or in the form of an
Amended and Restated Agreement and Amended and Restated Plan of Merger.
ARTICLE 2
MANNER OF CONVERTING SHARES AND OPTIONS; EXCHANGE RATIO
2.1 Conversion; Cancellation and Exchange of Shares; Exchange
Ratio. At the Effective Time, by virtue of the Merger and without any action on
the part of NCBC, PBI, or the shareholders of any of the foregoing, the shares
of the constituent corporations shall be converted as follows:
(a) NCBC Capital Stock. Each share of NCBC Capital Stock,
including any attached rights to purchase NCBC capital stock, issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) PBI Common Stock. Each share of PBI Common Stock issued
and outstanding at the Effective Time shall cease to represent any interest
(equity, shareholder or otherwise) in PBI and shall automatically be converted
exclusively into, and constitute only the right of each PBI Record Holder to
receive in exchange for such Holder's shares of PBI Common Stock the
consideration to which the PBI Record Holder is entitled as provided in this
Section 2.1(b):
(i) The Exchange Ratio Calculation. Subject to any adjustments
which may be required by an event described in Subsection 2.1(b)(iii) below, at
and as of the Effective Time:
(A) Each share of the PBI Common Stock outstanding at
and as of the Effective Time shall be converted into the right
to receive that number of shares of NCBC Common Stock equal
to:
(I) The quotient of the Net Purchase Price (defined
below) divided by the NCBC "Market Price Per Share" as
defined hereinbelow,
divided by
(II) The sum of the number of shares of PBI Common
Stock outstanding at and as of the Effective Time and the
number of shares of PBI Common Stock issuable pursuant to
options to purchase PBI Common Stock to the extent that
such options are outstanding at and as of the Effective
Time.
Notwithstanding the provisions of subsection (A) above, if the
Market Price Per Share shall be less than $20.70, then each share of PBI Common
Stock outstanding at and as of the Effective Time shall be converted into the
right to receive .60499 shares of NCBC Common Stock, and if the Market Price Per
Share shall exceed $25.30, then each share of PBI Common Stock outstanding at
and as of the Effective Time shall be converted into the right to receive .49499
shares of NCBC Common Stock.
(B) "Net Purchase Price" shall be $34,500,000.
No share of PBI Common Stock shall be deemed to be
outstanding or have any rights other than those set forth
in this Section 2.1(b) after the Effective Time. No
fractional shares of NCBC Common Stock shall be issued in
the Merger and, if after aggregating all of the whole and
fractional shares of NCBC Common Stock to which a PBI
Record Holder shall be entitled based upon this Exchange
Ratio Calculation, there should be a fractional share of
NCBC Common Stock remaining, such fractional share shall
be settled by a cash payment therefor pursuant to Article
3 of this Agreement, which cash settlement shall be based
upon the Market Price Per Share (as defined below) of one
(1) full share of NCBC Common Stock.
(ii) Definition of "Market Price Per Share". The "Market Price
Per Share" shall be the average of the closing price per share of NCBC Common
Stock on the Nasdaq (as reported by The Wall Street Journal) on the five (5)
trading day period ending two (2) trading days prior to the Effective Time, or
such earlier date as may be required by the Securities and Exchange Commission.
(iii) Effect of Stock Splits, Reverse Stock Splits, Stock
Dividends and Similar Changes in the Capital of PBI. Should PBI effect any stock
splits, reverse stock splits, stock dividends or similar changes in its
respective capital accounts subsequent to the
date of this Agreement but prior to the Effective Time, the Exchange Ratio may,
in NCBC's sole discretion if such change in the capital accounts constitutes a
breach of any of PBI's representations, warranties or covenants, be adjusted in
such a manner as the Board of Directors of NCBC shall deem in good faith to be
fair and reasonable in order to give effect to such changes. Notwithstanding the
foregoing, nothing in this subparagraph (iii) shall be deemed to be a waiver of
the inaccuracy of any representation or warranty or breach of any covenant by
PBI set forth herein.
(c) Shares Held by PBI or NCBC. Each of the shares of PBI
Common Stock held by any PBI Company or by any NCBC Company, in each case other
than in a fiduciary capacity or as a result of debts previously contracted,
shall be cancelled and retired at the Effective Time and no Consideration shall
be issued in exchange therefor.
2.2 Conversion of Stock Options.
(a) At the Effective Time, all rights with respect to PBI
Common Stock pursuant to stock options ("PBI Options") granted by PBI under the
PBI Option Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to NCBC
Common Stock, and NCBC shall assume each PBI Option, in accordance with the
terms of the PBI Option Plan and stock option agreement by which it is
evidenced. From and after the Effective Time, (i) each PBI Option assumed by
NCBC may be exercised solely for shares of NCBC Common Stock, (ii) the number of
shares of NCBC Common Stock subject to such PBI Option shall be equal to the
number of shares of PBI Common Stock subject to such PBI Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, and (iii) the per
share exercise price under each such PBI Option shall be adjusted by dividing
the per share exercise price under each such PBI Option by the Exchange Ratio
and rounding down to the nearest cent. PBI agrees to take all necessary steps to
effectuate the foregoing provisions of this Section 2.2. Notwithstanding the
foregoing, each stock option which is an "incentive stock option" under the PBI
Option Plan shall be adjusted as required by Section 424 of the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations promulgated thereunder
so as to continue as an incentive stock option under Section 424 of the Code and
so as not to constitute a modification, extension or renewal of the option
within the meaning of Section 424(h) of the Code.
2.3 Restricted Stock. At the Effective Time, each share of PBI
Common Stock held by the trustees under the Hillsborough Savings Bank, Inc., SSB
Management Recognition Plan (the "MRP"), including unvested shares subject to
Awards as defined in the MRP heretofore granted to participants under the MRP,
shall be converted into and exchanged for NCBC Common Stock and cash in lieu of
fractional shares pursuant to the provisions of Section 3.1 below, and such
shares and cash shall thereafter be held to be delivered to the respective
participants pursuant to the MRP. At the Effective Time, the MRP and each stock
grant agreement pursuant to which Awards were granted shall remain in effect,
except that from and after the Effective Time the MRP and each such stock grant
agreement shall be amended as necessary to provide that: (i) NCBC shall be
substituted for the Savings Bank Subsidiary; (ii) the NCBC Board of Directors or
its Compensation Committee shall be substituted for the Committee of the Savings
Bank Subsidiary Board of Directors with respect to administration of the MRP;
(iii) unvested shares of NCBC Common Stock and cash determined in accordance
with the provisions of Section 3.1 below shall be substituted for unvested
shares of PBI Common Stock; (iv) no shares or other assets in addition to the
shares of PBI Common Stock currently awarded under the MRP shall be purchased by
or for the MRP; and (v) shares, cash or other interests in the MRP forfeited by
participants shall be retained by the Trustees and shall be available for making
additional Awards under the MRP.
2.4 ESOP. The parties acknowledge that the Hillsborough
Savings Bank, Inc. Employee Stock Ownership Plan will not be continued by NCBC
and that, as a result, in accordance with the terms of such Plan, such Plan will
terminate as a result of the Merger.
2.5 Anti-Dilution Provisions. In the event NCBC changes the
number of shares of NCBC Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or 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.
ARTICLE 3
EXCHANGE OF SHARES
3.1 Exchange Procedures. Promptly after the Effective Time,
NCBC and PBI shall cause the Exchange Agent to mail to the PBI Record Holders
appropriate transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of PBI Common Stock shall pass, only upon proper delivery of
such certificates to the Exchange Agent). The Exchange Agent may establish
reasonable and customary rules and procedures in connection with its duties.
After the Effective Time, each PBI Record Holder of PBI Common Stock (other than
shares to be cancelled pursuant to Section 2.1(c) of this Agreement) 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 2.1(b) of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 3.2 of this Agreement. To the extent required by Section 2.1(b) of this
Agreement, each PBI Record Holder also shall receive, upon surrender of the
certificate or certificates representing his or her shares of PBI Common Stock
outstanding immediately prior to the Effective Time, cash in lieu of any
fractional share of NCBC Common Stock to which such holder may be otherwise
entitled (without interest). NCBC shall not be obligated to deliver the
Consideration to which any PBI Record Holder is entitled as a result of the
Merger until such PBI Record Holder surrenders such holder's certificate or
certificates representing the shares of PBI Common Stock for exchange as
provided in this Section 3.1. The certificate or certificates of PBI Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may reasonably
require. Any other provision of this Agreement notwithstanding, neither NCBC nor
the Exchange Agent shall be liable to a PBI Record Holder for any amounts paid
or properly delivered in good faith to a public official pursuant to any
applicable abandoned property Law. Adoption of this Agreement by the
shareholders of PBI shall constitute ratification of the appointment of the
Exchange Agent.
3.2 Rights of Former PBI Record Holders. At the Effective
Time, the stock transfer books of PBI shall be closed as to holders of PBI
Common Stock outstanding immediately prior to the Effective Time, and no
transfer of PBI Common Stock by any PBI Record Holder shall thereafter be made
or recognized. Until surrendered for exchange in accordance with the provisions
of Section 3.1 of this Agreement, each certificate theretofore representing
shares of PBI Common Stock (other than shares to be cancelled pursuant to
Section 2.1(c) of this Agreement) shall from and after the Effective Time
represent for all purposes only the right to receive the Consideration provided
in Section 2.1(b) of this Agreement, 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 PBI in respect of such shares of PBI Common Stock in accordance with the
terms of this Agreement and which remain unpaid at the Effective Time. Whenever
a dividend or other distribution is declared by NCBC on the NCBC 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 NCBC Common
Stock issuable pursuant to this Agreement, but beginning sixty (60) days after
the Effective Time no dividend or other distribution payable to the holders of
record of NCBC Common Stock as of any time subsequent to the Effective Time
shall be delivered to a PBI Record Holder until such PBI Record Holder
surrenders his or her certificate or certificates evidencing PBI Common Stock
for exchange as provided in Section 3.1 of this Agreement. However, upon
surrender of such PBI Common Stock certificate, both the NCBC Common Stock
certificate 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.
3.3 Lost Certificates. Any PBI Record Holder whose certificate
representing shares of PBI Common Stock has been lost, destroyed, stolen or
otherwise is missing shall be entitled to receive a certificate representing the
shares of NCBC Common Stock and cash in lieu of fractional shares to which he or
she is entitled in accordance with and upon compliance with conditions
reasonably imposed by the Exchange Agent (including, without limitation, a
requirement that the shareholder provide a lost instruments indemnity bond in
form, substance and amount reasonably satisfactory to the Exchange Agent).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PBI
Except as disclosed in the PBI Disclosure Letter, PBI hereby
represents and warrants to NCBC as follows:
4.1 Organization, Standing and Power. PBI is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of North Carolina and has the corporate power and authority to carry on
its business in all material respects as now conducted and to own, lease and
operate its Assets. PBI 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 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 Material Adverse
Effect on PBI.
4.2 Authority; No Breach of Agreement.
(a) PBI has the corporate power and authority necessary to
execute, deliver and, upon obtaining all necessary approvals from its
stockholders and appropriate Regulatory Authorities, to perform its obligations
under this Agreement and effect the Plan of Merger and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Plan of Merger, as appropriate, and the
consummation of the transactions contemplated herein and therein, including the
Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of PBI, subject to the approval of this Agreement
and the Plan of Merger by the requisite vote of holders of the outstanding
shares of PBI Common Stock, which is the only shareholder vote required for
approval of this Agreement and the Plan of Merger and consummation of the Merger
by PBI. Subject to the receipt of such requisite shareholder approval, this
Agreement represents a legal, valid and binding obligation of PBI, enforceable
against PBI 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 and other equitable remedies is subject to the discretion of the court
before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement or
the Plan of Merger, as appropriate, by PBI, nor the consummation by PBI of the
transactions contemplated hereby or thereby, nor compliance by PBI with any of
the provisions hereof or thereof will (i) conflict with or result in a breach of
any provision of PBI's Articles of Incorporation or Bylaws, or (ii) except as
disclosed in Section 4.2(b) of the PBI Disclosure Letter, constitute or result
in a Default under, or require any Consent (other than shareholder approval)
pursuant to, or result in the creation of any Lien on any material Asset of any
PBI Company under, any Contract or Permit of any PBI Company except as is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PBI, or (iii) subject to receipt of the requisite Consents referred to
in Section 7.3 of this Agreement, violate any Law or Order applicable to any PBI
Company or any of its assets except as is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PBI.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate Laws, the rules of the
American Stock Exchange 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 PBI
Employee Plans or under the HSR Act, 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 Material Adverse Effect on PBI, no notice
to, filing with, or Consent of, any public body or authority is necessary for
the consummation by PBI of the Merger and the other transactions contemplated in
this Agreement and the Plan of Merger.
(d) No PBI Company is a party to, or subject to, or bound by,
any agreement or judgment, order, letter of understanding, writ, prohibition,
injunction or decree of any court or other governmental body of competent
jurisdiction, or any law which would prevent the execution and delivery of this
Agreement and the Plan of Merger by PBI, or the consummation of the transactions
contemplated hereby and thereby, and no action or proceeding is pending against
any PBI Company in which the validity of this Agreement, the transactions
contemplated hereby or any action which has been taken by any of such Parties in
connection herewith or in connection with the transaction contemplated hereby is
at issue.
4.3 Capital Stock.
(a) The authorized capital stock of PBI consists of 20,000,000
shares of PBI Common Stock, no par value per share, of which 2,502,700 shares
are issued and outstanding as of the date of this Agreement and 5,000,000 shares
of PBI preferred stock, no par value, of which no shares are issued and
outstanding as of the date of this Agreement. All of the issued and outstanding
shares of capital stock of PBI are duly and validly issued and outstanding and
are fully paid and nonassessable. None of the outstanding shares of capital
stock of PBI have been issued in violation of any preemptive rights of the
current or past shareholders of PBI.
(b) Except as set forth in Section 4.3(a) of this Agreement or
pursuant to the PBI Option Plans, there are no shares of capital stock or other
equity securities of PBI outstanding and no outstanding Rights relating to the
capital stock of PBI; provided, however, that 105,800 shares of PBI Common Stock
have been issued, and are being held pursuant to restrictions set forth in, the
Hillsborough Savings Bank, Inc., SSB Management Recognition Plan.
4.4 PBI Subsidiaries. PBI has disclosed in Section 4.4 of the
PBI Disclosure Letter all of the PBI Subsidiaries(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 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 Material Adverse Effect on PBI, and the number of shares owned and
percentage ownership interest represented by such share ownership). PBI or one
of its wholly owned Subsidiaries owns all of the issued and outstanding shares
of capital stock (or other equity interests) of each PBI Subsidiary. No capital
stock (or other equity interest) of any PBI Subsidiary is or may become required
to be issued (other than to another PBI Company) by reason of any Rights, and
there are no Contracts by which any PBI Subsidiary is bound to issue (other than
to another PBI Company) additional shares of its capital stock (or other equity
interests) or Rights or by which any PBI Company is or may be bound to transfer
any shares of the capital stock (or other equity interest) of any PBI Subsidiary
(other than to another PBI Company). There are no Contracts relating to the
rights of any PBI Company to vote or to dispose of any shares of the capital
stock (or other equity interests) of any PBI Subsidiary. All of the shares of
capital stock (or other equity interests) of each PBI Subsidiary held by a PBI
Company are fully paid and nonassessable under the applicable corporation or
similar Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the PBI Company free and clear of any Lien. Each PBI
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 in all material respects as now conducted.
Each PBI 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 Material Adverse
Effect on PBI. The only PBI Subsidiary that is a depository institution is
Savings Bank Subsidiary. Savings Bank Subsidiary is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the Deposits in which are insured by the Savings Association
Insurance Fund, to the extent provided by law. The minute book and other
organizational documents and Records for each PBI Subsidiary have been made
available to NCBC for its review, and 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.
4.5 PBI Financial Statements. PBI has delivered or made
available to NCBC (or will deliver when available, with respect to periods ended
after the date of this Agreement but prior to the Effective Time) true, correct
and complete copies of:
(a) Annual reports on Form 10-K, including any amendments
thereto, for the years ended June 30, 1997, 1998 and 1999, and the quarterly
report on Form 10-Q for the quarter ended September 30, 1999, all as filed with
the SEC (the "PBI SEC Reports"). All financial statements contained in the PBI
SEC Reports (the "PBI GAAP Financial Statements") were prepared in accordance
with GAAP and fairly present the financial conditions, results of operations,
changes in stockholders' equity and cash flows of PBI as of the dates of such
financial statements and for the periods then ended (subject, in the case of
quarterly reports, to normal recurring year-end adjustments, which were not and
were not expected to be material).
(b) All Call Reports and Federal Reserve FRY-6 Reports and
FRY-9C Reports, including any amendments thereto, filed with any Regulatory
Authorities by PBI and any PBI Subsidiary, respectively, for the years ended
December 31, 1996, 1997, and 1998, and thereafter, together with any
correspondence with any Regulatory Authorities concerning any of the aforesaid
financial statements and Reports (the "PBI Regulatory Financial Statements").
Such PBI Regulatory Financial Statements (i) were (or will be) prepared from the
Records of PBI and/or each PBI Subsidiary; (ii) were (or will be) prepared in
accordance with regulatory accounting principles consistently applied except
where otherwise noted; (iii) present (or, when prepared, will present) in all
material respects PBI's and each PBI Subsidiary's financial condition and the
results of its operations, changes in stockholders' equity and cash flows at the
relevant dates thereof and for the periods covered thereby; and (iv) contain or
reflect (or, when prepared, will contain and reflect) all adjustments and
accruals necessary for the accurate presentation (in all material respects) of
PBI's and each PBI Subsidiary's financial condition and the results of PBI's and
each PBI Subsidiary's operations and cash flows for the periods covered by such
financial statements (subject to any exceptions as to consistency specified
therein or as may be indicated in the notes thereto or, in the case of interim
financial statements, to normal recurring year-end adjustments that are not
material).
4.6 Absence of Undisclosed Liabilities. No PBI Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PBI, except Liabilities which are
accrued or reserved against in the PBI GAAP Financial Statements as of September
30, 1999, or reflected in the notes or schedules, if any, thereto, and delivered
with the PBI Disclosure Letter prior to the date of this Agreement and (ii)
Liabilities incurred in the ordinary course of business since September 30,
1999. No PBI Company has incurred or paid any Liability since the Balance Sheet
Date, except for such Liabilities incurred or paid 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 Material Adverse Effect on
PBI or in connection with the transactions contemplated by this Agreement.
4.7 Absence of Certain Changes or Events. Except as described
in Section 4.7 of the PBI Disclosure Letter, since the Balance Sheet Date there
has not been:
(a) Any material transaction by any PBI Company which was
not undertaken in the ordinary course of business consistent with past practice.
(b) Any loss of a key employee or any damage, destruction
or loss, whether or not covered by insurance, which has had or which may be
reasonably expected to have a Material Adverse Effect on PBI.
(c) Any acquisition or disposition by any PBI Company of
any Asset having a fair market value, singularly or in the aggregate for each
PBI Company, in an amount greater than Fifty Thousand Dollars ($50,000.00),
except in the ordinary course of business consistent with past practice.
(d) Any mortgage, pledge or subjection to Lien, of any
kind or nature, any of the Assets of any PBI Company, except to secure
extensions of credit in the ordinary course of business consistent with past
practice.
(e) Any amendment, modification or termination of any
Contract relating to any PBI Company or to which any PBI Company is a party
which amendment, modification or termination would or may be reasonably expected
to have a Material Adverse Effect on PBI.
(f) Any increase in, or commitment to increase, the
compensation payable or to become payable to any officer, director, employee or
agent of any PBI Company, or any bonus payment or similar arrangement made to or
with any of such officers, directors, employees or agents, other than routine
increases made in the ordinary course of business not
exceeding the greater of ten percent (10%) per annum or Five Thousand Dollars
($5,000.00) for any of them individually.
(g) Any incurring of, assumption of, or taking of, by any
PBI Company, any Asset subject to any Liability, except for Liabilities incurred
or assumed or Assets taken subsequent to the Balance Sheet Date in the ordinary
course of business consistent with past practice.
(h) Except as are applicable to state-chartered, FDIC
insured savings banks and their Affiliates, generally, any material alteration
in the manner of keeping the books, accounts or Records of any PBI Company, or
in the accounting policies or practices therein reflected.
(i) Any release or discharge (or partial release or
discharge) of any obligation or Liability of any Person related to or arising
out of any loan made by any PBI Company, except in the ordinary course of
business and in conformity with past practice, which, individually or in the
aggregate, would or may reasonably be expected to have a Material Adverse Effect
on PBI.
4.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of
any of the PBI Companies have been timely filed or requests for extensions have
been timely filed, granted and have not expired for periods ended on or before
June 30, 1999, and will be filed, or requests for an extension of time for
filing will be filed, on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, 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 proceeding, or litigation
with respect to any Taxes, except as reflected in the PBI GAAP Financial
Statements or Section 4.8(a) of the PBI Disclosure Letter. 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 PBI Companies.
(b) None of the PBI Companies 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) Adequate provision for any Taxes due or to become due for
any of the PBI Companies for the period or periods through and including the
date of the respective PBI GAAP Financial Statements has been made and is
reflected on such PBI GAAP Financial Statements.
(d) Reserved.
(e) Each of the PBI Companies is in compliance with, and its
Records contain 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 IRC, except for such instances of non-compliance and
such omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PBI.
(f) There has not been an ownership change, as defined in the
IRC Section 382(g), of any of the PBI Companies that occurred during or after
any Taxable Period in which the PBI Companies incurred a net operating loss that
carries over to any Taxable Period ending after June 30, 1999.
(g) Except as set forth in Section 4.8(g) of the PBI
Disclosure Letter, none of the PBI Companies is a party to any tax allocation or
sharing agreement and none of the PBI Companies 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 PBI) or has any Liability for taxes of any
Person (other than PBI 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.
4.9 Allowance for Possible Loan Losses. The allowance for
possible loan or credit losses, including any allowances or reserves for losses
on ORE and other collateral taken in satisfaction, or partial satisfaction of a
debt previously contracted (the "Allowance") shown on the consolidated balance
sheets of PBI included in the most recent PBI Regulatory Financial Statements
dated prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of PBI included in the PBI Regulatory Financial
Statements as of dates subsequent to the execution of this Agreement and as of
the Closing Date will be, as of the dates thereof, in the reasonable opinion of
management of PBI adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for all known and reasonably anticipated
losses relating to or inherent in the loan and lease portfolios (including
accrued interest receivables and ORE reserves) of the PBI Companies and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the PBI Companies as of the dates thereof, except where the
failure of such Allowance to be adequate is not reasonably likely to have a
Material Adverse Effect on PBI. Except as described in Section 4.9 of the PBI
Disclosure Letter (by loan type, loan number, classification and outstanding
balance), no PBI Company has any Loan or other extension of credit which has
been (or should have been in management's reasonable opinion) classified as
"Other Assets Especially Mentioned," "Substandard," "Doubtful" or "Loss," or
similar classifications, that were not classified in any PBI Company's most
recent report of examination. Section 4.9 of the PBI Disclosure Letter also
lists all Loans or extensions of credit which are included on any PBI Company's
"watch list." The net book value of any PBI Company's assets acquired through
foreclosure in satisfaction of problem loans ("ORE") is carried on the balance
sheet of the PBI Financial Statements at fair value at the time of acquisition
less estimated selling costs which approximate the net realizable value of the
ORE in accordance with the American Institute of Certified Public Accountants'
Statement of Position 92-3.
4.10 Assets. Except as reflected in the PBI GAAP Financial
Statements or as set forth in Section 4.10 of the PBI Disclosure Letter, the PBI
Companies have good and marketable title, free and clear of all Liens, to all of
their respective Assets except to the extent that is not reasonably likely to
have a Material Adverse Effect on PBI. All tangible Assets used in the
businesses of the PBI Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
PBI's past practices except to the extent that is not reasonably likely to have
a Material Adverse Effect on PBI. All Assets which are material to PBI's
business on a consolidated basis, held under leases or subleases by any of the
PBI Companies, are held under valid Contracts enforceable in all material
respects 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 and other equitable remedies 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. The PBI Companies currently maintain insurance
similar in amounts, scope, and coverage that management believes to be adequate
in all material respects. None of the PBI Companies has received notice from any
insurance carrier that (i) such insurance would be cancelled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. Except as set forth
in Section 4.10 of the PBI Disclosure Letter there are presently no claims
pending under any such policies of insurance and no notices have been given by
any PBI Company under such policies.
4.11 Intellectual Property. All of the Intellectual Property
rights of the PBI Companies are in full force and effect and constitute legal,
valid and binding obligations of the respective parties thereto except to the
extent that is not reasonably likely to have a Material Adverse Effect on PBI,
and there have not been, and there currently are not, any defaults thereunder by
any PBI Company except to the extent that is not reasonably likely to have a
Material Adverse Effect on PBI. A PBI Company owns or is the valid licensee of
all such Intellectual Property rights free and clear of all liens or claims of
infringement except to the extent that is not reasonably likely to have a
Material Adverse Effect on PBI. Except to the extent that is not reasonably
likely to have a Material Adverse Effect on PBI, none of the PBI Companies or
their respective predecessors, has misused the Intellectual Property rights of
others and none of the Intellectual Property rights as used in the business
conducted by any such PBI Company infringes upon or otherwise violates the
rights of any Person, nor has any Person asserted a claim of such infringement.
Except as disclosed in Section 4.11 of the PBI Disclosure Memorandum, no PBI
Company is obligated to pay any royalties to any Person with respect to any such
Intellectual Property. Each PBI Company owns or has the valid right to use all
of the Intellectual Property rights material to PBI which it is presently using,
or in connection with performance of any material Contract to which it is a
party. No officer, director, or employee of any PBI Company is party to any
Contract which requires such officer, director or employee to assign any
interest in any Intellectual Property or keep confidential any trade secrets,
proprietary data, customer information, or other business information except as
disclosed in Section 4.11 of the PBI Disclosure Letter, which restricts or
prohibits such officer, director or employee from engaging in activities
competitive with any person, including any PBI Company.
4.12 Environmental Matters. Except as set forth in Section
4.12 of the PBI Disclosure Letter:
(a) To the Knowledge or PBI, each PBI Company, 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 Material Adverse
Effect on PBI.
(b) To the Knowledge of PBI, there is no litigation pending or
threatened before any court, governmental agency or authority or other forum in
which any PBI Company or any of its Operating Properties or Participation
Facilities (or PBI 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 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
PBI Company 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 Material Adverse Effect on PBI.
(c) To the Knowledge of PBI, during the period of (i) any PBI
Company's ownership or operation of any of their respective current properties,
(ii) any PBI Company's participation in the management of any Participation
Facility, or (iii) any PBI Company's holding of a security interest in an
Operating Property, there have been no releases 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 Material Adverse Effect on PBI. To the Knowledge of PBI, prior to
the period of (i) any PBI Company's ownership or operation of any of their
respective current properties, (ii) any PBI Company's participation in the
management of any Participation Facility, or (iii) any PBI Company's holding of
a security interest in an Operating Property, there were no releases of
Hazardous Material in, on, under, or affecting such property, Participation
Facility or Operating Property, except such as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on PBI.
4.13 Compliance with Laws. PBI is duly registered as a bank
holding company under the BHC Act. Each PBI Company 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 Material
Adverse Effect on PBI, and, to the knowledge of PBI, 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 Material Adverse Effect on
PBI. Except as set forth in Section 4.13 of the PBI Disclosure Letter, none of
the PBI Companies:
(a) Is, to the knowledge of PBI, in violation of any Laws,
Orders or Permits applicable to its business or employees conducting its
business, except for violations which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PBI; and
(b) 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 PBI Company 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 Material Adverse Effect on PBI, (ii)
threatening to revoke any Permits the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on PBI, or
(iii) requiring any PBI Company to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, 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.
4.14 Labor Relations. No PBI Company is the subject of any
Litigation asserting that it or any other PBI Company 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 PBI Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any PBI Company, pending or
threatened, or to the Knowledge of PBI, is there any activity involving any PBI
Company's employees seeking to certify a collective bargaining unit or engaging
in any other organization activity, in any case which might, individually or in
the aggregate, have a Material Adverse Effect on PBI.
4.15 Employee Benefit Plans.
(a) PBI has disclosed in Section 4.15(a) of the PBI Disclosure
Letter, and has delivered or made available to NCBC prior to the date 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,
arrangement 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 PBI Company or ERISA Affiliate (defined below)
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 "PBI Benefit
Plans"). Any of the PBI 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 "PBI ERISA Plan." Each PBI ERISA Plan which is also a "defined benefit
plan" (as defined in IRC Section 414(j)) is referred to herein as a "PBI Pension
Plan." No PBI Pension Plan is or has been a multi-employer plan within the
meaning of Section 3(37) of ERISA.
(b) Except as set forth in Section 4.15(b) of the PBI
Disclosure Letter, all PBI Benefit Plans are in compliance with the applicable
terms of ERISA, the IRC and any other applicable laws the breach or violation of
which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PBI. Each PBI ERISA Plan which is intended to be
qualified under IRC Section 401(a) has received a favorable determination letter
from the Internal Revenue Service, and PBI is not aware of any circumstances
likely to result in revocation of any such favorable determination letter.
Except as set forth in Section 4.15(b) of the PBI Disclosure Letter, no PBI
Company has engaged in a transaction with respect to any PBI Benefit Plan that,
assuming the taxable period of such plan expired as of the date hereof, would
subject any PBI Company to a tax imposed by either IRC Section 4975 or Section
502(i) of ERISA in amounts which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on PBI.
(c) Except as disclosed in Section 4.15(e) of the PBI
Disclosure Letter, no PBI Company has any liability for retiree health and life
benefits under any of the PBI Benefit Plans to former employees and there are no
restrictions on the rights of such PBI Company to amend or terminate any such
retiree health or benefit plan without incurring liability thereunder which is
reasonably likely to have a Material Adverse Effect on PBI.
(d) Except as disclosed in Section 4.15(f) of the PBI
Disclosure Letter, 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 PBI Company from
any PBI Company under any PBI Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any PBI Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(e) The 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 PBI Company and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of IRC Section 412 or Section 302 of ERISA, have been fully reflected
on the PBI GAAP Financial Statements to the extent required by and in accordance
with GAAP.
4.16 Material Contracts. Except as disclosed in Section 4.16
of the PBI Disclosure Letter, none of the PBI Companies, 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 providing for aggregate payments
to any Person in any calendar year in excess of $10,000 or total aggregate
payments of $50,000 to all Persons receiving benefits (ii) any contract relating
to the borrowing of money by any PBI Company or the guarantee by any PBI Company
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 contracts which prohibit or restrict any PBI Company from
engaging in any business activities in any geographic area, line of business or
otherwise in competition with any other person, (iv) 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 disclosed in the PBI GAAP Financial Statements delivered prior to the date
of this Agreement) which is a financial derivative contract (including various
combinations thereof), and (v) any other material contract or amendment thereto
that would be required to be filed as an exhibit to a PBI SEC Report (whether or
not PBI is subject to the filing requirements of the SEC) filed (or which would
have been filed if PBI were subject to the SEC reporting requirements) by PBI
with the SEC prior to the date of this Agreement (together with all contracts
referred to in Sections 4.10 and 4.15(a) of this Agreement (the "PBI
Contracts")). With respect to each PBI Contract: (i) no PBI Company is in
Default thereunder, and (ii) no other party to any such contract is, to the
Knowledge of PBI, in Default in any respect or has repudiated or waived any
material provision thereunder, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
PBI. Except as set forth in Section 4.16 of the PBI Disclosure Letter, all of
the indebtedness of any PBI Company for money borrowed is prepayable at any time
by such PBI Company without penalty or premium.
4.17 Legal Proceedings. There is no Litigation pending, or, to
the Knowledge of PBI, threatened against any PBI Company, or against any Asset,
interest, or right of any of them that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PBI, nor are
there any orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any PBI Company, that are reasonably likely
to have, individually or in the aggregate, a material Adverse Effect on PBI.
Section 4.17 of the PBI Disclosure Letter includes a report of all material
litigation as of the date of this Agreement to which any PBI Company is a party
and which names a PBI Company as a defendant or cross-defendant.
4.18 Reports. Since January 1, 1996, each PBI Company 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 (i) the SEC,
if applicable, including Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements,
(ii) all other Regulatory Authorities, and (iii) any applicable state securities
or banking authorities (except failures to file which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on PBI). 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.
4.19 Statements True and Correct. No statement, certificate,
instrument or other writing furnished or to be furnished by any PBI Company to
NCBC pursuant to this Agreement or any other document, agreement, or instrument
referred to herein contains, or will contain, any untrue statement of material
fact or will omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by any PBI
Company or any Affiliate thereof for inclusion in the Registration Statement to
be filed by NCBC 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 PBI Company or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to PBI's
shareholders in connection with the shareholders' meeting, and any other
documents to be filed by a PBI Company or any Affiliate thereof with the SEC or
any other Regulatory Authority in connection with the transactions contemplated
thereby, will, at the respective time such documents are filed, and with respect
to the Proxy Statement, when first mailed to the shareholders of PBI, contain
any untrue statement of 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 Proxy Statement or
any amendment thereof or supplement thereto, at the time of the shareholders'
meeting, contain any untrue statement of material fact, or omit to state any
material fact necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading. All documents that any
PBI Company 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.
4.20 Accounting, Tax and Regulatory Matters. To the Knowledge
of PBI, no PBI Company or any Affiliate thereof has taken any action or is
affected by any fact or circumstance that is reasonably likely to (i) prevent
the transactions contemplated hereby, including the Merger, from qualifying as a
reorganization within the meaning of Section 368(a) of the IRC, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 8.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
section. PBI has made stock repurchases as described in Section 4.20 of the PBI
Disclosure Letter, which, depending upon facts related to NCBC, could affect
qualification of the transactions contemplated hereby for pooling-of-interests
accounting treatment.
4.21 State Takeover Laws. Except for provisions in the
Articles of Incorporation of PBI and the Savings Bank Subsidiary, no PBI Company
has taken any action designed or intended to require the transactions
contemplated by this Agreement and the Plan of Merger to comply with any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover laws (collectively "Takeover Laws"), including Articles 9
and 9A of the North Carolina Business Corporation Act.
4.22 Articles of Incorporation Provisions. Each PBI Company
has taken all action so that the entering into of this Agreement and the Plan of
Merger and the consummation of the Merger and the other transactions
contemplated by this Agreement and the Plan of Merger do not and will not result
in the grant of any rights to any Person under the Articles, Bylaws or other
governing instruments of any PBI Company (other than their rights under this
Agreement and the Plan of Merger and voting, dissenters' appraisal or other
similar rights) or restrict or impair the ability of NCBC or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, shares of any PBI Company that may be directly or indirectly
acquired or controlled by it.
4.23 Charter Documents. PBI has previously provided, or made
available to, NCBC true and correct copies of the Articles of Incorporation and
Bylaws of PBI and the Articles of Incorporation and Bylaws of each PBI Company,
as amended to date, and each are in full force and effect.
4.24 Year 2000 Matters. The computer software operated by PBI
which is material to the conduct of its business is capable of providing or is
being adapted to provide uninterrupted millennium functionality to record,
store, process and present calendar dates falling on or after January 1, 2000,
in substantially the same manner and with the same functionality as such
software records, stores, processes and presents such calendar dates falling on
or before December 31, 1999, except as would not have a Material Adverse Effect
on PBI. PBI has not received and does not expect to receive a "Year 2000
Deficiency Notification Letter" (as such term is employed in the Federal
Reserve's Supervision and Regulation Letter No. SR 98-3(SUP), dated March 4,
1998). PBI has disclosed or made available to NCBC a complete and accurate copy
of PBI's plan for addressing the issues set forth in the statements of the
Federal Financial Institutions Examination Council, dated May 5, 1997, entitled
"Year 2000 Project Management Awareness," and December 1997, entitled "Safety
and Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect PBI. The costs of the adaptions and compliance referred to in this
Section 4.24 are not expected to have a Material Adverse Effect on PBI.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF NCBC
Except as disclosed in the NCBC Disclosure Letter, NCBC hereby
represents and warrants to PBI that:
5.1 Organization, Standing and Power. NCBC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Tennessee, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material assets.
NCBC 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 Material Adverse Effect on NCBC.
5.2 Authority; No Breach by Agreement.
(a) NCBC 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 Plan of Merger 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 NCBC. This Agreement represents a legal, valid and binding obligation of
NCBC, enforceable against NCBC in accordance with its terms (except in all cases
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, 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
NCBC, nor the consummation by NCBC of the transactions contemplated hereby, nor
compliance by NCBC with any of the provisions hereof will (i) conflict with or
result in a breach of any provision of any NCBC Company's Charter (or similar
governing instrument) or Bylaws, or (ii) constitute or result in a Default
under, or require any Consent pursuant to, or result in the creation of any Lien
on any assets of any NCBC Company under any Contract or Permit of any NCBC
Company, or (iii) subject to receipt of the requisite approvals referred to in
Section 8.1(b) of this Agreement, violate any Law or Order applicable to any
NCBC Company or any of their respective Material Assets.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate law and the rules of the
NASDAQ, 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, or
under the HSR Act, 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 Material Adverse Effect on NCBC, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
NCBC of the Merger and the other transactions contemplated in this Agreement and
the Plan of Merger.
(d) No NCBC Company is a party to, or subject to, or bound by,
any agreement or judgment, order, letter of understanding, writ, prohibition,
injunction or decree of any court or other governmental body of competent
jurisdiction, or any law which would prevent the execution and delivery of this
Agreement and the Plan of Merger by NCBC, or the consummation of the
transactions contemplated hereby and thereby, and no action or proceeding is
pending against any NCBC Company in which the validity of this Agreement, the
transactions contemplated hereby or any action which has been taken by any of
such Parties in connection herewith or in connection with the transaction
contemplated hereby is at issue.
5.3 Capital Stock. The currently authorized capital stock of
NCBC consists of (i) 175,000,000 shares of NCBC Common Stock, of which
108,346,501 shares are issued and outstanding as of November 30, 1999, and (ii)
5,000,000 shares of NCBC Preferred Stock, of which no shares are issued and
outstanding. All of the issued and outstanding shares of NCBC Capital Stock are,
and all of the shares of NCBC Common Stock to be issued in exchange for shares
of PBI 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 TBCA and the NCBC
Charter. NCBC has reserved for issuance a sufficient number of shares of NCBC
Common Stock for the purpose of issuing shares of NCBC Common Stock in
accordance with the provisions of Section 2.1(b) and 2.2 of this Agreement.
5.4 SEC Filings; Financial Statements.
(a) NCBC has filed and made available to PBI all SEC documents
required to be filed by NCBC since December 31, 1997 (the "NCBC SEC Reports").
The NCBC SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities 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 NCBC SEC Reports or necessary in order to make the statements in such NCBC
SEC Reports, in light of the circumstances under which they were made, not
misleading. Except for NCBC Subsidiaries that are registered as brokers, dealers
or investment advisors, no NCBC Subsidiary is required to file any SEC
Documents.
(b) Each of the NCBC Financial Statements (including, in each
case, any related notes) contained in the NCBC SEC Reports, including any NCBC
SEC Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
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 NCBC and its Subsidiaries as at the respective dates and
the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim 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.
(c) Nothing has come to the attention of NCBC which would
require a material change to its most recently filed SEC Documents since the
date of such filing.
5.5 Absence of Undisclosed Liabilities. No NCBC Company has
any liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on NCBC, except liabilities which are
accrued or reserved against in the consolidated balance sheets of NCBC as of
September 30, 1999, included in the NCBC Financial Statements reflected in the
notes thereto. No NCBC Company has incurred or paid any Liability since the
Balance Sheet Date, except for such Liabilities incurred or paid 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 Material Adverse
Effect on NCBC or in connection with the transactions contemplated by this
Agreement.
5.6 Absence of Certain Changes or Events. Since December 31,
1998, except as disclosed in the NCBC Financial Statements delivered prior to
the date of this Agreement or contemplated by pending federal legislation
applicable to financial institutions generally, (i) there have been no events,
changes or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on NCBC, and (ii)
the NCBC Companies 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 NCBC provided in Article 6
of this Agreement or would have a Material Adverse Effect on NCBC..
5.7 Compliance with Laws. NCBC is duly registered as a bank
holding company under the BHC Act and as a savings and loan holding company
under the HOLA. Each NCBC Company 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, and there has occurred no default under any such permit. No NCBC
Company:
(a) Is in violation of any Laws, Orders or Permits applicable
to its business or employees conducting its business; and
(b) 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 NCBC Company is not in
compliance with any of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, (ii) threatening to revoke any Permits, or (iii)
requiring any NCBC Company to enter into or consent to the issuance of a cease
and desist order, formal agreement, directive, commitment or memorandum or
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.
5.8 Legal Proceedings. There is no Litigation instituted or
pending, or, to the Knowledge of NCBC, 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 NCBC Company, or against any
Asset, interest or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on NCBC; nor are
there any orders of any regulatory authorities, other governmental authorities,
or arbitrators against any NCBC Company.
5.9 Reports. Since January 1, 1996, NCBC has filed all reports
and statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements, (ii) other
Regulatory Authorities, and (iii) any applicable state securities or banking
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 Material Adverse Effect on NCBC). 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.
5.10 Statements True and Correct. No statement, certificate,
instrument or other writing furnished or to be furnished by any NCBC Company or
any Affiliate thereof to PBI pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
NCBC Company or any Affiliate thereof for inclusion in the Registration
Statement to be filed by NCBC 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 NCBC Company or any Affiliate thereof for inclusion in the Proxy Statement
to be mailed to PBI Shareholders in connection with the shareholders' meetings,
and any other documents to be filed by any NCBC Company 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 Proxy Statement, when first mailed to the
shareholders of PBI, 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 Proxy Statement or any amendment thereof or supplement thereto,
at the time of the shareholders' meeting, contain any untrue statement of
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. All documents that any NCBC Company 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.
5.11 Accounting, Tax and Regulatory Matters. No NCBC Company
or any Affiliate thereof has taken any action or has any knowledge of any fact
or circumstance relating to NCBC that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of IRC Section 368(a), or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 8.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
5.12 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of
any of the NCBC Companies 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, 1998, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, 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 proceeding, or litigation
with respect to any Taxes, except as reflected in the NCBC Financial Statements
or Section 5.12(a) of the NCBC Disclosure Letter. 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 NCBC Companies.
(b) None of the NCBC Companies 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) Adequate provision for any Taxes due or to become due for
any of the NCBC Companies for the period or periods through and including the
date of the respective NCBC Financial Statements has been made and is reflected
on such NCBC Financial Statements.
(d) Reserved.
(e) Each of the NCBC Companies is in compliance with, and its
Records contain 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 IRC, except for such instances of non-compliance and
such omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on NCBC.
(f) There has not been an ownership change, as defined in the
IRC Section 382(g), of any of the NCBC Companies that occurred during or after
any Taxable Period in which the Companies incurred a net operating loss that
carries over to any Taxable Period ending after December 31, 1998.
(g) Except as set forth in Section 5.12(g) of the NCBC
Disclosure Letter, none of the NCBC Companies is a party to any tax allocation
or sharing agreement and none of the NCBC Companies 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 NCBC) or has any Liability for taxes of any
Person (other than NCBC 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.
5.13 Environmental Matters. Except as set forth in Section
5.13 of the NCBC Disclosure Letter:
(a) Each NCBC Company, 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 Material Adverse Effect on NCBC.
(b) To the Knowledge of NCBC, there is no litigation pending
or threatened before any court, governmental agency or authority or other forum
in which any NCBC Company or any of its Operating Properties or Participation
Facilities (or NCBC 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 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
NCBC Company 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 Material Adverse Effect on NCBC.
(c) To the Knowledge of NCBC, during the period of (i) any
NCBC Company's ownership or operation of any of their respective current
properties, (ii) any NCBC Company's participation in the management of any
Participation Facility, or (iii) any NCBC Company's holding of a security
interest in an Operating Property, there have been no releases 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 Material Adverse Effect on NCBC. To the Knowledge of
NCBC, prior to the period of (i) any NCBC Company's ownership or operation of
any of their respective current properties, (ii) any NCBC Company's
participation in the management of any Participation Facility, or (iii) any NCBC
Company's holding of a security interest in an Operating Property, there were no
releases of Hazardous Material in, on, under, or affecting such property,
Participation Facility or Operating Property, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
NCBC.
5.14 Charter Documents. NCBC has previously provided, or made
available to, PBI true and correct copies of the Charter and Bylaws of NCBC, as
amended to date, and each are in full force and effect.
5.15 Year 2000 Matters. The computer software operated by NCBC
which is material to the conduct of its business is capable of providing or is
being adapted to provide uninterrupted millennium functionality to record,
store, process and present calendar dates falling on or after January 1, 2000,
in substantially the same manner and with the same functionality as such
software records, stores, processes and presents such calendar dates falling on
or before December 31, 1999, except as would not have a Material Adverse Effect
on NCBC. NCBC has not received and does not expect to receive a "Year 2000
Deficiency Notification Letter" (as such term is employed in the Federal
Reserve's Supervision and Regulation Letter No. SR 98-3(SUP), dated March 4,
1998). The costs of the adaptions and compliance referred to in this Section
5.14 are not expected to have a Material Adverse Effect on NCBC.
ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 Affirmative Covenants of PBI. 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 NCBC shall have been obtained,
and except as otherwise expressly contemplated herein, PBI shall, and shall
cause each of its Subsidiaries to: (i) operate its business only in the usual,
regular and ordinary course, (ii) preserve intact its business organization and
assets and maintain its rights and franchises, (iii) take no action which would
(a) materially adversely affect the ability of any 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 sentence of Section
8.1(b) of this Agreement or prevent the transactions contemplated hereby,
including the Merger, from qualifying for pooling-of-interests accounting
treatment or as a reorganization within the meaning of Section 368(a) of the IRC
or (b) adversely affect in any material respect the ability of any Party to
perform its covenants and agreements under this Agreement, and (iv) provide NCBC
with PBI financial statements at the end of each month by the fifteenth (15th)
day following the close of said month.
6.2 Negative Covenants of PBI. Except as specifically
permitted by this Agreement, from the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement, PBI covenants and
agrees that it will not do or agree to commit to do, or permit any of its
Subsidiaries to do or agree or commit to do, any of the following without the
prior written consent of the chief executive officer, president, chief financial
officer or executive vice president of NCBC, which consent shall not be
unreasonably withheld:
(a) Amend the Articles, Bylaws or other governing instruments
of any PBI Company; or
(b) Incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a PBI Company to another PBI
Company) in excess of an aggregate of $50,000 (for the PBI Companies on a
consolidated basis) except in the ordinary course of the business of PBI
Subsidiaries consistent with past practices (which shall include, for PBI
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 PBI Company 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,
advances from the Federal Home Loan Bank, 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 PBI Disclosure Letter); or
(c) Repurchase, redeem or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans or under the
PBI Option Plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any PBI Company, or declare
or pay any dividend (other than regular quarterly dividends paid consistent with
past practice, and, provided the payment thereof would not prevent the Merger
from being accounted for as a "pooling-of-interests," such other quarterly
dividend as is required to prevent the PBI Record Holders from foregoing a
dividend from both PBI and NCBC during any calendar quarter) or make any other
distribution in respect of PBI capital stock; or
(d) Except pursuant to this Agreement or under the PBI Options
Plans, 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 PBI Common
Stock or any other capital stock of any PBI Company, or any stock appreciation
rights, or any option, warrant, conversion, or other right to acquire any such
stock, or any security convertible into any such stock or any stock equivalent
type rights; or
(e) Except under the PBI Option Plans, adjust, split, combine
or reclassify any capital stock of any PBI Company or issue or authorize the
issuance of any other securities in respect of or in substitution for shares of
PBI Common Stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber any shares of capital stock of any PBI Subsidiary (unless any such
shares of stock are sold or otherwise transferred to another PBI Company) 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 and tangible Assets
which are obsolete or no longer useful in the business of any PBI Company; or
(f) Except for purchases of U.S. Treasury securities, U.S.
government agency securities, which in either case have maturities of three (3)
years or less, or securities of the same nature as those held for investment by
any PBI Company as of September 30, 1999 purchase any securities or make any
material investment, either by purchase of stock or securities, contributions to
capital, asset transfers, or purchase of any assets, in any Person other than a
wholly owned PBI Subsidiary, or otherwise acquire direct or indirect control
over any Person, other than in connection with (i) foreclosures in the ordinary
course of business, (ii) acquisitions of control by a depository institution
Subsidiary in its fiduciary capacity, or (iii) 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 PBI Company, except in accordance with past
practice disclosed in Section 6.2(g) of the PBI Disclosure Letter or as required
by law; pay any severance or termination pay or any bonus (other than Christmas
bonuses payable in December 1999 in the ordinary course of business consistent
with past practice) other than pursuant to written policies or written contracts
in effect on the date of this Agreement and disclosed in Section 6.2(g) of the
PBI Disclosure Letter; and enter into or amend any severance agreements with
officers of any PBI Company; grant any material increase in fees or other
increases in compensation or other benefits to directors of any PBI Company
except in accordance with past practice disclosed in Section 6.2(g) of the PBI
Disclosure Letter; or voluntarily accelerate the vesting of any stock options or
other stock-based compensation or employee benefits (other than the acceleration
of vesting which occurs under a benefit plan under the terms of such plan upon a
change of control of PBI or otherwise pursuant to the provisions of such benefit
plan); or
(h) Except as otherwise provided for herein, enter into or
amend any employment contract between any PBI Company and any Person (unless
such amendment is required by law) that the PBI Company 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) Except for the contemplated termination of the
Hillsborough Savings Bank, Inc., SSB Employee Stock Ownership Plan in accordance
with the terms of such plan and except for termination of the 401(k) Plan
maintained by the Savings Bank Subsidiary for the benefit of its employees,
adopt any new employee benefit plan of any PBI Company or terminate or withdraw
from, or make any material change in or to, any existing employee benefit plans
of any PBI Company 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 the ordinary course
of business or in accordance with past practice, settle any litigation involving
any liability of any PBI Company for material money damages in excess of $50,000
or restrictions upon the operations of any PBI Company; or
(l) Except in the ordinary course of business, enter into,
modify, amend or terminate any material contract (excluding any loan contract)
or waive, release, compromise or assign any material rights or claims.
6.3 Covenants of NCBC. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, NCBC
covenants and agrees that it shall (i) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment to
enhance the long-term value of the NCBC Common Stock and the business prospects
of the NCBC Companies, and (ii) take no action which would (a) materially
adversely affect the ability of any 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 sentence of Section 8.1(b) of
this Agreement or prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of IRC Section 368(a), or (b) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this agreement, provided, that the foregoing shall not prevent
any NCBC Company from acquiring any other assets or businesses or from
discontinuing or disposing of any of its assets or business if such action is,
in the judgment of NCBC, desirable in the conduct of the business of NCBC and
its Subsidiaries and would not, in the judgment of NCBC, likely delay the
Effective Time to a date subsequent to the date set forth in Section 9.1(e) of
this Agreement. Notwithstanding the foregoing or any other provision in this
Agreement to the contrary, nothing herein shall be deemed to restrict NCBC from
exercising its option pursuant to the Stock Option Agreement at any time such
option shall be exercisable.
6.4 Adverse Changes in Condition. Each Party agrees to give
written notice promptly 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 Material Adverse Effect on it 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.
6.5 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 any Regulatory Authority
pursuant to the Securities Laws, 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 or regulatory accounting (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 any Regulatory Authorities
pursuant to the Securities Laws 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 7
ADDITIONAL AGREEMENTS
7.1 Registration Statement; Proxy Statement; Shareholder
Approvals. NCBC shall file the Registration Statement with the SEC, and shall
use its reasonable effort 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 NCBC Common Stock upon consummation of the Merger. PBI shall
furnish all information concerning it and the holders of its capital stock as
NCBC may reasonably request in connection with such action. PBI 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 the Plan of Merger and such other
related matters as its deems appropriate. In connection with the shareholders'
meeting, (i) NCBC and PBI shall prepare a Proxy Statement (which shall be
included in the Registration Statement with the SEC) and mail such Proxy
Statement to the shareholders of PBI, (ii) the Parties shall furnish to each
other all information concerning them that they may reasonably request in
connection with such Proxy Statement, (iii) the Board of Directors of PBI shall
recommend to their shareholders the approval of the matters submitted for
approval, and (iv) the Board of Directors and officers of PBI shall use their
reasonable efforts to obtain such shareholders' approvals; provided, however,
that any such action by the Board of Directors of PBI shall be subject to the
exercise of its good faith judgment as to its fiduciary duties to its
shareholders imposed by law.
7.2 Exchange Listing. NCBC shall use its reasonable efforts to
list, prior to the Effective Time, on the Nasdaq, subject to official notice of
issuance, the shares of NCBC Common Stock to be issued to the holders of PBI
Common Stock or PBI Stock Options pursuant to the Merger, and NCBC shall pay all
costs, give all notices, make all filings, with the Nasdaq and take all other
actions required in connection with the transactions contemplated herein.
7.3 Applications. NCBC shall prepare and file, and PBI shall
cooperate in the preparation and, where applicable, 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 as soon as practicable upon their becoming available.
7.4 NCBC Filings with State Offices. Upon the terms and
subject to the conditions of this Agreement, NCBC and PBI shall execute and file
the Articles of Merger with the Secretary of State of the State of North
Carolina and the Secretary of State of the State of Tennessee in connection with
the Closing.
7.5 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
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 8 of this Agreement; provided, however, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. 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; provided, however, that nothing
in this Section 7.5 shall be construed to obligate NCBC to take any action to
meet any condition required for it to obtain any Consent if such condition would
be unreasonable or constitute a significant impediment upon NCBC's ability to
carry on its business or acquisition programs or to require NCBC to increase its
capital ratios to amounts in excess of the Federal Reserve's minimum capital
ratio guidelines which may from time to time be in effect.
7.6 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
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) 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 or its advisors or agents concerning its and its
Subsidiaries' businesses, operations and financial positions (including any
information learned or obtained during any due diligence activities) 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. This agreement shall
remain in effect and survive termination of this Agreement.
(c) PBI shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with persons which are
considering an Acquisition Proposal with PBI to preserve the confidentiality of
the information relating to PBI provided to such persons and their Affiliates
and representatives.
(d) Each Party shall 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 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 Material Adverse Effect on the other Party.
7.7 Acquisition Proposals. PBI shall not, nor shall it
authorize or knowingly permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it to, initiate, solicit, encourage (including by way
of furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes any Acquisition
Proposal (as defined below), or enter into or maintain or continue discussions
or negotiate with any person in furtherance of an Acquisition Proposal, or agree
to or endorse any Acquisition Proposal, and PBI shall (unless it believes such
notification could violate the PBI Board of Directors' fiduciary duties) notify
NCBC as promptly as practicable, in reasonable detail, as to any inquiries and
proposals which it or any of its representatives or agents may receive;
provided, however, that, notwithstanding anything to the contrary contained in
this Agreement, (i) PBI may furnish or cause to be furnished confidential and
non-public information concerning PBI and its businesses, properties or assets
to a third party, (ii) PBI may engage in discussions or negotiations with a
third party, (iii) following receipt of an Acquisition Proposal, PBI may take
and disclose to its shareholders information about the proposal, including,
without limitation, its position with respect to such Acquisition Proposal,
and/or (iv) following receipt of an Acquisition Proposal, the PBI Board of
Directors may withdraw or modify its recommendation of the Merger or terminate
this Agreement, but in each event only if and to the extent that the PBI Board
of Directors shall determine in good faith based on the written advice of
counsel that such action is required for the Board of Directors to fulfill its
fiduciary duties to the PBI shareholders. As used herein, the term "Acquisition
Proposal" means: (x) any acquisition or purchase of a significant amount of the
assets PBI, or more than 20% of the equity interest in PBI or any take-over bid
or tender offer (including an issuer bid or self tender offer) or exchange
offer, consolidation, plan or arrangement, reorganization, consolidation,
business combination, sale of substantially all of the assets, sale of
securities, recapitalization, liquidation, dissolution or similar transaction
involving PBI (other than the transactions contemplated by this Agreement) or
(y) any proposal, plan or intention to do any of the foregoing either publicly
announced or communicated to PBI or any agreement to engage in any of the
foregoing. The execution of this covenant and the Stock Option Agreement by PBI
constitutes a significant part of the material inducement for NCBC to enter into
this Agreement.
7.8 (RESERVED)
7.9 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 as a "reorganization" within the meaning
of IRC Section 368(a) for federal income tax purposes.
7.10 State Takeover Laws. Each PBI Company shall take any
reasonable steps necessary to exempt the transactions contemplated by this
Agreement from, or if necessary challenge the validity or applicability of any
applicable, Takeover Law.
7.11 Articles of Incorporation Provisions. Each PBI Company
shall take all necessary action to ensure that the entering into of this
Agreement and the Plan of Merger and the consummation of the Merger and the
other transactions contemplated hereby and thereby do not and will not result in
the grant of any rights to any Person under the Charter, Bylaws, or other
governing instruments of any PBI Company (other than their rights pursuant to
this Agreement and the Plan of Merger and voting and other similar rights) or
restrict or impair the ability of NCBC or any of its Subsidiaries to vote, or to
exercise the rights of a shareholder with respect to, shares of any PBI Company
that may be directly or indirectly acquired or controlled by it.
7.12 Agreement of Affiliates. PBI has disclosed in Section
7.12 of the PBI Disclosure Letter all persons whom it reasonably believes is an
"affiliate" of PBI for purposes of Rule 145 under the 1933 Act. PBI shall use
its reasonable efforts to cause each such Person to deliver to NCBC not later
than thirty (30) days prior to the Effective Time, a written agreement,
substantially in the form annexed as Exhibit 3 to this Agreement. NCBC shall be
entitled to place restrictive legends upon certificates for shares of NCBC
Common Stock issued to affiliates of PBI pursuant to this Agreement and to
enforce the provisions of this Section 7.12 and of each such affiliate
agreement.
7.13 Employee Benefits and Contracts. Following the Effective
Time, NCBC shall provide to officers and employees of the PBI Companies employee
benefits under employee benefit and welfare plans, on terms and conditions which
when taken as a whole are substantially similar to those currently provided by
the NCBC Companies to their similarly situated officers and employees. For
purposes of determining eligibility to participate in and vesting under such
employee benefit and welfare plans, all such officers and employees shall be
given full credit for all prior service as officers or employees of the PBI
Companies, and no such officer or employee shall be subject to any waiting
period or pre-existing condition limitation pursuant to any NCBC health
insurance plan. NCBC shall offer employment contracts in the form annexed as
Exhibit 4 hereto to Xxx X. Laws and Xxxxx X. Xxxxx, and shall offer employment
contracts in the form annexed as Exhibit 5 to Xxx X. Xxxxxxxxxx, Xxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxx, Xx., Xxxxxxx X. Xxxxxxx, Xxxxxx
X.Xxxx and Xxxxx X. Xxxxxx. Any employee of PBI or its Subsidiaries who remains
employed through the Effective Date but whose employment is terminated by NCBC
or any of its Subsidiaries within 90 days after the Effective Date shall, in
addition to any benefits to which such employee may be entitled under the
existing Severance Plan of the Savings Bank Subsidiary, be paid a retention
bonus equal to four (4) weeks salary. Any employee of PBI or any of its
Subsidiaries who remains employed through the Effective Date and who remains
employed by PBI, any of its Subsidiaries or any of their successors for at least
ninety (90) days after the Effective Date shall be paid a retention bonus equal
to two (2) weeks salary at the time of his or her next salary payment after the
expiration of such 90 day period.
7.14 Advisory Board; Emeritus Directors. For a period of two
(2) years from and after the Effective Time, NCBC shall cause the Savings Bank
Subsidiary to maintain an advisory board of directors consisting of nine (9)
persons, each of whom shall be entitled to attend all regular quarterly meetings
of the Board of Directors of the Savings Bank Subsidiary, but shall xxxx no
right to vote as a director. Each advisory director shall be paid a retainer of
$1,000 every six months and a director fee of $500 for each regular meeting
attended in person. In addition to the foregoing, existing PBI emeritus
directors shall be appointed to serve on such advisory board for an annual fee
of $3,111. In consideration of the foregoing and the provisions of Section 7.18,
PBI shall use its reasonable best efforts to cause each director of PBI and the
Savings Bank Subsidiary to execute and deliver a Non-Competition Agreement in
the form annexed as Exhibit 6 to this Agreement.
7.15 D&O Coverage. At the Effective Time, NCBC will provide,
at its election, errors and omissions insurance coverage for PBI's directors and
officers either (i) by purchasing continuation coverage under PBI's current
policy for a period not less than six (6) years after the Effective Time, or
(ii) obtain coverage under NCBC's current policy to provide coverage for PBI's
directors and officers on a prior acts basis for a period not less than six (6)
years prior to the Effective Time.
7.16 Indemnification.
(a) With respect to all claims brought during the period of
six (6) years after the Effective Time, NCBC shall indemnify, defend and hold
harmless present and former directors, officers, employees and agents of PBI and
PBI Companies (the "PBI Entities") (each an "Indemnification 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 a PBI
Entity, or at the request of a PBI Entity, of another corporation, partnership,
joint venture, trust or other enterprise occurring at or prior to the Effective
Time (including transactions contemplated by this Agreement) to the fullest
extent permitted under North Carolina Law and the Articles of Incorporation and
Bylaws of PBI 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 PBI Entity or NCBC 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
NCBC and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 7.16, upon learning of any such Liability or
Litigation, shall promptly notify NCBC thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) the
Surviving Corporation shall have the right to assume the defense thereof and the
Surviving Corporation shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
the Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties shall advise that there are substantive issues which raise
conflicts of interest between the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
the Surviving Corporation shall be obligated pursuant to this paragraph (b) to
pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any
such Litigation, and (iii) the Surviving Corporation shall not be liable for any
settlement effected without its prior written consent; and provided further that
the Surviving Corporation shall not have any obligation thereunder to any
Indemnified Party when and if a court of competent jurisdiction shall determine,
and such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
The indemnification provided herein shall be in addition to
any idemnification rights on indemnitee may have by law, pursuant to the
Articles of Incorporation or by laws of PBI or any of its subsidiaries or
pursuant to the terms of any employee benefit plan for which the indemnitee
serves as a fiduciary.
7.17 PBI Severance Plan. NCBC agrees that the Merger shall
constitute a "Change in Control" for purposes of the existing Hillsborough
Savings Bank, Inc., SSB Severance Plan. The benefits provided by such Plan shall
survive the Closing and no subsequent amendment or termination of such Plan by
NCBC or its Subsidiaries shall affect the rights of employees with respect to
the receipt of benefits under such Plan.
7.18 Director's Deferred Compensation Plan. For a period of
two (2) years after the Effective Time, NCBC shall cause the Savings Bank
Subsidiary to maintain the current Director's Deferred Compensation Plan and to
permit continued deferral of directors' retainers and fees by advisory and
emeritus directors. After the end of such period, no additional contributions
shall be made to such plan, and accrued balances (plus any earnings thereon)
shall be paid in accordance with the terms of such plan.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 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
10.6 of this Agreement:
(a) Shareholder Approvals. The shareholders of PBI shall have
approved this Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby, including the Merger, as and to
the extent required by law or by the provisions of any governing instruments.
(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, which in the reasonable judgment of the Board of
Directors of either party would so materially adversely impact the financial or
economic benefits of the transactions contemplated by this Agreement that, had
such condition or requirement been known, either party would not, in its
reasonable judgment, have entered into this Agreement.
(c) Consents. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred to
in Section 8.1(b) of this Agreement) 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 Material Adverse
Effect on such Party.
(d) Legal Proceedings. No court or government 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 and the Plan of
Merger.
(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 approval under state securities
laws or the 1933 Act, or 1934 Act relating to the issuance or trading of the
shares of NCBC Common Stock pursuant to the Merger shall have been received.
(f) Exchange Listing. The shares of NCBC Common Stock issuable
pursuant to the Merger (including any shares issued to satisfy options existing
under the PBI Option Plans) shall have been approved for listing on the Nasdaq,
subject to official notice of issuance.
(g) Tax Opinion. NCBC and PBI shall have received an opinion
of Bass, Xxxxx & Xxxx PLC, counsel to NCBC, dated the Closing Date, to the
effect that (a) the Merger constitutes a reorganization under Section 368(a) of
the IRC, and (b) no gain or loss will be recognized by shareholders of PBI who
receive shares of NCBC Common Stock in exchange for their shares of PBI Common
Stock, except that gain or loss may be recognized as to cash received in lieu of
fractional share interests; in rendering their opinion, such counsel may require
and rely upon representations and agreements, including those contained in
certificates of officers of PBI, NCBC and others.
(h) Pooling of Interests. NCBC shall have received a negative assurance letter
from KPMG LLP, PBI's independent certified public accountant's dated the Closing
Date, to the effect that such firm is aware of no matters relating to PBI that
would prevent PBI from entering into a transaction similar to the proposed
transaction that would qualify for pooling-of-interests accounting treatment
based upon the attributes of PBI only.
8.2 Conditions to Obligations of NCBC. The obligations of NCBC
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 NCBC pursuant to Section 10.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this
Section 8.2(a), the accuracy of the representations and warranties of PBI 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 PBI set forth
in Section 4.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimis in amount). The representations and warranties
of PBI set forth in Sections 4.20, 4.21 and 4.22 of this Agreement shall be true
and correct in all material respects. There shall not exist inaccuracies in the
representations and warranties of PBI set forth in this Agreement (including the
representations and warranties set forth in Sections 4.3, 4.20, 4.21 and 4.22)
such that the aggregate effect of such inaccuracies has, or is reasonably likely
to have, a Material Adverse Effect on PBI.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of PBI 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. PBI shall have delivered to NCBC (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
president and the chief financial officer of the Savings Bank Subsidiary, to the
effect that the conditions of its obligations set forth in Sections 8.2(a) and
8.2(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by PBI'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 Plan of Merger, and the
consummation of the transactions contemplated hereby and thereby, all in such
reasonable detail as NCBC and its counsel shall reasonably request.
(d) Affiliates Agreements. NCBC shall have received from each
affiliate of PBI the affiliates letter referred to in Section 7.12 of this
Agreement, to the extent necessary to assure in the reasonable judgment of NCBC
that the transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
(e) Legal Opinion. PBI shall have delivered to NCBC an opinion
of Xxxxxx, Pierce, McLendon, Xxxxxxxx Xxxxxxx, L.L.P., counsel to PBI, dated as
of the Closing Date, addressed to and in form and substance satisfactory to
NCBC, to the effect that:
(i) PBI is a bank holding company duly organized and validly
existing and in good standing under the laws of the State of North Carolina with
corporate power and authority to conduct its business of which such counsel has
actual knowledge without any independent investigation and to own and use its
Assets of which such counsel has actual knowledge without any independent
investigation.
(ii) PBI Subsidiary Bank is a financial institution duly
organized and validly existing, and in good standing under the laws of the State
of North Carolina with corporate power and authority to conduct its business of
which such counsel has actual knowledge without any independent investigation
and own and use its Assets of which such counsel has actual knowledge without
any independent investigation.
(iii) The execution and delivery by PBI of the Agreement do
not, and if PBI were now to perform its obligations under the Agreement such
performance would not, violate or contravene any provision of the Articles of
Incorporation or Bylaws of PBI or, to such counsel's actual Knowledge but
without any independent investigation, result in any breach of, or default or
acceleration under any mortgage, agreement, lease, indenture, or other
instrument, order, judgment or decree to which PBI is a party or by which it is
bound.
(iv) The Agreement has been duly and validly executed and
delivered by PBI, and assuming the Agreement is a binding obligation of NCBC,
constitutes a valid and binding agreement of PBI enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and subject
to the application of equitable principles and judicial discretion. Such counsel
shall be entitled to rely upon certificates of officers of PBI and upon
certificates of public officials as to all factual matters relevant to such
opinion, which certificate shall be in form and substance reasonably
satisfactory to such counsel. In addition, such opinion shall contain such
assumptions, qualifications and limitations as are customary for transactions
such as those contemplated by this Agreement.
(g) Non-Compete Agreements. Each director of PBI and Savings
Bank Subsidiary shall have entered into Non-Competition Agreements with NCBC
substantially in the form attached hereto as Exhibit 6.
(h) Employment Agreement. D. Xxxxx Xxxxxxx shall have entered
into an Employment and Non-Competition Agreement with NCBC in the form attached
hereto as Exhibit 7.
(i) Material Adverse Change. There shall not have occurred an
event that would be reasonably likely to have a Material Adverse Effect on PBI.
8.3 Conditions to Obligations of PBI. The obligations of PBI
to perform this Agreement and the Plan of Merger and consummate the Merger and
the other transactions contemplated hereby are subject to the satisfaction of
the following conditions, unless waived by PBI pursuant to Section 10.6(b) of
this Agreement.
(a) Representations and Warranties. For purposes of this
Section 8.3(a), the accuracy of the representations and warranties of NCBC 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 NCBC set
forth in Section 5.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimis in amount). The representations and warranties
of NCBC set forth in Section 5.11 of this Agreement shall be true and correct in
all material respects. There shall not exist inaccuracies in the representations
and warranties of NCBC set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3 and 5.11) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on NCBC.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of NCBC 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. NCBC shall have delivered to PBI (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 of its obligations set forth in Sections 8.3(a) and 8.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by NCBC's Board of Directors 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 PBI and its counsel shall reasonably request.
(d) Legal Opinion. NCBC shall have delivered to PBI an opinion
of Bass, Xxxxx & Xxxx PLC, counsel to NCBC, dated as of the Closing Date,
addressed to and in form and substance satisfactory to PBI, to the effect that:
(i) NCBC is a Tennessee corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee with
corporate power and authority to conduct its business of which such counsel has
actual knowledge without any independent investigation and to own and use its
Assets of which such counsel has actual knowledge without any independent
investigation;
(ii) This Agreement and the Plan of Merger have been duly and
validly authorized, executed and delivered on behalf of NCBC by duly authorized
officers or representatives thereof, and (assuming this Agreement is a binding
obligation of PBI) constitutes a valid and binding obligation of NCBC
enforceable in accordance with its terms, subject as to enforceability to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and subject to the
application of equitable principles and judicial discretion;
(iii) The execution, delivery and performance of this
Agreement and the Plan of Merger, as appropriate, and the consummation of the
transactions contemplated herein and therein, including the Merger, have been
duly and validly authorized by all necessary corporate and shareholder action in
respect thereof on the part of NCBC. Such counsel shall be entitled to rely upon
certificates of officers of NCBC and upon certificates of public officials as to
all factual matters relevant to such opinion, which certificate shall be in form
and substance reasonably satisfactory to such counsel. In addition, such opinion
shall contain such assumptions, qualifications and limitations as are customary
for transactions such as those contemplated by this Agreement.
(iv) The execution and delivery by NCBC of the Agreement do
not, and if NCBC were now to perform its obligations under the Agreement such
performance would not, violate or contravene any provision of the Charter or
Bylaws of NCBC or, to such counsel's actual knowledge but without any
independent investigation, result in any breach of, or default or acceleration
under any mortgage, agreement, lease, indenture, or other instrument, order,
judgment or decree to which NCBC is a party or by which it is bound.
(e) Fairness Opinion. PBI shall have received from Trident
Securities, its independent financial adviser, a "fairness opinion" dated as of
the date of this Agreement and a "bring down fairness opinion" as of the date of
the mailing of proxy materials relative to the Shareholders' Meeting to the
effect that, in the opinion of such adviser, the consideration to be received by
the PBI Record Holders pursuant to the terms and conditions of this Agreement is
fair to the shareholders of PBI from a financial point of view, and such
fairness opinion shall not have been withdrawn prior to the Closing Date.
(f) Material Adverse Change. There shall not have occurred an
event that would be reasonably likely to have a Material Adverse Effect on NCBC.
ARTICLE 9
TERMINATION
9.1 Termination. Notwithstanding any other provision of this
Agreement, and not withstanding the approval of this Agreement by the
shareholders of NCBC or PBI, this Agreement and the Plan of Merger may be
terminated and the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of NCBC and
the Board of Directors of PBI; or
(b) By the Board of Directors of either Party (provided that
the terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.2(a) of this Agreement in the case of PBI and Section 8.3(a) in the case of
NCBC or in material breach of any covenant or other agreement contained in this
Agreement) in the event of an inaccuracy of any representation or warranty of
the other Party contained in this Agreement which cannot be or has not been
cured within thirty (30) days after the giving of written notice to breaching
Party of such inaccuracy and which inaccuracy would provide the terminating
Party the ability to terminate the Merger under the applicable standard set
forth in Section 8.2(a) of this Agreement in the case of PBI and Section 8.3(a)
of this Agreement in the case of NCBC; or
(c) By the Board of Directors of either Party (provided that
the terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.2(a) of this Agreement in the case of PBI and Section 8.3(a) in the case of
NCBC or in material breach of any 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 thirty (30) days after the giving of written notice to the breaching
Party of such breach; or
(d) By the Board of Directors of either Party in the event (i)
any consent of any Regulatory Authority required for consummation of the Merger
shall have been denied by final nonappealable action of such Regulatory
Authority or if any such action taken by such Regulatory Authority is not
appealed within the time limit for appeal or (ii) the shareholders of PBI fail
to vote their approval of this Agreement and the transactions contemplated
hereby as required by the North Carolina Code and PBI's Charter and Bylaws; or
(e) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by September 30, 2000, if the
failure to consummate the transactions contemplated hereby on or before such
date is not caused by any willful breach of this Agreement by the Party electing
to terminate pursuant to this Section 9.1(e) and further, if NCBC shall have
filed all applications necessary to obtain the necessary Consents of banking
Regulatory Authorities within sixty (60) days of the date hereof, and if the
Closing shall not have occurred because of a delay caused by a bank Regulatory
Authority in its review of the application before it, or by the SEC in its
review of the Registration Statement to be filed by NCBC, then PBI shall, upon
NCBC's written request, extend the September 30, 2000, date for a reasonable
time, in no event less than thirty (30) days nor more than sixty (60) days, in
order for NCBC to obtain all Consents of bank Regulatory Authorities required
and/or all Consents of the SEC and any other securities Regulatory Authorities,
and for the expiration of any stipulated waiting periods; or
(f) By the Board of Directors of either Party (provided that
the terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
8.2(a) of this Agreement in the case of PBI and Section 8.3(a) in the case of
NCBC or in material breach of any 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 9.1(e) of this Agreement as the same may be extended
pursuant to Section 9.1(e).
9.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 of this Agreement, this
Agreement and the Plan of Merger shall become void and have no effect, except
that (i) the provisions of this Section 9.1 and Article 10 and Section 7.6(b) of
this Agreement shall survive any such termination and abandonment; (ii) a
termination pursuant to Sections 9.1(b), 9.1(c) or 9.1(f) of this Agreement
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; and (iii) Section 7.8 of this Agreement shall be governed by its
own terms.
9.3 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 9.3 and
Articles 1, 2, 3 and 10 and Sections 7.1, 7.6, 7.12, 7.13, 7.14, 7.15, 7.16,
7.17 and 7.18 of this Agreement.
ARTICLE 10
GENERAL PROVISIONS
10.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"Acquisition Proposal" shall have the meaning given to that
term in Section 7.7.
"Affiliate" of a Party means any Person, partnership,
corporation, association, limited liability company, business trust, or other
legal entity directly or indirectly controlling, controlled by or under common
Control, with that Party.
"Agreement" shall mean this Agreement, the Plan of Merger and
the Exhibits delivered pursuant hereto and incorporated herein by reference.
"Allowances" shall mean the allowances for loan, lease and
other credit losses, including losses in connection with ORE, of any Person.
"Articles of Merger" shall mean the Articles of Merger to be
executed by NCBC and PBI and filed with the Secretary of State of the State of
North Carolina pursuant to Section 55-11-05 of the North Carolina Code and with
the Secretary of State of the State of Tennessee pursuant to Section 00-00-000
of the TBCA, relating to the merger of PBI with and into NCBC as contemplated by
this Agreement and the Plan of Merger.
"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.
"Balance Sheet Date" shall mean September 30, 1999.
"BHC Act" shall mean the Bank Holding Company Act of 1956, as
amended.
"Business Day" shall mean any Monday, Tuesday, Wednesday,
Thursday or Friday that is not a federal or state holiday generally recognized
or observed by banks in the State of Tennessee or North Carolina.
"Closing" shall mean the consummation of the Merger.
"Closing Date" shall mean the date on which the Closing
occurs.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or affirmation by any Person pursuant to any
Contract, Law, Order or Permit.
"Consideration" shall mean the shares of NCBC Common Stock and
the cash settlement of any remaining fractional share of NCBC Common Stock
deliverable to the PBI Record Holders pursuant to Section 2.1(b) of this
Agreement.
"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.
"Control" shall have the meaning assigned to such term in
Section 2(a)(2) of the Bank Holding Company Act of 1956, as amended.
"Default" shall mean (i) any breach or violation of or default
under any Contract, 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 or default under any Contract, Order, or Permit, or (iii) any
occurrence or any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of or renegotiate, or to accelerate, increase or impose any Liability
under, any Contract, Order or Permit.
"Deposits" shall mean all deposits (including, but not limited
to, certificates of deposit, savings accounts, NOW accounts and checking
accounts) of the Savings Bank Subsidiary and other deposit-taking Affiliates.
"Effective Date" shall mean that date on which the Effective
Time of the Merger shall have occurred.
"Effective Time" shall mean the date and time that the
Articles of Merger shall become effective with the Secretaries of State of the
States of North Carolina and Tennessee.
"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 any 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 USC ss.9601, et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 USC ss.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.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exchange Agent" shall mean Bank of New York.
"Exchange Ratio" shall mean the number of shares of NCBC
Common Stock, and fractions thereof, to be exchanged for each share of PBI
Common Stock pursuant to Section 2.1(b) of this Agreement, subject to such
adjustments as may be provided in this Agreement and the Plan of Merger.
"Exhibits" 1 through 3, 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 or thereto.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve" shall mean the Board of Governors of the
Federal Reserve System and shall include the Federal Reserve Bank of St. Louis
or the Federal Reserve Bank of Richmond when acting under delegated authority.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time, consistently applied.
"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).
"HSR Act" shall mean Section 7A of the Xxxxxxx Act, as added
by Title III of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"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.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean those
facts that are actually (as opposed to constructively) known by the Chairman,
Chief Executive Officer, President, Chief Administrative Officer, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer or General
Counsel of such Person, or such other officer of such Person, regardless of
title, charged with or responsible for the oversight of a particular area,
department or function to which the subject matter relates.
"Law" shall mean any code, 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, and (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary course of
the banking business.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability, but shall not include regular, periodic routine examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"Material Adverse Effect" on a Party 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 such Party and its Subsidiaries,
taken as a whole, or (ii) the ability of such Party to perform its obligations
under this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement.
"Merger" shall mean the merger of PBI with and into NCBC, as
described in Section 1.1 of this Agreement.
"Nasdaq" shall mean the Nasdaq Stock Market's National Market,
or its successor, upon which shares of NCBC Common Stock are listed for trading.
"NCBC" shall mean National Commerce Bancorporation, a
corporation chartered and existing under the laws of the State of Tennessee
which is registered both as a bank holding company and as a savings and loan
holding company and whose principal offices are located at Xxx Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxx Xxxxxx, Xxxxxxxxx 00000.
"NCBC Capital Stock" shall mean, collectively, the NCBC Common
Stock, the NCBC Preferred Stock and any other class or series of capital stock
of NCBC.
"NCBC Common Stock" shall mean the $2.00 par value common
stock of NCBC.
"NCBC Companies" shall mean, collectively, NCBC and all NCBC
Subsidiaries.
"NCBC Disclosure Letter" shall mean a letter signed by an
Executive Vice President and the Chief Financial Officer of NCBC delivered prior
to the date of this Agreement to PBI 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.
"NCBC Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of NCBC as of
September 30, 1999, and as of December 31. 1998, and December 30, 1997, and
December 31, 1996, and the related statements of earnings, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for the nine (9) months ended September 30, 1999, and for each of the three
years ended December 31, 1998, 1997, and 1996, as filed by NCBC in SEC
Documents, (ii) the consolidated balance sheet of NCBC (including related notes
and schedules, if any) and related statements of earnings, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) included in SEC Documents filed with respect to periods ended subsequent to
September 30, 1999.
"NCBC Preferred Stock" shall mean the no par value preferred
stock of NCBC authorized but none of which is currently outstanding.
"NCBC SEC Reports" has the meaning set forth in Section
5.4(a).
"NCBC Subsidiaries" shall mean the Subsidiaries of NCBC.
"1933 Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"North Carolina Code" shall mean the North Carolina General
Statutes, as amended.
"Operating Property" shall mean any property owned by the
Party in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where required by the context,
includes the owner or operator of such property, but only with respect to such
property.
"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.
"ORE" shall mean real estate and other property acquired
through foreclosure, deed in lieu of foreclosure, or similar procedures.
"PBI Common Stock" shall mean the common stock of Piedmont
Bancorp, Inc., no par value per share.
"PBI Company(ies)" shall mean PBI and all of its Subsidiaries,
whether direct or indirect.
"PBI Disclosure Letter" shall mean a letter signed by the
Chief Executive Officer and Chief Financial Officer of PBI delivered prior to
the date of this Agreement to NCBC 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.
"PBI Employee Plans" shall mean any pension plans, profit
sharing plans, deferred compensation plans, stock option plans, cafeteria plans,
and any other such or related benefit plans or arrangements offered or funded by
PBI or any PBI Subsidiary, to or for the benefit of the officers, directors,
employees, independent contractors or consultants of PBI or any PBI Subsidiary.
"PBI Option Plans" means those options to acquire PBI Common
Stock under the Piedmont Bancorp, Inc. Stock Option Plan.
"PBI Record Holders" means those Persons who shall be the
holders of record of any of the issued and outstanding shares of PBI Common
Stock immediately prior to the Effective Time.
"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 NCBC, on the one hand, or PBI on the other
hand, and "Parties" shall mean, NCBC and PBI.
"Pension Plan" shall mean any employee pension benefit plan as
such term is defined in Section 3(2) of ERISA which is maintained by the
referenced Party.
"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.
"Plan of Merger" shall mean the plan of merger providing for
the Merger, in substantially the form of Exhibit 1.
"Proxy Statement" shall mean the proxy statement to be used by
PBI to solicit proxies with a view to securing the approval of the PBI
shareholders of this Agreement and the Plan of Merger.
"Records" means all available records, minutes of meetings of
the Board of Directors, committees and shareholders of a Party; original
instruments and other documentation, pertaining to a Party or any of its
Subsidiaries or assets (including plans and specifications relating to any
realty), Liabilities, Deposits, Contracts, capital stock, and loans; and all
other business and financial records which are necessary or customary for use in
the conduct of such Person or any of such Person's Subsidiary businesses on or
after the Effective Time as it was conducted prior to the Effective Time.
"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 NCBC
under the 1933 Act with respect to the resale of the shares of NCBC Common Stock
to be issued to the shareholders of PBI in connection with the transactions
contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Federal Reserve,
the Office of Thrift Supervision (including its predecessor, the Federal Home
Loan Bank Board), the Office of the Comptroller of the Currency, the FDIC, all
state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, Nasdaq, the National Association of Securities Dealers
and the SEC, or any respective successor thereto.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a Person.
"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 which derive their value in whole or in part from shares of the
capital stock of a Person, including stock appreciation rights and phantom
stock, or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"Savings Bank Subsidiary" shall mean Hillsborough Savings
Bank, Inc., SSB.
"SEC" shall mean the United States Securities and Exchange
Commission, or any successor thereto.
"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 the SEC promulgated thereunder, as well as any similar state
securities laws and any similar rules and regulations promulgated by the
applicable federal or state bank Regulatory Authorities.
"Shareholders' Meeting" shall mean the Special Meeting of the
shareholders of PBI to be held pursuant to Section 7.1 of this Agreement,
including any adjournment or adjournments thereof.
"Subsidiaries" shall mean all of those Persons of which the
entity in question owns or controls 5% or more of the outstanding voting equity
securities or equity interest, either directly or through an unbroken chain of
entities as to each of which 5% or more of the outstanding equity securities or
equity interest is owned directly or indirectly by its parent; provided,
however, that there shall not be included any Person acquired through
foreclosure or in satisfaction of a debt previously contracted in good faith,
any such entity that owns or operates an automatic teller machine interchange
network, or any such Person the equity securities or equity interest of which
are owned or controlled in a fiduciary capacity or through a small business
development corporation.
"Surviving Corporation" shall mean NCBC, as the corporation
resulting from and surviving the consummation of the Merger as set forth in
Section 1.1 of this Agreement.
"Tax" or "Taxes" shall mean any federal, state, county, local
or foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy and other taxes,
assessments, charges, fares or impositions, including interest, penalties, and
additions imposed thereon or with respect thereto.
"TBCA" shall mean the Tennessee Business Corporation Act, as
amended.
(b) 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."
10.2 Expenses.
(a) Except as otherwise provided in this Section 10.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the costs 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 the filing fees
payable in connection with the Registration Statement and the Proxy Statement
and printing and mailing costs incurred in connection with the printing and
mailing of the Registration Statement and the Proxy Statement based on the
relative Asset sizes of the Parties at September 30, 1999.
(b) Nothing contained in this Section 10.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
non-breaching Party.
10.3 Brokers and Finders. Other than the engagement of Trident
Securities by PBI and Xxxxxx, Xxxxxxxx & Company by NCBC, 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, investments bankers fees, brokerage
fees, commissions, or finders fees in connection with this Agreement or the ones
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 PBI or NCBC, each of PBI and NCBC, 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.
10.4 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement (including the other 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. 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.
10.5 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 the Boards of Directors of each of the Parties, whether
before or after shareholder approval of this Agreement and the Plan of Merger
has been obtained; provided, that after any such approval by the holders of PBI
Common stock, there shall be made no amendment that modifies in any material
respect the Consideration to be received by the PBI Record Holders.
Notwithstanding the foregoing or any other provision contained in this
Agreement, in the event NCBC shall exercise its rights pursuant to Section 1.8
of this Agreement, PBI shall execute any amendment reasonably presented in
accordance with such section.
10.6 Publicity. The Parties shall mutually agree upon a press
release to be released no later than the next business day following execution
of this Agreement announcing that the Agreement has been executed. The press
release shall be in form and substance mutually agreed upon by the Parties;
provided, however, that such press release shall contain all information that
either Party shall be advised by counsel is necessary to satisfy such Party's
obligations under applicable laws, including, without limitation, the federal
securities laws and the rules of The Nasdaq Stock Market. The Parties shall
consult with each other regarding the form and substance of all subsequent press
releases related to the transactions contemplated by the Agreement; provided,
however, that notwithstanding the foregoing, neither Party shall be prohibited
from making any disclosure of information that such Party shall be advised by
counsel is necessary to satisfy such Party's obligations under applicable law,
including, without limitation, the federal securities laws and the rules of The
Nasdaq Stock Market.
10.7 Waivers.
(a) Prior to or at the Effective Time, NCBC, 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 PBI, to waive or extend the time for the compliance or fulfillment
by PBI of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of NCBC 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 NCBC.
(b) Prior to or at the Effective Time, PBI, 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 NCBC, to waive or extend the time for the compliance or fulfillment
by NCBC of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of PBI 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 PBI.
(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.
10.8 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; provided, however, NCBC
may assign all of their rights hereunder to any other wholly owned Subsidiary
whether now existing or hereafter acquired or organized. 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.
10.9 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
prepaid, 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:
If to NCBC: National Commerce Bancorporation
Xxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Vice President and General Counsel
Fax: (000) 000-0000
Telephone: (000) 000-0000
With a copy to: Bass, Xxxxx & Xxxx PLC
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Good, Esq.
Fax: (000)000-0000
Telephone: (000) 000-0000
If to PBI: Piedmont Bancorp, Inc.
000 Xx. Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: D. Xxxxx Xxxxxxx
President and Chief Executive Officer
Fax: (000) 000-0000
Telephone: (000) 000-0000
With a copy to: Brooks, Pierce, XxXxxxxx, Xxxxxxxx &
Xxxxxxx, L.L.P.
0000 Xxxxxxxxxxx Xxxxx
000 Xxxxx Xxx Xxxxxx
P. O. Box 26000 (27420)
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, III, Esq.
Fax: (000) 000-0000
Telephone: (000) 000-0000
10.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Tennessee, without regard
to any applicable conflicts of Laws.
10.11 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 document.
10.12 Captions. The captions contained in this Agreement are
for reference purposes only and are not part of this Agreement.
10.13 Interpretation. 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.
10.14 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
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.
10.15 Attorneys' Fees. If any Party hereto shall bring any
action at law or in equity to enforce its rights under this Agreement (including
an action based upon a misrepresentation or the breach of any warranty,
covenant, agreement or obligation contained herein), the prevailing Party in
such action shall be entitled to recover from the other Party its reasonable
costs and expenses necessarily incurred in connection with such action
(including fees, disbursements and expenses of attorneys and costs of
investigation).
10.16 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.
10.17 Remedies Cumulative. All remedies provided in this
Agreement, by Law or otherwise, shall be cumulative and not alternative.
IN WITNESS WHEREOF, each of the Parties hereto has duly
executed and delivered this Agreement or has caused this Agreement to be
executed and delivered in its name and on behalf by its representatives
thereunto duly authorized, all as of the date first written above.
PIEDMONT BANCORP, INC.
By: /s/ D. Xxxxx Xxxxxxx
--------------------
D. Xxxxx Xxxxxxx
President and Chief
Executive Officer
ATTEST:
/s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
Secretary
(Corporate Seal)
NATIONAL COMMERCE BANCORPORATION
By:/s/ Xxxxxxx X. Xxxx, Xx.
-------------------------
Xxxxxxx X. Xxxx, Xx. Vice Chairman
ATTEST:
/s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx, Secretary
PLAN OF MERGER
OF
PIEDMONT BANCORP, INC.
WITH AND INTO
NATIONAL COMMERCE BANCORPORATION.
Pursuant to this Plan of Merger ("Plan of Merger") dated ,
2000, PIEDMONT BANCORP, INC. ("PBI"), a corporation organized and existing under
the laws of the State of North Carolina, shall be merged with and into NATIONAL
COMMERCE BANCORPORATION ("NCBC"), a corporation organized and existing under the
laws of the State of Tennessee.
ARTICLE 1
TERMS OF MERGER
1.1 The Merger. Subject to the terms and conditions of that
certain Agreement and Plan of Reorganization dated as December 27, 1999, between
PBI and NCBC (the "Merger Agreement") and this Plan of Merger, at the Effective
Time (defined below), PBI shall be merged with and into NCBC in accordance with
the provisions of Section 55-11-06 of North Carolina General Statutes and with
the effect provided in Section 00-00-000 of the Tennessee Code Annotated (the
"Merger"). NCBC shall be the surviving corporation resulting from the Merger
(the "Surviving Corporation") and shall continue to be governed by the laws of
the State of Tennessee. The Merger shall be consummated pursuant to the terms of
the Merger Agreement and this Plan of Merger.
1.2 Effective Time. The Merger shall become effective on the
date and at the time the Articles of Merger reflecting the Merger shall have
been filed with both the Secretary of State of the State of North Carolina and
the Secretary of State of the State of Tennessee (the "Effective Time").
1.3 Charter. The Charter of NCBC in effect immediately prior
to the Effective Time shall be the Charter of the Surviving Corporation until
otherwise amended or repealed.
1.4 Bylaws. The Bylaws of NCBC in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
1.5 Name. The name of NCBC shall remain unchanged after the
Effective Time, unless and until otherwise renamed.
1.6 Directors and Officers. The directors and officers of NCBC
in office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected or appointed, shall serve as the directors
and officers of the Surviving Corporation from and after the Effective Time in
accordance with the bylaws of the Surviving Corporation, unless and until their
successors shall have been elected or appointed and shall have qualified or
until they shall have been removed in the manner provided therein.
ARTICLE 2
MANNER OF CONVERTING SHARES AND OPTIONS; EXCHANGE RATIO
2.1 Conversion, Cancellation and Exchange of Shares; Exchange
Ratio. At the Effective Time, by virtue of the Merger becoming effective and
without any action on the part of NCBC, PBI, or the shareholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) NCBC Common Stock. Each share of NCBC common stock, par
value $2.00 per share (the "NCBC Common Stock") issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) PBI Common Stock. Each share of PBI common stock, no par
value (the "PBI Common Stock") issued and outstanding at the Effective Time
shall cease to represent any interest (equity, shareholder or otherwise) in PBI
and shall automatically be converted exclusively into, and constitute only the
right of each holder of record of PBI Common Stock immediately before the
Effective Time (a "PBI Record Holder") to receive in exchange for such PBI
Record Holder's shares of PBI Common Stock the consideration to which the PBI
Record Holder is entitled as provided in this Section 2.1(b) (the
"Consideration"):
(i) The Exchange Ratio Calculation. Subject to any
adjustments which may be required by an event described in Subsection
2.1(b)(iii) below, at and as of the Effective Time:
(A) Each share of the PBI Common Stock outstanding
at and as of the Effective Time shall be converted into
the right to receive that number of shares of NCBC Common
Stock equal to (the "Exchange Ratio"):
(I) The quotient of the Net Purchase Price
(defined below) divided by the NCBC Market Price Per
Share (defined below),
divided by
(II) The sum of the number of shares of PBI
Common Stock outstanding at and as of the Effective
Time and the number of shares of PBI Common Stock
issuable pursuant to options to purchase PBI Common
Stock to the extent that such options are outstanding
at and as of the Effective Time.
Notwithstanding the provisions of subsection (A) above, if the
Market Price Per Share shall be less than $20.70, then each share of PBI Common
Stock outstanding at and as of the Effective Time shall be converted into the
right to receive .60499 shares of NCBC Common Stock, and if the Market Price Per
Share shall exceed $25.30, then each share of PBI Common Stock outstanding at
and as of the Effective Time shall be converted into the right to receive .49499
shares of NCBC Common Stock.
(B) "Net Purchase Price" shall be $34,500,000.
No share of PBI Common Stock shall be deemed to be
outstanding or have any rights other than those set
forth in this Section 2.1(b) after the Effective
Time. No fractional shares of NCBC Common Stock
shall be issued in the Merger and, if after
aggregating all of the whole and fractional shares
of NCBC Common Stock to which a PBI Record Holder
shall be entitled based upon this Exchange Ratio
calculation, there should be a fractional share of
NCBC Common Stock remaining, such fractional share
shall be settled by a cash payment therefor pursuant
to Article 3 of this Plan of Merger, which cash
settlement shall be based upon the Market Price Per
Share (as defined below) of one (1) full share of
NCBC Common Stock.
(ii) Definition of Market Price Per Share. The "Market Price
Per Share" of NCBC Common Stock shall be the average of the closing price per
share of NCBC Common Stock on the Nasdaq Stock Market's National Market (as
reported by The Wall Street Journal) on the five (5) trading day period ending
two (2) trading days prior to the Effective Time, or such earlier date as may be
required by the Securities and Exchange Commission.
(iii) Effect of Stock Splits, Reverse Stock Splits, Stock
Dividends and Similar Changes in the Capital of PBI. Should PBI effect any stock
splits, reverse stock splits, stock dividends or similar changes in its
respective capital accounts prior to the
Effective Time, the Exchange Ratio may, in NCBC's sole discretion if such change
in the capital accounts constitutes a breach of any of PBI's representations,
warranties or covenants, be adjusted in such a manner as the Board of Directors
of NCBC shall deem in good faith to be fair and reasonable in order to give
effect to such changes. Notwithstanding the foregoing, nothing in this
subparagraph (iii) shall be deemed to be a waiver of the inaccuracy of any
representation or warranty or breach of any covenant by PBI set forth in the
Merger Agreement.
(c) Shares Held by PBI or NCBC. Each of the shares of PBI
Common Stock held by PBI or any subsidiary or affiliate of PBI or by NCBC or any
subsidiary or affiliate of NCBC, in each case other than in a fiduciary capacity
or as a result of debts previously contracted, shall be cancelled and retired at
the Effective Time and no Consideration shall be issued in exchange therefor.
2.2 Conversion of Stock Options.
(a) At the Effective Time, all rights with respect to PBI
Common Stock pursuant to stock options ("PBI Options") granted by PBI under all
stock option plans of PBI (each a "PBI Option Plan"), which are outstanding at
the Effective Time, whether or not exercisable, shall be converted into and
become rights with respect to NCBC Common Stock, and NCBC shall assume each PBI
Option, in accordance with the terms of the PBI Option Plan and stock option
agreement by which it is evidenced. From and after the Effective Time, (i) each
PBI Option assumed by NCBC may be exercised solely for shares of NCBC Common
Stock, (ii) the number of shares of NCBC Common Stock subject to such PBI Option
shall be equal to the number of shares of PBI Common Stock subject to such PBI
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
and (iii) the per share exercise price under each such PBI Option shall be
adjusted by dividing the per share exercise price under each such PBI Option by
the Exchange Ratio and rounding down to the nearest cent. PBI agrees to take all
necessary steps to effectuate the foregoing provisions of this Section 2.2.
Notwithstanding the foregoing, each stock option which is an "incentive stock
option" under the PBI Option Plan shall be adjusted as required by Section 424
of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations promulgated thereunder so as to continue as an incentive stock
option under Section 424 of the Code and so as not to constitute a modification,
extension or renewal of the option within the meaning of Section 424(h) of the
Code.
2.3 Restricted Stock. At the Effective Time, each share of PBI
Common Stock held by the trustees under the Hillsborough Savings Bank, Inc., SSB
Management Recognition Plan (the "MRP"), including unvested shares subject to
Awards as defined in the MRP heretofore granted to participants under the MRP,
shall be converted into and exchanged for NCBC Common Stock and cash in lieu of
fractional shares pursuant to the provisions of Section 3.1 below, and such
shares and cash shall thereafter be held to be delivered to the respective
participants pursuant to the MRP. At the Effective Time, the MRP and each stock
grant agreement pursuant to which Awards were granted shall remain in effect,
except that from and after the Effective Time the MRP and each such stock grant
agreement shall be amended as necessary to provide that: (i) NCBC shall be
substituted for the Hillsborough Savings Bank, Inc., SSB; (ii) the Board of
Directors of NCBC or its Compensation Committee shall be substituted for the
Committee of the Savings Bank Subsidiary Board of Directors with respect to
administration of the MRP; (iii) unvested shares of NCBC Common Stock and cash
determined in accordance with the provisions of Section 3.1 below shall be
substituted for unvested shares of PBI Common Stock; (iv) no shares or other
assets in addition to the shares of PBI Common Stock currently awarded under the
MRP shall be purchased by or for the MRP; and (v) shares, cash or other
interests in the MRP forfeited by participants shall be retained by the trustees
of the MRP and shall be available for making additional Awards under the MRP.
2.4 Anti-Dilution Provisions. In the event NCBC changes the
number of shares of NCBC Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or 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.
ARTICLE 3
EXCHANGE OF SHARES
3.1 Exchange Procedures. Promptly after the Effective Time,
NCBC and PBI shall cause the Bank of New York (the "Exchange Agent") to mail to
the PBI Record Holders appropriate transmittal materials (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of PBI Common Stock shall pass, only upon proper
delivery of such certificates to the Exchange Agent). The Exchange Agent may
establish reasonable and customary rules and procedures in connection with its
duties. After the Effective Time, each PBI Record Holder of PBI Common Stock
(other than shares to be cancelled pursuant to Section 2.1(c) of this Plan of
Merger) 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 2.1(b) of this Plan of Merger, together with
all undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 3.2 of this Plan of Merger. To the extent
required by Section 2.1(b) of this Plan of Merger, each PBI Record Holder also
shall receive, upon surrender of the certificate or certificates representing
his or her shares of PBI Common Stock outstanding immediately prior to the
Effective Time, cash in lieu of any fractional share of NCBC Common Stock to
which such holder may be otherwise entitled (without interest). NCBC shall not
be obligated to deliver the Consideration to which any PBI Record Holder is
entitled as a result of the Merger until such PBI Record Holder surrenders such
holder's certificate or certificates representing the shares of PBI Common Stock
for exchange as provided in this Section 3.1. The certificate or certificates of
PBI Common Stock so surrendered shall be duly endorsed as the Exchange Agent may
reasonably require. Any other provision of this Plan of Merger notwithstanding,
neither NCBC nor the Exchange Agent shall be liable to a PBI Record Holder for
any amounts paid or properly delivered in good faith to a public official
pursuant to any applicable abandoned property Law. Adoption of the Merger
Agreement and this Plan of Merger by the shareholders of PBI shall constitute
ratification of the appointment of the Exchange Agent.
3.2 Rights of Former PBI Record Holders. At the Effective
Time, the stock transfer books of PBI shall be closed as to holders of PBI
Common Stock outstanding immediately prior to the Effective Time, and no
transfer of PBI Common Stock by any PBI Record Holder shall thereafter be made
or recognized. Until surrendered for exchange in accordance with the provisions
of Section 3.1 of this Plan of Merger, each certificate theretofore representing
shares of PBI Common Stock (other than shares to be cancelled pursuant to
Section 2.1(c) of this Plan of Merger) shall from and after the Effective Time
represent for all purposes only the right to receive the Consideration provided
in Section 2.1(b) of this Plan of Merger, 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 PBI in respect of such shares of PBI Common Stock in accordance with the
terms of this Plan of Merger and which remain unpaid at the Effective Time.
Whenever a dividend or other distribution is declared by NCBC on the NCBC 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 NCBC
Common Stock issuable pursuant to this Plan of Merger, but beginning sixty (60)
days after the Effective Time no dividend or other distribution payable to the
holders of record of NCBC Common Stock as of any time subsequent to the
Effective Time shall be delivered to a PBI Record Holder until such PBI Record
Holder surrenders his or her certificate or certificates evidencing PBI Common
Stock for exchange as provided in Section 3.1 of this Plan of Merger. However,
upon surrender of such PBI Common Stock certificate, both the NCBC Common Stock
certificate 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.
3.3 Lost Certificates. Any PBI Record Holder whose certificate
representing shares of PBI Common Stock has been lost, destroyed, stolen or
otherwise is missing shall be entitled to receive a certificate representing the
shares of NCBC Common Stock and cash in lieu of fractional shares to which he or
she is entitled in accordance with and upon compliance with conditions
reasonably imposed by the Exchange Agent (including, without limitation, a
requirement that the shareholder provide a lost instruments indemnity bond in
form, substance and amount reasonably satisfactory to the Exchange Agent).
ARTICLE 4
MISCELLANEOUS
4.1 Conditions Precedent. Consummation of the Merger by NCBC
shall be conditioned on the satisfaction of or waiver by NCBC of the conditions
precedent to the Merger set forth in Sections 8.1 and 8.2 of the Merger
Agreement. Consummation of the Merger by PBI shall be conditioned on the
satisfaction, or waiver by PBI, of the conditions precedent to the Merger set
forth in Sections 8.1 and 8.3 of the Merger Agreement.
4.2 Amendments. To the extent permitted by Law and the Merger
Agreement, this Plan of Merger may be amended as permitted in the Merger
Agreement.
4.3 Captions. The captions contained in this Plan of Merger
are for reference purposes only and are not part of this Plan of Merger.
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Agreement"), dated as of
December 27, 1999, is between NATIONAL COMMERCE BANCORPORATION ("NCBC") and
PIEDMONT BANCORP, INC. ("PBI").
RECITALS
PBI and NCBC have executed an Agreement and Plan of
Reorganization ("Merger Agreement"), of even date with this Agreement, under
which PBI will be merged with and into NCBC upon completion of the merger
("Merger") contemplated in the Merger Agreement.
By negotiating and executing the Merger Agreement and by
taking actions necessary or appropriate to effect the transactions contemplated
by the Merger Agreement, NCBC has incurred and will incur substantial direct and
indirect costs (including, without limitation, the costs of management and
employee time) and will forgo the pursuit of certain alternative investments and
transactions.
AGREEMENT
THEREFORE, in consideration of the promises set forth in this
Agreement and in the Merger Agreement, the parties agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth in this Agreement, PBI irrevocably grants an option ("Option") to NCBC to
purchase that number of authorized but unissued shares of PBI's common stock, no
par value per share ("PBI Common Stock"), such that immediately following such
purchase NCBC would own 19.5% of the then issued and outstanding shares (as
adjusted as set forth herein) of PBI Common Stock after giving effect to the
exercise of the Option at a per share price in cash (or immediately available
funds) equal to $7.65 ("Option Price").
2. Exercise of Option. Subject to the provisions of this
Section 2 and of Section 12(a) of this Agreement, this Option may be exercised
by NCBC as set forth in Section 5 of this Agreement, in whole or in part, at any
time, in any of the following circumstances:
(a) PBI enters into an agreement or PBI's Board of Directors
recommends to PBI shareholders (or withdraws its recommendation FOR approval of
the Merger after receipt of a proposal for PBI to enter into) an agreement
(other than the Merger Agreement) under which any entity,
person or group (collectively "Person"), within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended ("Exchange Act"), would: (1)
merge or consolidate with, acquire 25% or more of the assets or liabilities of,
or enter into any similar transaction with PBI, or (2) purchase or otherwise
acquire (including by merger, reorganization, consolidation, share exchange or
any similar transaction) securities representing 25% or more of PBI's voting
shares;
(b) any Person (other than NCBC or any of its subsidiaries)
acquires the beneficial ownership or the right to acquire beneficial ownership
of securities which, when aggregated with other such securities owned by such
Person, represents 25% or more of the voting shares of PBI (the term "beneficial
ownership" for purposes of this Agreement has the meaning set forth in Section
13(d) of the Exchange Act, and the regulations promulgated under the Exchange
Act) (not including acquisitions pursuant to which the acquiror or acquiring
group has successfully rebutted the presumption of control pursuant to 12 C.F.R.
ss.574(e) and has voted or given to management of PBI an irrevocable proxy to
vote the securities so acquired for the approval of the Merger at any and all
meetings of shareholders of PBI called for that purpose or at which such matter
is considered (a "Rebuttal Acquisition");
(c) failure of the shareholders to approve, prior to the
termination of the Merger Agreement, the Merger by the required affirmative vote
at a meeting of the shareholders, because a third Person (other than NCBC or a
subsidiary of NCBC) announces publicly or communicates, in writing, to PBI a
proposal to (a) acquire PBI (by merger, reorganization, consolidation, the
purchase of 25% or more of its assets or liabilities, or any other similar
transaction), or (b) purchase or otherwise acquire securities representing 25%
or more of the voting shares of PBI.
(d) It is understood and agreed that the Option will become
exercisable immediately upon the occurrence of any of the above-described
circumstances even though the circumstance occurred as a result, in part or in
whole, of the board of PBI complying with its fiduciary duties.
(e) Notwithstanding any other provision of this Agreement to
the contrary, in no event shall:
(i) NCBC's Total Profit (as defined below)
exceed $1,035,000 and, if it otherwise would exceed such
amount, NCBC at its sole election, shall either (A) reduce any
remaining shares of PBI Common Stock subject to the Option,
(B) deliver to PBI for cancellation without consideration
shares of PBI Common Stock previously purchased by NCBC
pursuant to the exercise of the Option, (C) pay cash to PBI,
or (D) any combination of the foregoing, so that NCBC's actual
realized Total Profit shall not exceed $1,035,000 after taking
into account the foregoing actions; or
(ii) the Option be exercised for a number of
shares of PBI Common Stock as would, as of the date of
exercise, result in NCBC's Total Notional Profit (as defined
below) exceeding $1,035,000; 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) any net
cash amounts received by NCBC pursuant to the sale of shares of PBI Common Stock
received pursuant to the exercise of the Option ( or any other securities into
which such shares shall be converted or exchanged) to any unaffiliated person
less NCBC's purchase price of such shares; (ii) any amount received by NCBC
pursuant to PBI's repurchase of shares of PBI Common Stock received pursuant to
the exercise of the Option less NCBC's purchase price of such shares, and (iii)
any amount received by NCBC pursuant to PBI's repurchase of the Option (or any
portion thereof).
As used in this Agreement, the term "Total Notional Profit"
with respect to any number of shares of PBI Common Stock as to which NCBC 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 such shares held by NCBC or its affiliates as of such date that were
issued pursuant to the exercise of the Option, were sold for cash at the closing
sale price per share of PBI Common Stock as quoted on the American Stock
Exchange ("AMEX") or, if PBI Common Stock in not then quoted on AMEX, 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 NCBC as of the close of business on the preceding trading day
(less customary brokerage commissions).
3. Notice, Time and Place of Exercise. When NCBC wishes to
exercise the Option, NCBC will give written notice of its intention to exercise
the Option and the place and date for the closing of the exercise (which date
may not be later than ten business days from the date such notice is mailed). If
any law, regulation or other restriction will not permit such exercise to be
consummated during this ten-day period, the date for the closing of such
exercise will be within five days following the cessation of the restriction on
consummation.
4. Payment and Delivery of Certificate(s). At the closing for
the exercise of the Option or any portion thereof, (a) NCBC and PBI will each
deliver to the other certificates as to the accuracy, as of the closing date, of
their respective representations and warranties under this Agreement, (b) NCBC
will pay the aggregate purchase price for the shares of PBI Common Stock to be
purchased by delivery of a certified or bank cashier's check in immediately
available funds payable to the order of PBI, and (c) PBI will deliver to NCBC a
certificate or certificates representing the shares so purchased.
5. Transferability of the Option. Neither the Option nor any
portion of the Option will be transferable except to a wholly-owned subsidiary
of NCBC.
6. Representations, Warranties and Covenants of PBI. PBI
represents and warrants to NCBC as follows:
(a) Due Authorization. This Agreement has been duly authorized
by all necessary corporate action on the part of PBI, has been duly executed by
a duly authorized officer of PBI and constitutes a valid and binding obligation
of PBI. No shareholder approval by PBI shareholders is required by applicable
law or otherwise before the exercise of the Option in whole or in part.
(b) Option Shares. PBI 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 of this Agreement to such time as the obligation to deliver
shares under this Agreement terminates, will have reserved for issuance, at the
closing(s) upon exercise of the Option, the Option Shares (subject to
adjustment, as provided in Section 8 below), all of which, upon issuance under
this Agreement, will be duly and validly issued, fully paid and nonassessable,
and will be delivered free and clear of all claims, liens, encumbrances and
security interests, including any preemptive right of any of the shareholders of
PBI.
(c) No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated by it will
violate or result in any violation of or be in conflict with or constitute a
default under any term of the charter or bylaws of PBI or any agreement,
instrument, judgment, decree, law, rule or order applicable to PBI or any
subsidiary of PBI or to which PBI or any such subsidiary is a party.
(d) Notification of Record Date. At any time from and after
the date of this Agreement until the Option is no longer exercisable, PBI will
give NCBC at least 10 days prior written notice before setting the record date
for determining the holders of record of the PBI Common Stock entitled to vote
on any transaction described in Section 2 above.
7. Representations, Warranties and Covenants of NCBC. NCBC
represents and warrants to PBI as follows:
(a) Due Authorization. This Agreement has been duly authorized
by all necessary corporate action on the part of NCBC, has been duly executed by
a duly authorized officer of NCBC and constitutes a valid and binding obligation
of NCBC.
(b) No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated by it will
violate or result in any violation of or be in conflict with or constitute a
default under any term of the charter or bylaws of NCBC or
any agreement, instrument, judgment, decree, law, rule or order applicable to
NCBC or any subsidiary of NCBC or to which NCBC or any such subsidiary is a
party.
8. Adjustment Upon Changes in Capitalization. In the event of
any change in the PBI Common Stock by reason of stock dividends, split-ups,
mergers, reorganizations, recapitalizations, combinations, exchanges of shares
or the like, the number and kind of shares or securities subject to the Option
and the purchase price per share of Common Stock will be appropriately adjusted.
If, before the Option terminates or is exercised, PBI is acquired by another
party, or consolidates with or merges into another corporation, NCBC will
thereafter receive, upon exercise of the Option, the securities or properties to
which a holder of the number of shares of Common Stock then deliverable upon the
exercise thereof would have been entitled upon such acquisition, consolidation,
merger, or reorganization, and PBI will take all steps in connection with such
acquisition, consolidation, merger, or reorganization, as may be necessary to
assure that the provisions of this Agreement will thereafter be applicable, as
nearly as reasonably may be practicable, in relation to any securities or
property thereafter deliverable upon exercise of the Option.
9. Binding Effect; Assignment. This Agreement binds and inures
to the benefit of the parties and their successors. Except as set forth in
Section 5, this Agreement is not assignable by either party.
10. Regulatory Restrictions. Upon exercise of this Option, PBI
will use its best efforts to obtain or to cooperate with NCBC in obtaining all
necessary regulatory consents, approvals, waivers or other action (whether
regulatory, corporate or other) to permit the acquisition of any or all Option
Shares by NCBC.
11. No Rights as Shareholder. This Option, before it is
exercised, will not entitle its holder to any rights as a shareholder of PBI at
law or in equity. Specifically, this Option, before it is exercised, will not
entitle the holder to vote on any matter presented to the shareholders of PBI
or, except as provided in this Agreement, to any notice of any meetings of
shareholders or any other proceedings of PBI.
12. Miscellaneous.
(a) Termination. This Agreement and the Option will terminate
upon the earliest of (1) the mutual agreement of the parties to this Agreement;
(2) the 90th day following the termination of the Merger Agreement for any
reason; or (3) 12 months after the date hereof; but if the Option has been
exercised before the termination of this Agreement, then the exercise will close
under Section 4 of this Agreement, even though that closing date is after the
termination of this Agreement.
(b) Amendments. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties.
(c) Severability of Terms. Any provision of this Agreement
that is invalid, illegal or unenforceable is ineffective only to the extent of
the invalidity, illegality or unenforceability without affecting in any way the
remaining provisions or rendering any other provisions of this Agreement
invalid, illegal or unenforceable. Without limiting the generality of the
foregoing, if the right of NCBC to exercise the Option in full for the total
number of shares of PBI Common Stock or other securities or property issuable
upon the exercise of the Option is limited by applicable law, or otherwise, NCBC
may, nevertheless, exercise the Option to the fullest extent permissible.
(d) Notices. All notices, requests, claims, demands and other
communications under this Agreement must be in writing and must be given (and
will be deemed to have been duly received if so given) by delivery, by cable,
telecopies or telex, or by registered or certified mail, postage prepaid, return
receipt requested, to the respective parties at the addresses below, or to such
other address as either party may furnish to the other in writing. Change of
address notices will be effective upon receipt.
If to PBI to: Piedmont Bancorp, Inc.
000 Xx. Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: D. Xxxxx Xxxxxxx, President
Fax: (000) 000-0000
Phone: (000) 000-0000
with a copy to: Brooks, Pierce, XxXxxxxx, Xxxxxxxx &
Xxxxxxx, L.L.P.
0000 Xxxxxxxxxxx Xxxxx
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, III, Esq.
Fax: (000) 000-0000
Phone: (000) 000-0000
If to NCBC to: National Commerce Bancorporation
Xxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
and
Xxxxxxx X. Xxxxx
Vice President and General Counsel
Fax: (000) 000-0000
Phone: (000) 000-0000
with a copy to: Bass, Xxxxx & Xxxx PLC
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx X. Good, Esq.
Fax: (000) 000-0000
Phone: (000) 000-0000
(e) Governing Law. The parties intend this Agreement and the
Option, in all respects, including all matters of construction, validity and
performance, to be governed by the laws of the State of North Carolina, without
giving effect to conflicts of law principles.
(f) Counterparts. This Agreement may be executed in several
counterparts, including facsimile counterparts, each of which is an original,
and all of which together constitute one and the same agreement.
(g) Effects of Headings. The section headings in this
Agreement are for convenience only and do not affect the meaning of its
provisions.
IN WITNESS WHEREOF, the parties hereto have signed and
delivered this Stock Option Agreement as of the day and year first above
written.
NATIONAL COMMERCE BANCORPORATION
By:
-------------------
Xxxxxxx X. Xxxx,
Vice Chairman
PIEDMONT BANCORP, INC.
By: -----------------
D. Xxxxx Xxxxxxx
President and Chief Executive
Officer
