Final
EXHIBIT 2
AGREEMENT AND PLAN OF SHARE EXCHANGE
BY AND BETWEEN
FIRST SECURITY GROUP, INC.
AND
FIRST STATE BANK
DATED AS OF MARCH 13, 2002
TABLE OF CONTENTS
PAGE
----
ARTICLE 1........................................................................................................ 5
TRANSACTIONS AND TERMS OF THE SHARE EXCHANGE...................................................................... 5
1.1 SHARE EXCHANGE........................................................................................ 5
1.2 TIME AND PLACE OF CLOSING............................................................................. 6
1.3 EFFECTIVE TIME........................................................................................ 6
ARTICLE 2......................................................................................................... 6
TERMS OF SHARE EXCHANGE........................................................................................... 6
2.1 CHARTER............................................................................................... 6
2.2 BYLAWS................................................................................................ 6
2.3 DIRECTORS AND OFFICERS................................................................................ 6
ARTICLE 3......................................................................................................... 7
EXCHANGE OF SHARES................................................................................................ 7
3.1 EXCHANGE OF SHARES.................................................................................... 7
3.2 SHARES HELD BY SELLER OR BUYER........................................................................ 7
3.3 DISSENTING SHAREHOLDERS............................................................................... 7
3.4 DEDUCTIONS FOR TAXES.................................................................................. 7
3.5 ESCHEAT............................................................................................... 8
3.6 RIGHTS OF FORMER SELLER SHAREHOLDERS.................................................................. 8
ARTICLE 4......................................................................................................... 8
REPRESENTATIONS AND WARRANTIES OF SELLER.......................................................................... 8
4.1 ORGANIZATION, STANDING, AND POWER..................................................................... 8
4.2 AUTHORITY OF SELLER; NO BREACH BY AGREEMENT........................................................... 9
4.3 CAPITAL STOCK......................................................................................... 10
4.4 SELLER SUBSIDIARIES................................................................................... 10
4.5 FINANCIAL STATEMENTS.................................................................................. 11
4.6 ABSENCE OF UNDISCLOSED LIABILITIES.................................................................... 11
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................................. 12
4.8 TAX MATTERS........................................................................................... 12
4.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES.................................................................... 13
4.10 ASSETS................................................................................................ 14
4.11 INTELLECTUAL PROPERTY................................................................................. 14
4.12 ENVIRONMENTAL MATTERS................................................................................. 15
4.13 COMPLIANCE WITH LAWS.................................................................................. 15
4.14 LABOR RELATIONS....................................................................................... 16
4.15 EMPLOYEE BENEFIT PLANS................................................................................ 16
4.16 PRIVACY OF CUSTOMER INFORMATION....................................................................... 18
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4.17 LEGAL PROCEEDINGS.................................................................................... 19
4.18 REPORTS.............................................................................................. 19
4.19 STATEMENTS TRUE AND CORRECT.......................................................................... 19
4.20 ACCOUNTING, TAX, AND REGULATORY MATTERS.............................................................. 20
4.21 STATE TAKEOVER LAWS.................................................................................. 20
4.22 CHARTER PROVISIONS................................................................................... 20
4.23 SHAREHOLDER SUPPORT AGREEMENTS....................................................................... 20
4.24 OPINION OF FINANCIAL ADVISOR......................................................................... 20
4.25 BOARD RECOMMENDATION................................................................................. 20
4.26 USA PATRIOT ACT COMPLIANCE........................................................................... 21
ARTICLE 5........................................................................................................ 21
REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................................... 21
5.1 ORGANIZATION, STANDING, AND POWER.................................................................... 21
5.2 AUTHORITY; NO BREACH BY AGREEMENT.................................................................... 21
5.3 CAPITAL STOCK........................................................................................ 22
5.4 BUYER SUBSIDIARIES................................................................................... 22
5.5 SEC FILINGS; FINANCIAL STATEMENTS.................................................................... 22
5.6 ABSENCE OF UNDISCLOSED LIABILITIES................................................................... 23
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS................................................................. 23
5.8 TAX MATTERS.......................................................................................... 24
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES................................................................... 24
5.10 INTELLECTUAL PROPERTY................................................................................ 24
5.11 ENVIRONMENTAL MATTERS................................................................................ 25
5.12 COMPLIANCE WITH LAWS................................................................................. 25
5.13 EMPLOYEE BENEFIT PLANS............................................................................... 25
5.14 LEGAL PROCEEDINGS.................................................................................... 27
5.15 REPORTS.............................................................................................. 27
5.16 STATEMENTS TRUE AND CORRECT.......................................................................... 27
5.17 ACCOUNTING, TAX AND REGULATORY MATTERS............................................................... 28
ARTICLE 6........................................................................................................ 28
CONDUCT OF BUSINESS PENDING CONSUMMATION......................................................................... 28
6.1 AFFIRMATIVE COVENANTS OF SELLER...................................................................... 28
6.2 NEGATIVE COVENANTS OF SELLER......................................................................... 28
6.3 COVENANTS OF BUYER................................................................................... 30
6.4 ADVERSE CHANGES IN CONDITION......................................................................... 30
6.5 REPORTS.............................................................................................. 30
ARTICLE 7........................................................................................................ 31
ADDITIONAL AGREEMENTS............................................................................................ 31
7.1 PRIVATE PLACEMENT MEMORANDUM; SHAREHOLDER APPROVAL................................................... 31
7.2 OTHER OFFERS, ETC.................................................................................... 31
7.3 CONSENTS OF REGULATORY AUTHORITIES................................................................... 32
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7.4 FILINGS WITH STATE OFFICES........................................................................... 32
7.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE................................................................ 32
7.6 INVESTIGATION AND CONFIDENTIALITY.................................................................... 33
7.7 PRESS RELEASES....................................................................................... 33
7.8 STATE TAKEOVER LAWS.................................................................................. 34
7.9 CHARTER PROVISIONS................................................................................... 34
7.10 EMPLOYEE BENEFITS AND CONTRACTS...................................................................... 34
7.11 INDEMNIFICATION...................................................................................... 34
7.12 BOARD MEETINGS....................................................................................... 36
7.13 ACCOUNTING POLICIES.................................................................................. 36
7.14 DELIVERY OF SELLER DISCLOSURE MEMORANDUM............................................................. 36
7.15 AUDITS............................................................................................... 36
ARTICLE 8........................................................................................................ 36
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE................................................................ 36
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY.............................................................. 36
8.2 CONDITIONS TO OBLIGATIONS OF BUYER................................................................... 37
8.3 CONDITIONS TO OBLIGATIONS OF SELLER.................................................................. 38
ARTICLE 9........................................................................................................ 39
TERMINATION...................................................................................................... 39
9.1 TERMINATION.......................................................................................... 39
9.2 EFFECT OF TERMINATION................................................................................ 40
9.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS........................................................ 40
ARTICLE 10....................................................................................................... 41
MISCELLANEOUS.................................................................................................... 41
10.1 DEFINITIONS.......................................................................................... 41
10.2 EXPENSES............................................................................................. 49
10.3 BROKERS AND FINDERS.................................................................................. 49
10.4 ENTIRE AGREEMENT..................................................................................... 49
10.5 AMENDMENTS........................................................................................... 50
10.6 WAIVERS.............................................................................................. 50
10.7 ASSIGNMENT........................................................................................... 50
10.8 NOTICES.............................................................................................. 51
10.9 GOVERNING LAW........................................................................................ 51
10.10 COUNTERPARTS......................................................................................... 52
10.11 CAPTIONS; ARTICLES AND SECTIONS...................................................................... 52
10.12 INTERPRETATIONS...................................................................................... 52
10.13 ENFORCEMENT OF AGREEMENT............................................................................. 52
10.14 SEVERABILITY......................................................................................... 52
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EXHIBIT INDEX
Exhibit Description Page
------- ----------- ----
Exhibit 1 Form of Plan of Exchange....................................................................... 55
Exhibit 2 Form of Shareholder Support Agreements......................................................... 56
Exhibit 3 Form of Opinion of Seller Counsel.............................................................. 57
Exhibit 4 Form of Opinion of Buyer Counsel............................................................... 58
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AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (this "Agreement") is made
and entered into as of March 13, 2002, by and between First Security Group, Inc.
("Buyer"), a Tennessee corporation; and First State Bank ("Seller"), a Tennessee
state-chartered bank.
PREAMBLE
The respective Boards of Directors of Seller and Buyer are of the
opinion that the transactions described herein are in the best interests of the
Parties to this Agreement and their respective shareholders. This Agreement
provides for the acquisition of Seller by Buyer pursuant to a statutory share
exchange (the "Share Exchange") as provided in the TBCA (as defined below), and
as otherwise set forth in the Plan of Exchange in substantially the form of
Exhibit 1 ("Plan of Exchange"). At the effective time of such Share Exchange,
all outstanding shares of the capital stock of Seller shall be converted into
the right to receive a cash payment from Buyer. As a result, Seller shall
continue to conduct its business and operations as a wholly owned subsidiary of
Buyer. The transactions described in this Agreement are subject to the approvals
of the shareholders of Seller applicable Regulatory Authorities , and the
satisfaction of the other conditions provided in this Agreement.
Concurrently with the execution and delivery of this Agreement, as a
condition and inducement to Buyer's willingness to enter into this Agreement,
certain of the holders of the outstanding shares of Seller Common Stock have
executed and delivered to Buyer an agreement in substantially the form of
Exhibit 2 (the "Shareholder Support Agreements"), pursuant to which they have
agreed, among other things, subject to the terms of such Shareholder Support
Agreement, to vote the shares of Seller Common Stock over which such Persons
have voting power to approve and adopt this Agreement.
Certain capitalized terms used in this Agreement are defined in Section
10.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
Parties agree as follows:
ARTICLE 1.
TRANSACTIONS AND TERMS OF THE SHARE EXCHANGE
1.1 SHARE EXCHANGE.
Subject to the terms and conditions of this Agreement, at the Effective
Time and in accordance with the provisions of Section 00-00-000 of the Tennessee
Business Corporation Act (the "TBCA") and with the effect provided in Section
00-00-000 of the TBCA, Seller shall become a wholly owned subsidiary of Buyer
through the Share Exchange. The separate corporate existence of each of Buyer
and Seller shall continue following the Share Exchange.
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1.2 TIME AND PLACE OF CLOSING.
The closing of the transactions contemplated hereby (the "Closing")
will take place at 9:00 A.M. on the date that the Effective Time occurs (or the
immediately preceding day if the Effective Time is earlier than 9:00 A.M.), or
at such other time as the Parties, acting through their authorized officers, may
mutually agree. The Closing shall be held at such location as may be mutually
agreed upon by the Parties.
1.3 EFFECTIVE TIME.
The Share Exchange and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Plan of
Exchange reflecting the Share Exchange shall become effective with the Secretary
of State of the State of Tennessee (the "Effective Time"). Subject to the terms
and conditions hereof, unless otherwise mutually agreed upon in writing by the
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on the last business day of the
month in which occurs the last to occur of: (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the Share
Exchange, and (ii) the date on which the shareholders of Seller approve this
Agreement to the extent such approval is required by applicable Law or such
later date within 30 days thereof as may be specified by Buyer.
ARTICLE 2.
TERMS OF SHARE EXCHANGE
2.1 CHARTER.
The Charter of Seller in effect immediately prior to the Effective Time
shall be the Charter of the Seller after the Effective Time until duly amended
or repealed.
2.2 BYLAWS.
The Bylaws of Seller in effect immediately prior to the Effective Time
shall be the Bylaws of the Seller after the Effective Time until duly amended or
repealed.
2.3 DIRECTORS AND OFFICERS.
The directors of Seller in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the directors of the Seller from and after the Effective Time in
accordance with the Bylaws of the Seller except that Xxxxxx XxXxxxx will resign
both as Chairman and as a director of the Seller at the Effective Time. The
officers of Seller in office immediately prior to the Effective Time, together
with such additional persons as may thereafter be elected, shall serve as the
officers of the Seller from and after the Effective Time in accordance with the
Bylaws of the Seller.
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ARTICLE 3.
EXCHANGE OF SHARES
3.1 EXCHANGE OF SHARES.
Subject to the provisions of this Article 3, at the Effective Time, by
virtue of the Share Exchange and without any action on the part of Buyer, Seller
or the shareholders of any of the foregoing, the shares of Seller Common Stock,
excluding shares held by shareholders who perfect their statutory dissenters'
rights as provided in Section 3.3 or those shares that are to be cancelled
pursuant to Section 3.2, issued and outstanding immediately prior to the
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive a cash payment ("Cash Payment") equal to
$191.60 per share without interest, except as expressly provided in this
subsection 3.1(b). If the Closing is delayed beyond May 31, 2002, each share of
Seller Common Stock shall also entitle the holder to interest equal to the
amount per share calculated by multiplying (i) the Cash Payment by (ii) 6% per
annum times (iii) the actual number of days between June 1, 2002 and the Closing
divided by 365.
3.2 SHARES HELD BY SELLER OR BUYER.
Each of the shares of Seller Common Stock held by any Seller Entity or
by any Buyer Entity, in each case other than in a fiduciary capacity or as a
result of debts previously contracted, shall be canceled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
3.3 DISSENTING SHAREHOLDERS.
Any holder of shares of Seller Common Stock who perfects such holder's
dissenters' rights in accordance with and as contemplated by Section 45-2-1309
of the Tennessee Banking Act and Sections 00-00-000 et seq. of the TBCA shall be
entitled to receive from the Seller the value of such shares in cash as
determined pursuant to such provision of Law; provided, that no such payment
shall be made to any dissenting shareholder unless and until such dissenting
shareholder has complied with the applicable provisions of the TBCA and
surrendered to Seller the certificate or certificates representing the shares
for which payment is being made. In the event that after the Effective Time a
dissenting shareholder of Seller fails to perfect, or effectively withdraws or
loses, such holder's right to appraisal of and payment for such holder's shares,
Buyer shall issue and deliver the consideration to which such holder of shares
of Seller Common Stock is entitled under this Section 3.3 (without interest)
upon surrender by such holder of the certificate or certificates representing
the shares of Seller Common Stock held by such holder.
3.4 DEDUCTIONS FOR TAXES.
Each of Buyer and the Seller shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Seller Common Stock such amounts, if any, as it is required
to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code or any provision of state, local or
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foreign Tax Law. To the extent that any amounts are so withheld by Buyer or the
Seller, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Seller Common Stock in respect of which such deduction and withholding was made
by Buyer or the Seller as the case may be.
3.5 ESCHEAT.
Any other provision of this Agreement notwithstanding, neither Buyer or
the Seller shall be liable to a holder of Seller Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
3.6 RIGHTS OF FORMER SELLER SHAREHOLDERS.
At the Effective Time, the stock transfer books of Seller shall be
closed as to holders of Seller Common Stock immediately prior to the Effective
Time and no transfer of Seller Common Stock by any such holder shall thereafter
be made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 3.1, each Certificate theretofore representing shares of
Seller Common Stock (other than shares to be canceled pursuant to Sections 3.2
or as to which statutory dissenters' rights have been perfected as provided in
Section 3.3) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Section 3.1 in exchange
therefor, subject, however, to the Seller'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 Seller in respect of such shares of Seller
Common Stock in accordance with the terms of this Agreement and which remain
unpaid at the Effective Time.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 ORGANIZATION, STANDING, AND POWER.
Seller 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. Seller 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 Seller
Material Adverse Effect. The minute book and other organizational documents for
Seller have been made available to Buyer for its review and, except as disclosed
in Section 4.1 of the Seller Disclosure Memorandum, are true and complete in all
material respects as in effect as of the date of this Agreement and accurately
reflect in all material respects all amendments thereto and all proceedings of
the Board of Directors (including any committees of the Board of Directors) and
shareholders thereof.
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4.2 AUTHORITY OF SELLER; NO BREACH BY AGREEMENT.
(a) Seller has the corporate power and authority necessary to
execute, deliver, and, other than with respect to the Share Exchange, perform
this Agreement, and with respect to the Share Exchange, upon the adoption and
approval of this Agreement and the Share Exchange by Seller's shareholders in
accordance with this Agreement and Tennessee law, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Share Exchange, have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of Seller, subject to the approval and adoption of this Agreement by
the holders of a majority of the outstanding shares of Seller Common Stock as
contemplated by Section 8.1(a), which is the only shareholder vote required for
approval of this Agreement and consummation of the Share Exchange by Buyer and
Seller. Subject to such requisite shareholder approval, this Agreement
represents a legal, valid, and binding obligation of Seller, enforceable against
Seller in accordance with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Seller, nor the consummation by Seller of the transactions contemplated hereby,
nor compliance by Seller with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Seller's Charter or Bylaws or the
certificate or Charter or bylaws of any Seller Subsidiary or any resolution
adopted by the board of directors or the shareholders of any Seller Entity, or
(ii) except as disclosed in Section 4.2(b) of the Seller Disclosure Memorandum,
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any Seller Entity under, any
Contract or Permit of any Seller Entity, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Seller Material Adverse Effect, or, (iii) subject to receipt of
the requisite Consents referred to in Section 8.1(c), constitute or result in a
Default under, or require any Consent pursuant to, any Law or Order applicable
to any Seller Entity or any of their respective material Assets (including any
Buyer Entity or any Seller Entity becoming subject to or liable for the payment
of any Tax or any of the Assets owned by any Buyer Entity or any Seller Entity
being reassessed or revalued by any Regulatory Authority).
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and other
than Consents required from Regulatory Authorities, and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, and other than Consents,
filings, or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Seller Material Adverse
Effect, no notice to, filing with, or Consent of, any public body or authority
is necessary for the consummation by Seller of the Share Exchange and the other
transactions contemplated in this Agreement.
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4.3 CAPITAL STOCK.
(a) The authorized capital stock of Seller consists of 50,000
shares of Seller Common Stock, of which 42,275 shares are issued and outstanding
as of the date of this Agreement and not more than 42,275 shares will be issued
and outstanding at the Effective Time. All of the issued and outstanding shares
of Seller Common Stock are duly and validly issued and outstanding and are fully
paid and nonassessable. None of the outstanding shares Seller Common Stock has
been issued in violation of any preemptive rights of the current or past
shareholders of Seller.
(b) Except as set forth in Section 4.3(a), there are no shares of
capital stock or other equity securities of Seller outstanding and no
outstanding Equity Rights relating to the capital stock of Seller. Except as
specifically contemplated by this Agreement, no Person has any Contract or any
right or privilege (whether pre-emptive or contractual) capable of becoming a
Contract or Equity Right for the purchase, subscription or issuance of any
securities of Seller.
4.4 SELLER SUBSIDIARIES.
Seller has disclosed in Section 4.4 of the Seller Disclosure Memorandum
each of the Seller Subsidiaries that is a corporation (identifying its
jurisdiction of incorporation, each jurisdiction in which it is qualified and/or
licensed to transact business, and the number of shares owned and percentage
ownership interest represented by such share ownership) and each of the Seller
Subsidiaries that is a general or limited partnership, limited liability
company, or other non-corporate entity (identifying the Law under which such
entity is organized, each jurisdiction in which it is qualified and/or licensed
to transact business, and the amount and nature of the ownership interest
therein). Except as disclosed in Section 4.4 of the Seller Disclosure
Memorandum, Seller or one of its wholly owned Subsidiaries owns all of the
issued and outstanding shares of capital stock (or other equity interests) of
each Seller Subsidiary. No capital stock (or other equity interest) of any
Seller Subsidiary is or may become required to be issued (other than to another
Seller Entity) by reason of any Equity Rights, and there are no Contracts by
which any Seller Subsidiary is bound to issue (other than to another Seller
Entity) additional shares of its capital stock (or other equity interests) or
Equity Rights or by which any Seller Entity is or may be bound to transfer any
shares of the capital stock (or other equity interests) of any Seller Subsidiary
(other than to another Seller Entity). There are no Contracts relating to the
rights of any Seller Entity to vote or to dispose of any shares of the capital
stock (or other equity interests) of any Seller Subsidiary. All of the shares of
capital stock (or other equity interests) of each Seller Subsidiary held by a
Seller Entity are fully paid and (except pursuant to 12 U.S.C. Section 55 in the
case of national banks and comparable, applicable state Law, if any, in the case
of state depository institutions) nonassessable under the applicable corporation
Law of the jurisdiction in which such Subsidiary is incorporated or organized
and are owned by the Seller Entity free and clear of any Lien. Except as
disclosed in Section 4.4 of the Seller Disclosure Memorandum, each Seller
Subsidiary is either a bank, a savings association, or a corporation, limited
liability company, limited partnership or limited liability partnership, and
each such Subsidiary is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each Seller Subsidiary is duly qualified or licensed to transact
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business as a foreign entity 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 Seller Material
Adverse Effect. Each Seller Subsidiary that is a depository institution 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
Bank Insurance Fund. The minute book and other organizational documents for each
Seller Subsidiary have been made available to Buyer for its review, and, except
as disclosed in Section 4.4 of the Seller Disclosure Memorandum, are true and
complete in all material respects as in effect as of the date of this Agreement
and accurately reflect in all material respects all amendments thereto and all
proceedings of the Board of Directors and shareholders thereof.
4.5 FINANCIAL STATEMENTS.
Seller has included in Section 4.5 of the Seller Disclosure Memorandum
all Seller Financial Statements for periods ended prior to the date hereof and
will deliver to Buyer copies of all Seller Financial Statements prepared
subsequent to the date hereof. The Seller Financial Statements (as of the dates
thereof and for the periods covered thereby) (i) are and will be in accordance
with the books and records of the Seller Entities, which are and will be,
complete and correct and which have been and will be maintained in accordance
with good business practices, and (ii) present or will present, as the case may
be, fairly in all material respects the financial position of the Seller
Companies as of the dates indicated and the results of operations, changes in
shareholders' equity, and cash flows of the Seller Entities for the periods
indicated, in accordance with GAAP (subject to exceptions as to consistency
specified therein, requirements of the FFIEC in the case of Call Reports, 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 in
amount or effect).
4.6 ABSENCE OF UNDISCLOSED LIABILITIES.
No Seller Entity has any Liabilities that are reasonably likely to
have, individually or in the aggregate, a Seller Material Adverse Effect, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of Seller as of December 31, 2001, included in the Seller Financial
Statements delivered prior to the date of this Agreement or reflected in the
notes thereto. No Seller Entity has incurred or paid any Liability since
December 31, 2001, except for such Liabilities incurred or paid (i) in the
ordinary course of business consistent with past business practice and which are
not reasonably likely to have, individually or in the aggregate, a Seller
Material Adverse Effect or (ii) in connection with the transactions contemplated
by this Agreement. Except as disclosed in Section 4.6 of the Seller Disclosure
Memorandum, no Seller Entity is directly or indirectly liable, by guarantee,
indemnity, or otherwise, upon or with respect to, or obligated, by discount or
repurchase agreement or in any other way, to provide funds in respect to, or
obligated to guarantee or assume any Liability or any Person for any amount in
excess of $25,000.
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4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since December 31, 2001, except as disclosed in Section 4.7 of the
Seller Disclosure Memorandum, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Seller Material Adverse Effect, and (ii) none of the Seller
Entities has 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 Seller provided in Article 6.
4.8 TAX MATTERS.
(a) All Seller Entities have timely filed with the appropriate
Taxing authorities all Tax Returns in all jurisdictions in which Tax Returns are
required to be filed, and such Tax Returns are correct and complete in all
respects. None of the Seller Entities is the beneficiary of any extension of
time within which to file any Tax Return. All Taxes of the Seller Entities
(whether or not shown on any Tax Return) have been fully and timely paid. There
are no Liens for any Taxes (other than a Lien for current real property or ad
valorem Taxes not yet due and payable) on any of the Assets of any of the Seller
Entities. No claim has ever been made by an authority in a jurisdiction where
any Seller Entity does not file a Tax Return that such Seller Entity may be
subject to Taxes by that jurisdiction.
(b) None of the Seller Entities has received any notice of
assessment or proposed assessment in connection with any Taxes, and there are no
threatened or pending disputes, claims, audits, assessments, or examinations
regarding any Taxes of any Seller Entity or the assets of any Seller Entity. No
officer or employee responsible for Tax matters of any Seller Entity expects any
Regulatory Authority to assess any additional Taxes for any period for which Tax
Returns have been filed. None of the Seller Entities has waived any statute of
limitations in respect of any Taxes or agreed to a Tax assessment or deficiency.
(c) Each Seller Entity has complied with all applicable Laws,
rules and regulations relating to the withholding of Taxes and the payment
thereof to appropriate authorities, including Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee or
independent contractor, and Taxes required to be withheld and paid pursuant to
Sections 1441 and 1442 of the Internal Revenue Code or similar provisions under
applicable Law.
(d) The unpaid Taxes of each Seller Entity (i) did not, as of the
most recent fiscal month end, exceed the reserve for Tax Liability (other than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the most recent balance sheet
(rather than in any notes thereto) for such Seller Entity and (ii) do not exceed
that reserve as adjusted for the passage of time through the Closing Date in
accordance with past custom and practice of the Seller Entities in filing their
Tax Returns.
(e) Except as set forth in Section 4.8 of the Seller Disclosure
Memorandum, none of the Seller Entities is a party to any Tax allocation or
sharing agreement and none of the Seller Entities has been a member of an
affiliated group filing a consolidated federal income Tax
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Return (other than a group the common parent of which was Seller) or has any Tax
Liability of any Person under Treasury Regulation Section 1.1502-6 or any
similar provision of state, local or foreign Law, or as a transferee or
successor, by contract or otherwise.
(f) During the five-year period ending on the date hereof, none of
the Seller Entities was a distributing corporation or a controlled corporation
in a transaction intended to be governed by Section 355 of the Internal Revenue
Code and Seller has never made any election to be taxed as a Subchapter S
Corporation under the Internal Revenue Code.
(g) None of the Seller Entities has made any payments, is
obligated to make any payments, or is a party to any contract that could
obligate it to make any payments that could be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code. Seller has not been a
United States real property holding corporation within the meaning of Internal
Revenue Code Section 897(c)(1)(A)(ii). None of the Seller Entities has been or
will be required to include any adjustment in taxable income for any Tax period
(or portion thereof) pursuant to Section 481 of the Internal Revenue Code or any
comparable provision under state or foreign Tax Laws as a result of transactions
or events occurring prior to the Closing. The net operating losses of the Seller
Entities are not subject to any limitation on their use under the provisions of
Sections 382 or 269 of the Internal Revenue Code or any other provisions of the
Internal Revenue Code or the Treasury Regulations dealing with the utilization
of net operating losses other than any such limitations as may arise as a result
of the consummation of the transactions contemplated by this Agreement.
(h) Each of the Seller Entities is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code.
(i) No Seller Entity has or has had in any foreign country a
permanent establishment, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
4.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES.
In the opinion of management of Seller, the allowance for possible loan
or credit losses (the "Allowance") shown on the balance sheets of Seller
included in the most recent Seller Financial Statements dated prior to the date
of this Agreement was, and the Allowance shown on the consolidated balance
sheets of Seller included in the Seller Financial Statements as of dates
subsequent to the execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known or reasonably anticipated losses inherent
in the loan, lease and securities portfolios (including accrued interest
receivables) of the Seller Entities and other extensions of credit (including
letters of credit and commitments to make loans or extend credit) by the Seller
Entities as of the dates thereof.
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4.10 ASSETS.
(a) Except as disclosed in Section 4.10 of the Seller Disclosure
Memorandum or as disclosed or reserved against in the Seller Financial
Statements delivered prior to the date of this Agreement, the Seller Entities
have good and marketable title, free and clear of all Liens, to all of their
respective Assets, except for any such Liens or other defects of title which are
not reasonably likely to have a Seller Material Adverse Effect. All tangible
properties used in the businesses of the Seller Entities are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with Seller's past practices.
(b) All Assets which are material to Seller's business, held under
leases or subleases by any of the Seller Entities, are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect.
(c) The Seller Entities currently maintain insurance similar in
amounts, scope, and coverage to that maintained by other similar banks in
Tennessee. None of the Seller Entities has received notice from any insurance
carrier that (i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no claims for amounts pending under such policies of insurance and no notices of
claims in excess of such amounts have been given by any Seller Entity under such
policies.
(d) The Assets of the Seller Entities include all Assets required
to operate the business of the Seller Entities as presently conducted.
4.11 INTELLECTUAL PROPERTY.
Each Seller Entity owns or has a license to use all of the Intellectual
Property used by such Seller Entity in the course of its business, including
sufficient rights in each copy possessed by each Seller Entity. Seller Entity is
the owner of or has a license, with the right to sublicense, to any Intellectual
Property sold or licensed to a third party by such Seller Entity in connection
with such Seller Entity's business operations, and such Seller Entity has the
right to convey by sale or license any Intellectual Property so conveyed. No
Seller Entity is in Default under any of its Intellectual Property licenses. No
claims or proceedings have been instituted, or are pending or to the Knowledge
of Seller threatened, which challenge the rights of Seller with respect to
Intellectual Property used, sold or licensed by such Seller Entity in the course
of its business, nor has any person claimed or alleged any rights to such
Intellectual Property. The conduct of the business of the Seller Entities does
not infringe any Intellectual Property of any other person. Except as disclosed
in Section 4.11 of the Seller Disclosure Memorandum, no officer, director or
employee of any Seller Entity is party to any Contract which restricts or
prohibits such officer, director or employee from engaging in activities
competitive with any Person, including any Seller Entity.
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4.12 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Seller, each Seller Entity, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Seller Material
Adverse Effect.
(b) To the Knowledge of Seller, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other forum in
which any Seller Entity or any of its Operating Properties or Participation
Facilities has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with or
have any Liability under any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site currently or formerly owned, leased, or operated
by any Seller Entity or any of its Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Seller Material
Adverse Effect, nor is there any reasonable basis for any Litigation of a type
described in this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a Seller Material Adverse Effect.
(c) During the period of (i) any Seller Entity's ownership or
operation of any of the respective current properties, (ii) any Seller Entity's
participation in the management of any Participation Facility, or (iii) any
Seller Entity's holding of a security interest in any Operating Property, there
have been no releases, discharges, spillages, or disposals of Hazardous Material
in, on, under, adjacent to, or affecting (or potentially affecting) such
properties, except such as are not reasonably likely to have, individually or in
the aggregate, a Seller Material Adverse Effect. Prior to the period of (i) any
Seller Entity's ownership or operation of any of their respective current
properties, (ii) any Seller Entity's participation in the management of any
Participation Facility, or (iii) any Seller Entity's holding of a security
interest in any Operating Property, to the Knowledge of Seller, there were no
releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Seller Material Adverse Effect.
4.13 COMPLIANCE WITH LAWS.
Seller is duly chartered as a state chartered commercial bank under the
laws of Tennessee. Each Seller Entity has in effect all Permits necessary for it
to own, lease, or operate its material Assets and to carry on its business as
now conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Seller Material Adverse
Effect, and there has occurred no Default under any such Permit, other than
Defaults which could not reasonably be anticipated to have, individually or in
the aggregate, a Seller Material Adverse Effect. Except as disclosed in Section
4.13 of the Seller Disclosure Memorandum, none of the Seller Entities:
(a) is in Default under any of the provisions of its Charter or
Bylaws (or other governing instruments);
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(b) is in Default under any Laws, Orders, or Permits applicable to
its business or employees conducting its business, except for Defaults which,
individually or in the aggregate, are could not reasonably be anticipated to
have, individually or in the aggregate, a Seller Material Adverse Effect; or
(c) since December 31, 1998, 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 Seller Entity is not, or may not be, in compliance with any Laws or Orders,
where such noncompliance is reasonably likely to have, individually or in the
aggregate, a Seller Material Adverse Effect, (ii) threatening to revoke any
Permits, the revocation of which is reasonably likely to have, individually or
in the aggregate, a Seller Material Adverse Effect, or (iii) requiring any
Seller Entity to enter into or consent to the issuance of a cease and desist
order, injunction formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any board resolution or similar undertaking, which
restricts materially the conduct of its business or in any manner relates to its
employment decisions, its employment or safety policies or practices, its
capital adequacy, its business, including credit or reserve policies, its
management, or the payment of dividends; or
Copies of all material reports, correspondence, notices and other
documents relating to any inspection, audit, monitoring or other form of review
or enforcement action by all applicable Regulatory Authorities, other than exam
reports subject to Section 45-2-1603 of the Tennessee Banking Act, have been
made available to Buyer.
4.14 LABOR RELATIONS.
No Seller Entity is the subject of any Litigation asserting that it or
any other Seller Entity has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state Law) or other
violation of state or federal labor Law or seeking to compel it or any other
Seller Entity to bargain with any labor organization or other employee
representative as to wages or conditions of employment, nor is any Seller Entity
party to any collective bargaining agreement, nor is there any strike or other
labor dispute involving any Seller Entity, pending or threatened, or to the
Knowledge of Seller, is there any activity involving any Seller Entity's
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
4.15 EMPLOYEE BENEFIT PLANS.
(a) Seller has disclosed in Section 4.15 of the Seller Disclosure
Memorandum, and has delivered or made available to Buyer prior to the execution
of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any Seller Entity or ERISA
Affiliate thereof for the benefit of employees, retirees, dependents,
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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 "Seller Benefit Plans"). Any of the Seller 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 "Seller ERISA Plan." Each Seller ERISA Plan
which is also a "defined benefit plan" (as defined in Section 414(j) of the
Internal Revenue Code) is referred to herein as a "Seller Pension Plan." No
Seller Pension Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA.
(b) All Seller Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Seller Material Adverse Effect. Except as disclosed in Section
4.15 of the Seller Disclosure Memorandum, each Seller ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue Service, and
Seller is not aware of any circumstances likely to result in revocation of any
such favorable determination letter. No Seller Entity has engaged in a
transaction with respect to any Seller Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject any
Seller Entity to a Tax imposed by either Section 4975 of the Internal Revenue
Code or Section 502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Seller Material Adverse Effect.
(c) To the Knowledge of Seller, no Seller Pension Plan has any
"unfunded current liability," as that term is defined in Section 302(d)(8)(A) of
ERISA, and the fair market value of the assets of any such plan exceeds the
plan's "benefit liabilities," as that term is defined in Section 401(a)(16) of
ERISA, when determined under actuarial factors that would apply if the plan
terminated in accordance with all applicable legal requirements. Since the date
of the most recent actuarial valuation, there has been (i) no material change in
the financial position of any Seller Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Seller Pension Plan, and (iii) no
increase in benefits under any Seller Pension as a result of plan amendments or
changes in applicable Law which is reasonably likely to have, individually or in
the aggregate, a Seller Material Adverse Effect or materially adversely affect
the funding status of any such plan. Neither any Seller Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any Seller Entity, or the single-employer
plan of any entity which is considered one employer with Seller under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, which is reasonably likely to have a Seller Material
Adverse Effect. No Seller Entity has provided, or is required to provide,
security to a Seller Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by any Seller Entity with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate which Liability is reasonably likely to have a Seller Material Adverse
Effect. No Seller Entity has incurred any withdrawal Liability with respect to a
multiemployer plan under Subtitle B of Title IV of ERISA (regardless of whether
based on contributions of an
17
ERISA Affiliate), which Liability is reasonably likely to have a Seller Material
Adverse Effect. No notice of a "reportable event," within the meaning of Section
4043 of ERISA for which the 30-day reporting requirement has not been waived,
has been required to be filed for any Seller Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 4.15 of the Seller Disclosure
Memorandum, no Seller Entity has any Liability for retiree health and life
benefits under any of the Seller Benefit Plans and there are no restrictions on
the rights of such Seller Entity to amend or terminate any such retiree health
or benefit Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a Seller Material Adverse Effect.
(f) Except as disclosed in Section 4.15 of the Seller Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming payable by Seller to any of its directors, officers or any
employees of any Seller Entity from any Seller Entity under any Seller Benefit
Plan or otherwise, (ii) increase any benefits otherwise payable under any Seller
Benefit Plan, or (iii) result in any acceleration of the time of payment or
vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Seller Entity and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirements plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have to the knowledge of Seller been fully reflected on the Seller Financial
Statements to the extent required by and in accordance with GAAP.
(h) Seller has performed all of its obligations under the Seller
Benefit Plans and has made appropriate entries in their financial records and
statements for all such obligations that have accrued but that are not yet due.
Seller has made all required contributions and payments under each Seller
Benefit Plan for all periods through and including the Closing.
(i) Other than routine claims for benefits, no claim against or
legal proceeding involving any Seller Benefit Plan is pending or, to the
Knowledge of Seller, threatened.
4.16 PRIVACY OF CUSTOMER INFORMATION.
(a) Seller is the sole owner of all individually identifiable
personal information ("IIPI") relating to customers, former customers and
prospective customers that will be transferred to Buyer pursuant to this
Agreement. For purposes of this Section 4.16, "IIPI" means any information
relating to an identified or identifiable natural Person.
Seller's collection and use of such IIPI and the use of such IIPI by
the Seller as contemplated by this Agreement complies with Seller's privacy
policy, the Fair Credit Reporting Act, the Xxxxx-Xxxxx-Xxxxxx Act and all other
applicable state, federal and foreign privacy Law, and any Contract or industry
standard relating to privacy.
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4.17 LEGAL PROCEEDINGS.
Except as disclosed in Section 4.17 of the Seller Disclosure
Memorandum, there is no Litigation instituted or pending, or, to the Knowledge
of Seller, 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 Seller Entity, or against any director, officer, employee
or employee benefit plan of any Seller Entity, or against any Asset interest, or
right of any of them, that is reasonably likely to have, individually or in the
aggregate, a Seller Material Adverse Effect, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any Seller Entity, that are reasonably likely to have,
individually or in the aggregate, a Seller Material Adverse Effect. Section 4.18
of the Seller Disclosure Memorandum contains a list of all Litigation as of the
date of this Agreement to which any Seller Entity is named as a defendant or
cross-defendant or for which any Seller Entity has any potential liability.
4.18 REPORTS.
Since December 31, 1998, each Seller Entity has timely filed all
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with Regulatory Authorities
(except, in the case of state securities authorities, failures to file which are
not reasonably likely to have, individually or in the aggregate, a Seller
Material Adverse Effect). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its respective
date, each such report and document did not, in all material respects, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
4.19 STATEMENTS TRUE AND CORRECT.
(a) No statement, certificate, instrument, or other writing
furnished or to be furnished by any Seller Entity or any Affiliate thereof to
Buyer 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.
(b) None of the information supplied or to be supplied by any
Seller Entity or any Affiliate thereof for inclusion in the Proxy Statement to
be mailed to Seller's shareholders in connection with the Shareholders' Meeting,
and any other documents to be filed by a Seller Entity or any Affiliate thereof
with any 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 Seller, 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, be false or misleading with respect to any material
fact, or omit to state
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any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting.
(c) All documents that any Seller Entity or any Affiliate thereof
is responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
4.20 ACCOUNTING, TAX, AND REGULATORY MATTERS.
No Seller Entity or any Affiliate thereof has taken or agreed to take
any action or has any Knowledge of any fact or circumstance that is reasonably
likely to materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 8.1(b) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
4.21 STATE TAKEOVER LAWS.
Each Seller Entity has taken all necessary action to exempt the
transactions contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable "moratorium," "fair price,"
"business combination," "control share," or other anti-takeover Laws, including
Title 48, Chapter 103 of the Tennessee Code Annotated (collectively, "Takeover
Laws").
4.22 CHARTER PROVISIONS.
Each Seller Entity has taken all action so that the entering into of
this Agreement and the consummation of the Share Exchange and the other
transactions contemplated by this Agreement 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 Seller Entity or restrict or impair the ability of Buyer or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any Seller Entity that may be directly or
indirectly acquired or controlled by them.
4.23 SHAREHOLDER SUPPORT AGREEMENTS.
Each of the executive officers and directors of Seller and each of the
holders of 10% or more of the outstanding shares of Seller Common Stock has
executed and delivered to Buyer a Shareholder Support Agreement.
4.24 OPINION OF FINANCIAL ADVISOR.
Seller has received the opinion of Seller's Financial Advisor, dated
the date of this Agreement, to the effect that the consideration to be received
in the Share Exchange by the holders of Seller Common Stock is fair, from a
financial point of view, to such holders, a signed copy of which has been
delivered to Buyer.
4.25 BOARD RECOMMENDATION.
The Board of Directors of Seller, at a meeting duly called and held,
has by unanimous vote of the directors present (who constituted all of the
directors then in office) (i) determined
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that this Agreement and the transactions contemplated hereby, including the
Share Exchange and the Shareholder Support Agreements, and the transactions
contemplated thereby, taken together, are fair to and in the best interests of
the shareholders and (ii) resolved to recommend that the holders of the shares
of Seller Common Stock approve and adopt this Agreement.
4.26 USA PATRIOT ACT COMPLIANCE.
All Seller Entities are in compliance in all material respects with the
provisions of the Uniting and Strengthening by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA PATRIOT Act")
and all regulations promulgated thereunder including, but not limited to, those
provisions of the USA PATRIOT Act that address money-laundering, know-your
customer, account maintenance and customer verification.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION, STANDING, AND POWER.
Buyer 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. Buyer 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 Buyer
Material Adverse Effect.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Buyer has the corporate power and authority necessary to execute, deliver
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Share Exchange, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Buyer. This
Agreement represents a legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by Buyer,
nor the consummation by Buyer of the transactions contemplated hereby, nor
compliance by Buyer with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of
21
Buyer's Charter 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
Asset of any Buyer Entity under, any Contract or Permit of any Buyer Entity,
where such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Buyer Material Adverse
Effect, or, (iii) subject to receipt of the requisite Consents referred to in
Section 8.1(b), constitute or result in a Default under, or require any Consent
pursuant to, any Law or Order applicable to any Buyer Entity or any of their
respective material Assets (including any Buyer Entity or any Seller Entity
becoming subject to or liable for the payment of any Tax or any of the Assets
owned by any Buyer Entity or any Seller Entity being reassessed or revalued by
any Regulatory Authority ).
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and other
than Consents required from Regulatory Authorities, and other than notices to or
filings with the IRS or the Pension Benefit Guaranty Corporation with respect to
any employee benefit plans, and other than Consents, filings, or notifications
which, if not obtained or made, are not reasonably likely to have, individually
or in the aggregate, a Buyer Material Adverse Effect, no notice to, filing with,
or Consent of, any public body or authority is necessary for the consummation by
Buyer of the Share Exchange and the other transactions contemplated in this
Agreement.
5.3 CAPITAL STOCK.
The authorized capital stock of Buyer consists of 20,000,000 shares of
Buyer Common Stock, of which 5,002,644 shares are issued and outstanding as of
the date of this Agreement. All of the issued and outstanding shares of Buyer
Capital Stock are, and all of the shares of Buyer Common Stock to be issued in
exchange for shares of Seller Common Stock upon consummation of the Share
Exchange, 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. None of the outstanding shares of Buyer Capital Stock has been, and
none of the shares of Buyer Common Stock to be issued in exchange for shares of
Seller Common Stock upon consummation of the Share Exchange will be, issued in
violation of any preemptive rights of the current or past shareholders of Buyer.
Except as disclosed in Section 5.3 of the Buyer Disclosure Memorandum, there are
no shares of capital stock or other equity securities of Buyer outstanding and
no outstanding Equity Rights relating to the capital stock of Buyer.
5.4 BUYER SUBSIDIARIES.
Buyer has disclosed in Section 5.4 of the Buyer Disclosure Memorandum
all of the Buyer Subsidiaries as of the date of this Agreement that are
corporations and all of the Buyer Subsidiaries that are general or limited
partnerships or other non-corporate entities. Each Buyer Subsidiary that is a
depository institution is an "insured institution" as defined in the Federal
Deposit Insurance Act and applicable regulations thereunder.
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5.5 SEC FILINGS; FINANCIAL STATEMENTS. Buyer has timely filed and
made available to Seller all SEC Documents required to be filed by Buyer since
December 31, 1999 (together with all such SEC Documents filed, whether or not
required to be filed, the "Buyer SEC Reports"). The Buyer SEC Reports (i) at the
time filed, complied in all material respects with the applicable requirements
of the Securities Laws and other applicable Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing or, in the case of registration
statements, at the effective date thereof) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Buyer SEC Reports or necessary in order to make the statements in such Buyer SEC
Reports, in light of the circumstances under which they were made, not
misleading.
(b) Each of the Buyer Financial Statements (including, in each
case, any related notes) contained in the Buyer SEC Reports, including any Buyer
SEC Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of Buyer
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES.
No Buyer Entity has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of Buyer as of December 31, 2001, included in the Buyer Financial
Statements delivered prior to the date of this Agreement or reflected in the
notes thereto. No Buyer Entity has incurred or paid any Liability since December
31, 2001, except for such Liabilities incurred or paid (i) in the ordinary
course of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect or (ii) in connection with the transactions contemplated by this
Agreement.
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5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 2001, except
as disclosed in the Buyer Financial Statements delivered prior to the date of
this Agreement or as disclosed in Section 5.7 of the Buyer Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a Buyer
Material Adverse Effect, and (ii) none of the Buyer Entities has 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 Buyer provided in Article 6.
5.8 TAX MATTERS.
(a) Buyer has timely filed with the appropriate Taxing authorities
all Tax Returns that it is required to file and such Tax Returns are correct and
complete in all material respects. Buyer is not the beneficiary of any extension
of time within which to file any Tax Return. All Taxes of the Buyer have been
fully and timely paid. There are no Liens for any Taxes (other than a Lien for
current real property or ad valorem Taxes not yet due and payable) on any of the
Assets of any Buyer.
(b) Except for an audit flash examination by the Tennessee
Department of Revenue for franchise, excise, sales and use tax from which Buyer
does not anticipate any material assessments, Buyer has not received any notice
of assessment or proposed assessment in connection with any Taxes, and there are
no threatened or pending disputes, claims, audits or examinations regarding any
Taxes of Buyer. Buyer has not waived any statute of limitations in respect of
any Taxes, nor agreed to a Tax assessment or deficiency.
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES.
In the opinion of management of Buyer, the Allowance shown on the
consolidated balance sheets of Buyer included in the most recent Buyer Financial
Statements dated prior to the date of this Agreement was, and the Allowance
shown on the consolidated balance sheets of Buyer included in the Buyer
Financial Statements as of dates subsequent to the execution of this Agreement
will be, as of the dates thereof, adequate (within the meaning of GAAP and
applicable regulatory requirements or guidelines) to provide for all known or
reasonably anticipated losses inherent in the loan, lease and securities
portfolios (including accrued interest receivables) of the Buyer Entities and
other extensions of credit (including letters of credit and commitments to make
loans or extend credit) by the Buyer Entities as of the dates thereof, except
where the failure of such Allowance to be so adequate is not reasonably likely
to have a Buyer Material Adverse Effect.
5.10 INTELLECTUAL PROPERTY.
Each Buyer Entity owns or has a license to use all of the Intellectual
Property used by such Buyer Entity in the course of its business including
sufficient rights in each copy possessed by each Buyer Entity. Each Buyer Entity
is the owner of or has a license, with the right to sublicense, to any
Intellectual Property sold or licensed to a third party by such Buyer Entity in
connection with such Buyer Entity's business operations, and such Buyer Entity
has the right to convey by sale or license any Intellectual Property so
conveyed. No Buyer Entity is in Default
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under any of its Intellectual Property licenses. No proceedings have been
instituted, or are pending or to the Knowledge of Buyer threatened, which
challenge the rights of any Buyer Entity with respect to Intellectual Property
used, sold or licensed by such Buyer Entity in the course of its business, nor
has any person claimed or alleged any rights to such Intellectual Property. To
the Knowledge of Buyer, the conduct of the business of the Buyer Entities does
not infringe any Intellectual Property of any other person. No officer, director
or employee of any Buyer Entity is party to any Contract which restricts or
prohibits such officer, director or employee from engaging in activities
competitive with any Person, including any Buyer Entity.
5.11 ENVIRONMENTAL MATTERS.
To the Knowledge of Buyer, each Buyer Entity, it 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 Buyer Material Adverse Effect.
5.12 COMPLIANCE WITH LAWS.
Buyer is duly registered as a bank holding company under the BHC Act.
Each Buyer Entity has in effect all Permits necessary for it to own, lease or
operate its material Assets and to carry on its business as now conducted,
except for those Permits the absence of which are not reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, and there has
occurred no Default under any such Permit, other than Defaults which could not
reasonably be anticipated to have, individually or in the aggregate, a Buyer
Material Adverse Effect. Except as disclosed in Section 5.12 of the Buyer
Disclosure Memorandum, none of the Buyer Entities:
(a) is in Default under its Charter or Bylaws (or other governing
instruments); or
(b) is in Default under any Laws, Orders or Permits applicable to
its business or employees conducting its business, except for Defaults which
could not reasonably be anticipated to have, individually or in the aggregate, a
Buyer Material Adverse Effect; or
(c) since January 1, 1998, 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 Buyer Entity is not, or may not be, in compliance with any Laws or Orders,
where such noncompliance is reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect, (ii) threatening to revoke any
Permits, the revocation of which is reasonably likely to have, individually or
in the aggregate, a Buyer Material Adverse Effect, or (iii) requiring any Buyer
Entity to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment or memorandum of understanding, or to
adopt any board resolution or similar undertaking, which restricts materially
the conduct of its business, or in any manner relates to its employment
decisions, its employment or safety policies or practices, its capital adequacy,
its credit or reserve policies, its management, or the payment of dividends.
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5.13 EMPLOYEE BENEFIT PLANS.
(a) Buyer has delivered or made available to Seller prior to the
execution of this Agreement, copies in each case of all Employee Benefit Plans
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any Buyer Entity or ERISA Affiliate thereof for the benefit of
employees, former employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries or under which employees, former
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Buyer
Benefit Plans"). Any of the Buyer Benefit Plans which is an "employee pension
benefit plan," as that term is defined in ERISA Section 3(2), is referred to
herein as a "Buyer ERISA Plan." Each Buyer ERISA Plan which is also a "defined
benefit plan" (as defined in Internal Revenue Code Section 414(j)) is referred
to herein as a "Buyer Pension Plan." No Buyer Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) Each Buyer Benefit Plan is in compliance with the applicable
terms of such Buyer Benefit Plan, in compliance with the applicable requirements
of the Internal Revenue Code in material compliance with the terms of ERISA, and
in compliance with any other applicable Laws the breach or violation of which
are reasonably likely to have, individually or in the aggregate, a Buyer
Material Adverse Effect. Each Buyer ERISA Plan which is intended to be qualified
under Internal Revenue Code Section 401(a) has received a favorable
determination letter from the IRS, and Buyer is not aware of any circumstances
likely to result in revocation of any such favorable determination letter. To
the Knowledge of Buyer, no "party in interest" (as defined in ERISA Section
3(14)) or "disqualified person" (as defined in Internal Revenue Code Section
4975(e)(2)) of any Buyer Benefit Plan has engaged in any nonexempt "prohibited
transaction" (described in Internal Revenue Code Section 4975(c) or ERISA
Section 406).
(c) For any Buyer Pension Plan, the fair market value of such
Buyer Pension Plan's assets equals or exceeds the present value of all benefits
(whether vested or not) accrued to date by all present or former participants in
such Buyer Pension Plan. For this purpose the funding status shall be determined
assuming the Buyer Pension Plan will be continued indefinitely and by using the
assumption set forth in the most recent actuarial statement for such Buyer
Pension Plan. Since the date of the most recent actuarial valuation, there has
been (i) no material change in the financial position of any Buyer Pension Plan,
(ii) no change in the actuarial assumptions with respect to any Buyer Pension
Plan, and (iii) no increase in benefits under any Buyer Pension Plan as a result
of Buyer Pension Plan amendments or changes in any applicable regulation which
is reasonably likely to have, individually or in the aggregate, a material
adverse effect on the funding status of such Buyer Pension Plan. All
contributions with respect to an Employee Benefit Plan of Buyer, or of any of
its ERISA Affiliates that is subject to Internal Revenue Code Section 412 or
ERISA Section 302 have or will be timely made and, with respect to any such
Employee Benefit Plan, there is no Lien nor is there expected to be a Lien under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under
Internal Revenue Code Section 4971. No Buyer Pension Plan has a "liquidity
shortfall" as defined in Internal Revenue Code Section 412(m)(5). Neither the
Buyer nor any of its ERISA Affiliates is subject to or can reasonably be
expected to become subject to a Lien under Internal Revenue Code Section
401(a)(29). All premiums required to be paid under ERISA Section 4006 have been
timely paid by the Buyer and by each of its ERISA Affiliates.
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(d) No Liability under Title IV of ERISA has been or is expected
to be incurred by any of Buyer or its ERISA Affiliates and no event has occurred
that could reasonably be anticipated to result in Liability under Title IV of
ERISA being incurred by Buyer or any of its ERISA Affiliates with respect to any
ongoing, frozen or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate, which Liability is reasonably likely to have a Buyer
Material Adverse Effect. There has been no notice of a "reportable event,"
within the meaning of ERISA Section 4043 for which the 30-day reporting
requirement has not been waived by any ongoing, frozen or terminated single
employer plan of Buyer or of any ERISA Affiliate.
5.14 LEGAL PROCEEDINGS.
There is no Litigation instituted or pending, or, to the Knowledge of
Buyer, threatened (or unasserted but considered probable of assertion and which
if asserted would have at least a reasonable possibility of an unfavorable
outcome) against any Buyer Entity, or against any director, employee or employee
benefit plan of any Buyer Entity, or against any Asset, interest, or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect, nor are there any Orders outstanding
against any Buyer Entity, that is reasonably likely to have, individually or in
the aggregate, a Buyer Material Adverse Effect. Section 5.14 of the Buyer
Disclosure Memorandum contains a summary of all Litigation as of the date of
this Agreement to which any Buyer Entity is a party and which names a Buyer
Entity as a defendant or cross-defendant or for which any Buyer Entity has
potential Liability.
5.15 REPORTS.
Since January 1, 1999, each Buyer Entity has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities (except, in
the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its respective
date, each such report and document did not, in all material respects, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
5.16 STATEMENTS TRUE AND CORRECT.
(a) No statement, certificate, instrument or other writing
furnished or to be furnished by any Buyer Entity or any Affiliate thereof to
Seller 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.
(b) None of the information supplied or to be supplied by any
Buyer Entity or any Affiliate thereof for inclusion in the Proxy Statement to be
mailed to Seller's shareholders in connection with the Shareholders Meeting, and
any other documents to be filed by any Buyer Entity or any Affiliate thereof
with the SEC or any other Regulatory Authority in connection
27
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 Seller, 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, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting.
(c) All documents that any Buyer Entity or any Affiliate thereof
is responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
5.17 ACCOUNTING, TAX AND REGULATORY MATTERS.
No Buyer Entity or any Affiliate thereof has taken or agreed to take
any action or has any Knowledge of any fact or circumstance that is reasonably
likely to materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 8.1(b) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
ARTICLE 6.
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 AFFIRMATIVE COVENANTS OF SELLER.
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 Buyer
shall have been obtained, and except as otherwise expressly contemplated herein,
Seller shall, and shall cause each of its Subsidiaries to, (A) operate its
business only in the usual, regular, and ordinary course, (B) preserve intact
its business organization and Assets and maintain its rights and franchises, and
(C) take no action which would (1) materially and 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) or in Section 8.1(c), or (2) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
6.2 NEGATIVE COVENANTS OF SELLER.
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 Buyer
shall have been obtained, and except as otherwise expressly contemplated herein,
Seller covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Charter, Bylaws or other governing instruments of
any Seller Entity, or
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(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Seller Entity to another Seller
Entity) except in the ordinary course of the business of Seller Subsidiaries
consistent with past practices (which shall include, for Seller 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 Seller
Entity of any Lien or permit any such Lien to exist (other than in connection
with deposits, repurchase agreements, bankers acceptances, "treasury tax and
loan" accounts established in the ordinary course of business, the satisfaction
of legal requirements in the exercise of trust powers, and Liens in effect as of
the date hereof that are disclosed in the Seller Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any Seller Entity, or declare or pay any dividend or make any
other distribution in respect of Seller's capital stock; or
(d) except for this Agreement, or as disclosed in Section 6.2(d)
of the Seller Disclosure Memorandum, authorize, 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 Seller Common Stock or any other capital
stock of any Seller Entity, or any stock appreciation rights, or any option,
warrant, or other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of any
Seller Entity or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Seller Common Stock, or sell, lease,
mortgage or otherwise dispose of or otherwise encumber any Asset having a book
value in excess of $25,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment, either
by purchase of stock of securities, contributions to capital, Asset transfers,
or purchase of any Assets, in any Person, or otherwise acquire direct or
indirect control over any Person, other than in connection with foreclosures in
the ordinary course of business; or
(g) grant any increase in compensation or benefits to the
employees or officers of Seller, except in accordance with past practice
disclosed in Section 6.2(g) of the Seller Disclosure Memorandum or as required
by Law; pay any severance or termination pay or any bonus other than pursuant to
written policies or written Contracts in effect on the date of this Agreement
and disclosed in Section 6.2(g) of the Seller Disclosure Memorandum; and enter
into or amend any severance agreements with officers of any Seller Entity; grant
any material increase in fees or other increases in compensation or other
benefits to directors of any Seller Entity except in accordance with past
practice disclosed in Section 6.2(g) of the Seller Disclosure Memorandum; or
voluntarily accelerate the vesting of any stock options or other stock-based
compensation or employee benefits or other Equity Rights; or
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(h) enter into or amend any employment Contract between any Seller
Entity and any Person (unless such amendment is required by Law) that the Seller
Entity does not have the unconditional right to terminate without Liability
(other than Liability for services already rendered), at any time on or after
the Effective Time; or
(i) adopt any new employee benefit plan of any Seller Entity or
terminate or withdraw from, or make any material change in or to, any existing
employee benefit plans of any Seller Entity other than any such change that is
required by Law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan, or make any distributions
from such employee benefit plans, except as required by Law, the terms of such
plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting methods
or systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Seller Entity for
material money damages or restrictions upon the operations of any Seller Entity;
or
(l) except in the ordinary course of business, enter into, modify,
amend or terminate any material Contract (including any loan Contract with an
unpaid balance exceeding $100,000) or waive, release, compromise or assign any
material rights or claims.
6.3 COVENANTS OF BUYER.
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 Seller
shall have been obtained, and except as otherwise expressly contemplated herein,
Buyer covenants and agrees that it shall take no action which would (i)
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) or in Section 8.1(c), or (ii) 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 Buyer Entity from acquiring
any Assets or other businesses or from discontinuing or disposing of any of its
Assets or business if such action is, in the reasonable judgment of Buyer,
desirable in the conduct of the business of Buyer and its Subsidiaries, provided
that such actions shall not materially delay the Effective Time or materially
hinder consummation of the Share Exchange.
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 Seller Material Adverse
Effect or a Buyer Material Adverse Effect, as applicable, or (ii) would cause or
constitute a material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
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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 the SEC, such financial statements will fairly
present the consolidated financial position of the entity filing such statements
as of the dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As of their respective
dates, such reports filed with the SEC will comply in all material respects with
the Securities Laws and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
ARTICLE 7.
ADDITIONAL AGREEMENTS
7.1 PRIVATE PLACEMENT MEMORANDUM; SHAREHOLDER APPROVAL.
(a) At a date determined by Buyer in its sole discretion, Buyer
shall prepare a private placement memorandum (the "Placement Memorandum") to
offer and issue shares of Buyer Common Stock and to take such other actions as
it deems appropriate to fund the acquisition cost of the Share Exchange.
(b) Seller shall duly call, give notice of, convene and hold a
Shareholders' Meeting, to be held as soon as reasonably practicable after
execution of this Agreement, on a date reasonably acceptable to Buyer, for the
purpose of voting upon approval and adoption of this Agreement ("Seller
Shareholder Approval") and such other related matters as it deems appropriate
and shall, through its Board of Directors, recommend to its shareholders the
approval and adoption of this Agreement and use its reasonable efforts to obtain
the Seller Shareholder Approval.
(c) Neither the Board of Directors of Seller nor any committee
thereof shall (i) withdraw, qualify or modify, or propose publicly to withdraw,
qualify or modify, in a manner adverse to Buyer, the approval or recommendation
of such Board of Directors or such committee of the Share Exchange or this
Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, or (iii) cause Seller to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Acquisition
Proposal.
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7.2 OTHER OFFERS, ETC.
(a) No Seller Entity shall, nor shall it authorize or permit any
of its Affiliates or Representatives to, directly or indirectly (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal, (ii) participate in any discussions or negotiations
regarding, or furnish to any Person or "Group" (as such term is defined in
Section 13(d) under the Exchange Act) any nonpublic information with respect to,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) approve, endorse or recommend any Acquisition
Proposal, or (iv) enter into any Acquisition Agreement contemplating or
otherwise relating to any Acquisition Transaction.
(b) In addition to the obligations of Seller set forth in Section
7.2(a), as promptly as practicable, and in any event within one business day
after any of the executive officers of Seller become aware thereof, Seller shall
advise Buyer of any request received by Seller for nonpublic information which
Seller reasonably believes could lead to an Acquisition Proposal or of any
Acquisition Proposal, the material terms and conditions of such request or
Acquisition Proposal, and the identity of the Person or Group making any such
request or Acquisition Proposal. Seller shall keep Buyer informed promptly of
material amendments or modifications to any such request or Acquisition
Proposal.
(c) Seller and its Subsidiaries shall immediately cease any and
all existing activities, discussions or negotiations with any Persons conducted
heretofore with respect to any Acquisition Proposal and will use their
respective reasonable best efforts to enforce any confidentiality or similar
agreement relating to any Acquisition Proposal. Without limiting the foregoing,
it is agreed that any violation of the restrictions set forth in this Section
7.2, by any Affiliate or Representative of any Seller Entity shall be deemed to
be a breach of this Section 7.2 by Seller.
7.3 CONSENTS OF REGULATORY AUTHORITIES.
Buyer shall promptly prepare and file all draft and final applications
with the relevant Regulatory Authorities. The Parties hereto shall also
cooperate with each other and use their reasonable efforts to promptly prepare
and file all necessary documentation, to effect all applications, notices,
petitions and filings and to obtain as promptly as practicable all Consents of
all Regulatory Authorities and other Persons which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including the Share
Exchange). The Parties agree that they will consult with each other with respect
to the obtaining of all Consents of all Regulatory Authorities and other Persons
necessary or advisable to consummate the transactions contemplated by this
Agreement and each Party will keep the other apprised of the status of matters
relating to contemplation of the transactions contemplated herein. Each Party
also shall promptly advise the other upon receiving any communication from any
Regulatory Authority whose Consent is required for consummation of the
transactions contemplated by this Agreement which causes such Party to believe
that there is a reasonable likelihood that any requisite Consent will not be
obtained or that the receipt of any such Consent will be materially delayed.
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7.4 FILINGS WITH STATE OFFICES.
Upon the terms and subject to the conditions of this Agreement, the
Parties shall execute and file the Plan of Share Exchange with 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 Affiliates to use, their reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper, or advisable under applicable Laws to consummate and
make effective, as soon as reasonably practicable after the date of this
Agreement, the transactions contemplated by this Agreement, including using its
reasonable efforts to lift or rescind any Order adversely affecting its ability
to consummate the transactions contemplated herein and to cause to be satisfied
the conditions referred to in Article 8; provided, 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.
7.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, Seller shall keep Buyer advised
of all material developments relevant to its business and to consummation of the
Share Exchange and shall permit Buyer to make or cause to be made such
investigation of the business and properties of Seller and its Subsidiaries and
of their respective financial and legal conditions as the Buyer 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 ability of such
Party to rely on the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Seller shall use its reasonable efforts to exercise, and shall
not waive any of, its rights under confidentiality agreements entered into with
Persons which were considering an Acquisition Proposal with respect to Seller to
preserve the confidentiality of the information relating to the Seller Entities
provided to such Persons and their Affiliates and Representatives.
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(d) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Seller Material Adverse
Effect or a Buyer Material Adverse Effect, as applicable.
7.7 PRESS RELEASES.
Prior to the Effective Time, Seller and Buyer shall consult with each
other as to the form and substance of any press release or other public
disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 7.7 shall be deemed
to prohibit any Party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such Party's disclosure obligations
imposed by Law.
7.8 STATE TAKEOVER LAWS.
Each Seller Entity shall take all necessary steps to exempt the
transactions contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable Takeover Law.
7.9 CHARTER PROVISIONS.
Each Seller Entity shall take all necessary action to ensure that the
entering into of this Agreement and the consummation of the Share Exchange and
the other transactions contemplated hereby 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 Seller Entity or restrict or impair the ability of Buyer or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any Seller Entity that may be directly or
indirectly acquired or controlled by them.
7.10 EMPLOYEE BENEFITS AND CONTRACTS.
Following the Effective Time, Buyer shall provide generally to officers
and employees of the Seller Entities employee benefits under employee benefit
and welfare plans (other than stock option or other plans involving the
potential issuance of Buyer Common Stock), on terms and conditions which when
taken as a whole are substantially similar to those currently provided by the
Buyer Entities to their similarly situated officers and employees. For purposes
of participation, vesting and (except in the case of Buyer retirement plans)
benefit accrual under Buyer's employee benefit plans, the service of the
employees of the Seller Entities prior to the Effective Time shall be treated as
service with a Buyer Entity participating in such employee benefit plans. Buyer
also shall cause the Seller and its Subsidiaries to honor, in accordance with
their terms all employment, severance, consulting and other compensation
Contracts disclosed in Section 7.10 of the Seller Disclosure Memorandum to Buyer
between any Seller Entity and any current or former director, officer, or
employee thereof, and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Time under the Seller Benefit Plans.
Notwithstanding the foregoing, Seller agrees to cooperate with Buyer in the
transition of
34
its employee benefit plans following the Effective Time including, but not
limited to, the termination of its 401K Plan Administrator so as to allow
Buyer's 401K Plan Administrator to manage all funds of all of Buyer's employees
including the funds of the Seller's employees after the Effective Time.
7.11 INDEMNIFICATION.
(a) For a period of six years after the Effective Time, Buyer
shall, and shall cause the Seller to, indemnify, defend and hold harmless the
present and former directors, officers, employees and agents of the Seller
Entities (each, an "Indemnified Party") against all Liabilities arising out of
actions or omissions arising out of the Indemnified Party's service or services
as directors, officers, employees or agents of Seller or, at Seller's request,
of another corporation, partnership, joint venture, trust or other enterprise
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted under Tennessee
Law and by Seller's Charter and Bylaws as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any Litigation and whether or not any Buyer Entity is insured against any such
matter. Without limiting the foregoing, in any case in which approval by the
Seller is required to effectuate any indemnification, the Seller 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 Buyer
and the Indemnified Party.
(b) Buyer shall, or shall cause the Seller to, use its reasonable
efforts (and Seller shall cooperate prior to the Effective Time in these
efforts) to maintain in effect for a period of three years after the Effective
Xxxx Xxxxxx'x existing directors' and officers' liability insurance policy
(provided that Buyer or the Seller may substitute therefor (i) policies of at
least the same coverage and amounts containing terms and conditions which are
substantially no less advantageous or (ii) with the consent of Seller given
prior to the Effective Time, any other policy) with respect to claims arising
from facts or events which occurred prior to the Effective Time and covering
persons who are currently covered by such insurance; provided, that neither
Buyer nor the Seller shall be obligated to make aggregate annual premium
payments for such three-year period in respect of such policy (or coverage
replacing such policy) which exceed, for the portion related to Seller's
directors and officers, 150% of the annual premium payments on Seller's current
policy in effect as of the date of this Agreement (the "Maximum Amount"). If the
amount of the premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, Buyer or the Seller shall use its reasonable efforts
to maintain the most advantageous policies of directors' and officers' liability
insurance obtainable for a premium equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 7.11, upon learning of any such Liability or
Litigation, shall promptly notify Buyer and the Seller thereof. In the event of
any such Litigation (whether arising before or after the Effective Time), (i)
Buyer or the Seller shall have the right to assume the defense thereof and
neither Buyer nor the Seller shall 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
Buyer or the Seller elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which
35
raise conflicts of interest between Buyer or the Seller and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Buyer or the Seller shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received;
provided, that Buyer and the Seller shall be obligated pursuant to this
paragraph (c) 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) neither Buyer nor the Seller shall be liable for
any settlement effected without its prior written consent; and provided further
that neither Buyer nor the Seller shall have any obligation hereunder 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.
(d) If Buyer or the Seller or any successors or assigns shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving Person of such consolidation or merger or shall transfer all or
substantially all of its assets to any Person, then and in each case, proper
provision shall be made so that the successors and assigns of Buyer or the
Seller shall assume the obligations set forth in this Section 7.11.
(e) The provisions of this Section 7.11 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party and their
respective heirs and representatives.
7.12 BOARD MEETINGS.
Seller agrees to give not less than two days' prior notice of all
meetings of Seller's Board of Directors and Buyer and Seller agree that Buyer
shall be entitled to have representatives attend all such Board Meetings;
provided that Seller shall have the right to exclude either or both of such
representatives during discussions relating to a confidential matter, the Share
Exchange, or as to a matter which would result in a conflict of interest for the
Board of Seller.
7.13 ACCOUNTING POLICIES.
Buyer and Seller shall consult with respect to the character, amount
and timing of restructuring and merger-related expense charges to be taken by
Buyer or Seller in connection with the transactions contemplated by this
Agreement and shall take such charges in accordance with GAAP, prior to the
Effective Time, as may be mutually agreed upon by the Parties.
7.14 DELIVERY OF SELLER DISCLOSURE MEMORANDUM.
On or before the fifth business day after the date of this Agreement,
Seller shall deliver to Buyer a complete Seller Disclosure Memorandum.
7.15 AUDITS.
Seller shall permit Buyer's independent auditors to examine, at Buyer's
expense, Seller's books and records and perform an audit on Seller to facilitate
Buyer making all SEC filings that Buyer determines are necessary and desirable.
36
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 Share Exchange 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:
(a) Shareholder Approval. The shareholders of Seller shall have
adopted and approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Share Exchange, as and to the extent required
by Law, 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 Share Exchange shall have been obtained or made and
shall be in full force and effect and all waiting periods required by Law shall
have expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to the
raising of additional capital or the disposition of Assets) which in the
reasonable judgment of the Board of Directors of Buyer would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or requirement been
known, such Party would not, in its reasonable judgment, have entered into this
Agreement.
(c) Consents and Approvals. Each Party shall have obtained any and
all Consents required for consummation of the Share Exchange (other than those
referred to in Section 8.1(b)) or for the preventing of any Default under any
Contract or Permit of such Party which, if not obtained or made, is reasonably
likely to have, individually or in the aggregate, a Seller Material Adverse
Effect or a Buyer Material Adverse Effect, as applicable. Seller shall have
obtained the Consents listed in Section 8.1(c) of the Seller Disclosure
Memorandum.
(d) Legal Proceedings. No court or governmental or Regulatory
Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by this Agreement.
8.2 CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to perform this Agreement and consummate the
Share Exchange and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Buyer pursuant to
Section 10.6(a):
(a) Representations and Warranties. For purposes of this Section
8.2(a), the accuracy of the representations and warranties of Seller 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
37
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date). The representations and warranties set
forth in Section 4.3 shall be true and correct (except for inaccuracies which
are de minimis in amount). The representations and warranties set forth in
Sections 4.3, 4.20, 4.21 and 4.22 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Seller 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
Seller Material Adverse Effect; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Seller 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. Seller shall have delivered to Buyer (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 8.1 as relates to Seller and in Sections 8.2(a)
and 8.2(b) have been satisfied, and (ii) certified copies of resolutions duly
adopted by Seller's Board of Directors and shareholders evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Buyer and its counsel
shall request.
(d) Opinion of Seller Counsel. Buyer shall have received an
opinion of Seller Counsel, counsel to Seller, dated as of the Closing, in form
reasonably satisfactory to Buyer, as to the matters set forth in Exhibit 3.
(e) Seller's Disclosure Memorandum. The Seller's Disclosure
Memorandum shall be satisfactory to Buyer and the audit of Seller provided by
Section 7.15 shall be satisfactory to Buyer.
(f) Maximum Number of Dissenters. The number of shares of Seller
Common Stock who dissent from the Share Exchange may not exceed 5% of the
Seller's outstanding shares.
(g) Loan Loss Reserves. Seller shall not, between the date of this
Agreement and the Effective Time, lower its allowance for loan loss reserves.
8.3 CONDITIONS TO OBLIGATIONS OF SELLER.
The obligations of Seller to perform this Agreement and consummate the
Share Exchange and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Seller pursuant to
Section 10.6(b):
38
(a) Representations and Warranties. For purposes of this Section
8.3(a), the accuracy of the representations and warranties of Buyer 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 Buyer set
forth in Section 5.3 shall be true and correct (except for inaccuracies which
are de minimis in amount). The representations and warranties of Buyer set forth
in Section 5.17 shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of Buyer set forth
in this Agreement (including the representations and warranties set forth in
Section 5.3 and Section 5.17) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Buyer Material Adverse
Effect; provided that, for purposes of this sentence only, those representations
and warranties which are qualified by references to "material" or "Material
Adverse Effect" or to the "Knowledge" of any Person shall be deemed not to
include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Buyer 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. Buyer shall have delivered to the Seller (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 8.1 as relates to Buyer and in Sections 8.3(a)
and 8.3(b) have been satisfied, and (ii) certified copies of resolutions duly
adopted by Buyer'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 Seller and its counsel shall request.
(d) Opinion of Buyer Counsel. Seller shall have received an
opinion of Buyer Counsel, counsel to Buyer, dated as of the Effective Time, in
form reasonably acceptable to Seller, as to the matters set forth in Exhibit 4.
ARTICLE 9.
TERMINATION
9.1 TERMINATION.
Notwithstanding any other provision of this Agreement, and
notwithstanding the approval of this Agreement by the shareholders of Seller and
shareholders of Sub or both, this Agreement may be terminated and the Share
Exchange abandoned at any time prior to the Effective Time:
(a) By mutual written agreement of Buyer and Seller; or
39
(b) By either Party (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Share Exchange and the
other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, (ii) any Law or Order
permanently restraining, enjoining or otherwise prohibiting the consummation of
the Share Exchange shall have become final and nonappealable, or (iii) the
shareholders of Seller fail to vote their approval of the matters relating to
this Agreement and the transactions contemplated hereby at the Shareholders'
Meetings where such matters were presented to such shareholders for approval and
voted upon; or
(c) By either Party in the event that the Share Exchange shall not
have been consummated by July 31, 2002, if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by any
breach of this Agreement by the Party electing to terminate pursuant to this
Section 9.1(c); or
(d) By Buyer in the event that (i) the Board of Directors of
Seller, shall have failed to reaffirm its approval upon Buyer's request for such
reaffirmation of the Share Exchange and the transactions contemplated by this
Agreement (to the exclusion of any other Acquisition Proposal), or shall have
resolved not to reaffirm the Share Exchange, or (ii) the Board of Directors of
Seller shall have failed to include in the Proxy Statement its recommendation,
without modification or qualification, that Seller shareholders give the Seller
Shareholder Approval or shall have withdrawn, qualified or modified, or proposed
publicly to withdraw, qualify or modify, in a manner adverse to Buyer, the
recommendation of such Board of Directors to Seller shareholders that they give
the Seller Shareholder Approval, or (iii) the Board of Directors of Seller shall
have affirmed, recommended or authorized entering into any Acquisition
Transaction other than the Share Exchange or, within ten business days after
commencement of any tender or exchange offer for any shares of Seller Common
Stock, the Board of Directors of Seller shall have failed to recommend against
acceptance of such tender or exchange offer by its shareholders or takes no
position with respect to the acceptance of such tender or exchange offer by its
shareholders, or (iv) the Board of Directors of Seller negotiates or authorizes
the conduct of negotiations (and five business days have elapsed without such
negotiations being discontinued) with a third party (it being understood and
agreed that "negotiate" shall not be deemed to include the provision of
information to, or the request and receipt of information from, any Person that
submits an Acquisition Proposal or discussions regarding such information for
the sole purpose of ascertaining the terms of such Acquisition Proposal and
determining whether the board of directors will in fact engage in, or authorize,
negotiations) regarding an Acquisition Proposal other than the Share Exchange;
or
(e) By either Party (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Share Exchange
cannot be satisfied or fulfilled by the date specified in Section 9.1(c).
40
9.2 EFFECT OF TERMINATION.
In the event of the termination and abandonment of this Agreement
pursuant to Section 9.1, this Agreement shall become void and have no effect,
except that (i) the provisions of this Section 9.2, 7.6(b), and Article 10,
shall survive any such termination and abandonment, and (ii) no such termination
shall relieve the breaching Party from Liability resulting from any breach by
that Party of this Agreement.
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 Article 1, Article 2, Article 3 and Article 10.
ARTICLE 10.
MISCELLANEOUS
10.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"ACQUISITION PROPOSAL" means any proposal (whether
communicated to Seller or publicly announced to Seller's shareholders)
by any Person (other than Buyer or any of its Affiliates) for an
Acquisition Transaction involving Seller or any of its present or
future consolidated Subsidiaries, or any combination of such
Subsidiaries, the assets of which constitute ten percent (10%) or more
of the consolidated assets of Seller as reflected on Seller's
consolidated statement of condition prepared in accordance with GAAP.
"ACQUISITION TRANSACTION" means any transaction or series of
related transactions (other than the transactions contemplated by this
Agreement) involving: (i) any acquisition or purchase from Seller by
any Person or "Group" (other than Buyer or any of its Affiliates) of 5%
or more in interest of the total outstanding voting securities of
Seller or any of its Subsidiaries, or any tender offer or exchange
offer that if consummated would result in any Person or "Group" (other
than Buyer or any of its Affiliates) beneficially owning 5% or more in
interest of the total outstanding voting securities of Seller or any of
its Subsidiaries, or any merger, consolidation, business combination or
similar transaction involving Seller pursuant to which the shareholders
of Seller immediately preceding such transaction hold less than 95% of
the equity interests in the surviving or resulting entity (which
includes the parent corporation of any constituent corporation to any
such transaction) of such transaction; (ii) any sale or lease (other
than in the ordinary course of business), or exchange, transfer,
license (other than in the ordinary course of business), acquisition or
disposition of 5% or more of the assets of Seller; or (iii) any
liquidation or dissolution of Seller.
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"AFFILIATE" of a Person means: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person;
or (iii) any other Person for which a Person described in clause (ii)
acts in any such capacity.
"ASSETS" of a Person means all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of
such Person and wherever located.
"BHC ACT" means the federal Bank Holding Company Act of 1956,
as amended.
"BUYER CAPITAL STOCK" means, collectively, the Buyer Common
Stock, the Buyer Preferred Stock and any other class or series of
capital stock of Buyer.
"BUYER COMMON STOCK" means the $.01 par value common stock of
Buyer.
"BUYER DISCLOSURE MEMORANDUM" means the written information
entitled "Buyer Disclosure Memorandum" delivered prior to the date of
this Agreement to Seller describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which
such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced with respect thereto.
"BUYER ENTITIES" means, collectively, Buyer and all Buyer
Subsidiaries.
"BUYER FINANCIAL STATEMENTS" means (i) the consolidated
balance sheets (including related notes and schedules, if any) of Buyer
as of June 30, 2001 and September 30, 2001, and as of December 31,
2001, and the related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
for each of the three fiscal years ended December 31, 2001, 2000 and
1999, and (ii) the consolidated balance sheets of Buyer (including
related notes and schedules, if any) and related statements of income,
changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) with respect to periods ended subsequent
to December 31, 2001.
"BUYER MATERIAL ADVERSE EFFECT" means 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 Buyer and its
Subsidiaries, taken as a whole, or (ii) the ability of Buyer to perform
its obligations under this Agreement or to consummate the Share
Exchange or the other transactions contemplated by this Agreement,
provided that "Buyer Material Adverse Effect" shall not be deemed to
include the impact of (A) changes in banking and similar Laws of
general applicability or interpretations thereof by courts or
governmental
42
authorities, (B) changes in generally accepted accounting principles or
regulatory accounting principles generally applicable to banks, (C)
actions and omissions of Buyer (or any of its Subsidiaries) taken with
the prior informed written Consent of Seller in contemplation of the
transactions contemplated hereby, (D) the direct effects of compliance
with this Agreement on the operating performance of Buyer, including
expenses incurred by Buyer in consummating the transactions
contemplated by this Agreement, (E) effects demonstrably shown to have
been proximately caused by the public announcement of, and the response
or reaction of customers, vendors, licensors, investors or employees of
Buyer to, this Agreement or any of the transactions contemplated by
this Agreement, (F) failure of Buyer to meet the revenue or earnings
predictions of equity analysts (as reflected in the First Call
consensus estimate), or any other published revenue or earnings
predictions or expectations, for any period ending on or after the date
of this Agreement, or (G) changes in the market price or trading volume
of Buyer Common Stock.
"BUYER SUBSIDIARIES" means the Subsidiaries of Buyer, which
shall include the Buyer Subsidiaries described in Section 5.4 and any
corporation, bank, savings association, limited liability company,
limited partnership, limited liability partnership or other
organization acquired as a Subsidiary of Buyer in the future and held
as a Subsidiary by Buyer at the Effective Time.
"CLOSING DATE" means the date on which the Closing occurs.
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement, dated January 10, 2002, between Seller and Buyer.
"CONSENT" means any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" means any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
license, obligation, plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital
stock, Assets or business.
"DEFAULT" means (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or
Permit, (ii) any occurrence of any event that with the passage of time
or the giving of notice or both would constitute a breach or violation
of, default under, contravention of, or conflict with, any Contract,
Law, Order, or Permit, or (iii) any occurrence of any event that with
or without the passage of time or the giving of notice would give rise
to a right of any Person to exercise any remedy or obtain any relief
under, terminate or revoke, suspend, cancel, or modify or change the
current terms of, or renegotiate, or to accelerate the maturity or
performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit, where, in any such event, such Default
is reasonably likely to have, individually or in the
43
aggregate, a Seller Material Adverse Effect or a Buyer Material Adverse
Effect, as applicable.
"EMPLOYEE BENEFIT PLAN" means each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, share purchase, severance pay, vacation, bonus, retention,
change in control or other incentive plan, medical, vision, dental or
other health plan, any life insurance plan, flexible spending account,
cafeteria plan, vacation, holiday, disability or any other employee
benefit plan or fringe benefit plan, including any "employee benefit
plan," as that term is defined in Section 3(3) of ERISA and any other
plan, fund, policy, program, practice, custom understanding or
arrangement providing compensation or other benefits, whether or not
such Employee Benefit Plan is or is intended to be (i) covered or
qualified under the Code, ERISA or any other applicable Law, (ii)
written or oral, (iii) funded or unfunded, (iv) actual or contingent or
(v) arrived at through collective bargaining or otherwise.
"ENVIRONMENTAL LAWS" means 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)
including the Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et
seq. ("RCRA"), and other Laws relating to emissions, discharges,
releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"EQUITY RIGHTS" means all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Equity Rights.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means any entity which together with the
Seller would be treated as a single employer under Code Section 414.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXHIBITS" 1 through 4, inclusive, means the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument
or document without being attached hereto.
"GAAP" means generally accepted accounting principles,
consistently applied during the periods involved.
44
"HAZARDOUS MaTERIAL" means (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, asbestos-containing materials and any
polychlorinated biphenyls.
"INTELLECTUAL PROPERTY" means copyrights, patents, trademarks,
service marks, service names, trade names, domain names, together with
all goodwill associated therewith, registrations and applications
therefor, technology rights and licenses, computer software (including
any source or object codes therefor or documentation relating thereto),
trade secrets, franchises, know-how, inventions, and other intellectual
property rights.
"INTERNAL REVENUE CODE" means 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) means the
personal knowledge after due inquiry of those facts that are known or
should reasonably have been known after due inquiry by the chairman,
president, chief financial officer, chief accounting officer, chief
operating officer, general counsel, any assistant or deputy general
counsel, or any senior, executive or other vice president of such
Person and the knowledge of any such Persons obtained or which would
have been obtained from a reasonable investigation.
"LAW" means any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any Regulatory
Authority.
"LIABILITY" means 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" means 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,
and (iii) Liens which do not materially impair the use of or title to
the Assets subject to such Lien.
45
"LITIGATION" means any action, arbitration, cause of action,
lawsuit, claim, complaint, criminal prosecution, governmental or other
examination or investigation, audit (other than regular audits of
financial statements by outside auditors), compliance review,
inspection, hearing, administrative or other proceeding relating to or
affecting a Party, its business, its records, its policies, its
practices, its compliance with Law, its actions, its Assets (including
Contracts related to it), or the transactions contemplated by this
Agreement, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"LOSSES" means any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, damages (including
special and consequential damages), liabilities, costs, and expenses,
including interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
"MATERIAL" or "MATERIAL" for purposes of this Agreement shall
be determined in light of the facts and circumstances of the matter in
question; provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"OPERATING PROPERTY" means any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds a security interest or other
interest (including an interest in a fiduciary capacity), and, where
required by the context, includes the owner or operator of such
property, but only with respect to such property.
"ORDER" means any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"PARTICIPATION FACILITY" means 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" means either Seller , Sub, or Buyer, and "PARTIES"
means Seller, Sub, and Buyer.
"PERMIT" means 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" means 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, limited liability partnership, trust, business
association, group acting in concert, or any person acting in a
representative capacity.
46
"PROXY STATEMENT" means the proxy statement used by Seller to
solicit the approval of its shareholders of the transactions
contemplated by this Agreement.
"REGULATORY AUTHORITIES" means, collectively, the SEC, the
Board of the Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Tennessee Department of Financial
Institutions and all other federal, state, county, local or other
governmental or regulatory agencies, authorities (including taxing and
self-regulatory authorities), instrumentalities, commissions, boards or
bodies having jurisdiction over the Parties and their respective
Subsidiaries.
"REPRESENTATIVE" means any investment banker, financial
advisor, attorney, accountant, consultant, or other representative or
agent engaged by a Person.
"SEC" means the United States Securities and Exchange
Commission.
"SEC DOCUMENTS" means 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 ACT" means the Securities Act of 1933, as amended.
"SECURITIES LAWS" means the Securities Act, the Exchange Act,
the Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"SELLER" means Seller as the surviving corporation resulting
from the Share Exchange.
"SELLER COMMON STOCK" means the $10.00 par value common stock
of Seller.
"SELLER DISCLOSURE MEMORANDUM" means the written information
entitled "Seller Disclosure Memorandum" delivered prior to the date of
this Agreement to Buyer describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which
such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced with respect thereto.
"SELLER ENTITIES" means, collectively, Seller and all Seller
Subsidiaries.
"SELLER FINANCIAL STATEMENTS" means (i) the balance sheets
(including related notes and schedules, if any) of Seller as of March
31 and September 30, 2001, and as of December 31, 2001, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the for each of the
three fiscal years ended December 31, 2001, 2000 and 1999, including
all Seller Call Reports and Directors' Examinations, and (ii) the
balance sheets of Seller (including related notes and schedules, if
any) and related statements of income, changes in
47
shareholders' equity, and cash flows (including related notes and
schedules, if any) including all Call Reports and Directors Exams as of
and for each period ended on such date in such period all of which will
be provided to Buyer . All Seller Financial Statements may be unaudited
but shall otherwise be prepared in accordance with GAAP.
"SELLER MATERIAL ADVERSE EFFECT" means 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, cash flows, or results of operations of Seller and
its Subsidiaries, taken as a whole, or (ii) the ability of Seller to
perform its obligations under this Agreement or to consummate the Share
Exchange or the other transactions contemplated by this Agreement,
provided that "Material Adverse Effect" shall not be deemed to include
the impact of (A) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental
authorities, (B) changes in generally accepted accounting principles or
regulatory accounting principles generally applicable to banks and
their holding companies, (C) actions and omissions of Seller (or any of
its Subsidiaries) taken with the prior informed written Consent of
Buyer in contemplation of the transactions contemplated hereby, or (D)
the direct effects of compliance with this Agreement on the operating
performance of Seller, including reasonable expenses incurred by Seller
in consummating the transactions contemplated by this Agreement.
"SELLER SUBSIDIARIES" means the Subsidiaries of Seller, if
any, which shall include the Seller Subsidiaries described in Section
4.4 and any corporation, bank, savings association, limited liability
company, limited partnership, limited liability partnership or other
organization acquired as a Subsidiary of Seller in the future and held
as a Subsidiary by Seller at the Effective Time.
"SHAREHOLDERS' MEETING" means the meeting of the shareholders
of Seller to be held pursuant to Section 7.1, including any adjournment
or adjournments thereof.
"SUBSIDIARIES" means all those corporations, associations, or
other business entities of which the entity in question either (i) owns
or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly or
indirectly by its parent (provided, there shall not be included any
such entity the equity securities of which are owned or controlled in a
fiduciary capacity), (ii) in the case of partnerships, serves as a
general partner, (iii) in the case of a limited liability company,
serves as a managing member, or (iv) otherwise has the ability to elect
a majority of the directors, trustees or managing members thereof.
"TAX" or "TAXES" means any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, recording license, payroll, franchise, severance,
documentary, stamp, occupation, windfall profits, environmental,
federal highway use, commercial rent, customs duties, capital stock,
paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
48
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
county, local or foreign government or subdivision or agency thereof,
including any interest, penalties, and additions imposed thereon or
with respect thereto.
"TAX RETURN" means any report, return, information return, or
other information required to be supplied to a Regulatory Authority in
connection with Taxes, including any return of an affiliated or
combined or unitary group that includes a Party or its Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
TERM PAGE
Acquisition Agreement............................... 31
Agreement........................................... 5
Allowance........................................... 13
Buyer............................................... 5
Buyer Benefit Plans................................. 26
Buyer ERISA Plan.................................... 26
Buyer Pension Plan.................................. 26
Buyer SEC Reports................................... 23
Cash Payment........................................ 7
Closing............................................. 6
Effective Time...................................... 6
Indemnified Party................................... 35
Individually Identifiable Personal Information...... 18
Maximum Amount...................................... 35
Plan of Exchange.................................... 6
Seller.............................................. 5
Seller Shareholder Approval......................... 31
Shareholder Support Agreements...................... 5
Takeover Laws....................................... 20
TBCA................................................ 5
(c) Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
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 transactions contemplated hereunder, including filing,
registration and application fees, printing fees, and fees and expenses of its
own financial or other consultants, investment bankers, accountants, and
counsel.
(b) Nothing contained in this Section 10.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by
Seller of the terms of this Agreement or otherwise limit the rights of Buyer.
10.3 BROKERS AND FINDERS.
Except for Seller Financial Advisor as to Seller and except for Buyer
Financial Advisor as to Buyer, each of the Parties represents and warrants that
neither it nor any of its officers,
49
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon such broker's representing or being retained by
or allegedly representing or being retained by Seller or by Buyer, each of
Seller and Buyer, 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. Seller
has provided a copy of the engagement letter with IBS. Any fees and expenses
payable by the Seller to IBS shall be reasonable and properly allowable to
Seller and not include any fees or expenses payable in respect of any other
future services for Affiliates of Seller.
10.4 ENTIRE AGREEMENT.
Except as otherwise expressly provided herein, this Agreement
(including the documents and instruments referred to herein) constitutes the
entire agreement between the Parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral (except, as to Section 7.6(b), for the
Confidentiality Agreements). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, other than as provided in Sections 7.10 and 7.11.
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 each of
the Parties, whether before or after shareholder approval of this Agreement has
been obtained; provided, that after any such approval by the holders of Seller
Common Stock, there shall be made no amendment that reduces or modified in any
material respect the consideration to be received by holders of Seller Common
Stock without the further approval of such shareholders.
10.6 WAIVERS.
(a) Prior to or at the Effective Time, Buyer, 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 Seller, to waive or extend the time for the compliance or
fulfillment by Seller of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of Buyer
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 Buyer.
(b) Prior to or at the Effective Time, Seller, 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 Buyer or Sub, to waive or extend the time for the compliance or
fulfillment by Buyer or Sub of any and all of its obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of Seller under this Agreement, except any condition which, if not
satisfied, would result in the violation of any
50
Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Seller.
(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.
10.7 ASSIGNMENT.
Except as expressly contemplated hereby, neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any Party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
10.8 NOTICES.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
Seller: First State Bank
0000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile Number: 9865) 992-2265
Additional Copy to: Xx. Xxxxxx XxXxxxx
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Copy to Counsel: Xxxxxx & Xxxxxx LLP
1200 One Nashville Place
000 0xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx Xxxx Edge
Buyer: First Security Group, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile Number: (000) 000-0000
51
Attention: Xxxxxx X. Xxxxxx
Copy to Counsel: Xxxxxx & Bird LLP
One Atlantic Center
0000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Facsimile Number: (000) 000-0000
Attention: Xxxxx X. XxxXxxxxx, III
10.9 GOVERNING LAW.
Regardless of any conflict of law or choice of law principles that
might otherwise apply, the Parties agree that this Agreement shall be governed
by and construed in all respects in accordance with the laws of the State of
Tennessee. The Parties all expressly agree and acknowledge that the State of
Tennessee has a reasonable relationship to the Parties and/or this Agreement. As
to any dispute, claim, or litigation arising out of or relating in any way to
this Agreement or the transaction at issue in this Agreement, the Parties hereto
hereby agree and consent to be subject to the exclusive jurisdiction of the
United States District Court for the Eastern District of Tennessee. If
jurisdiction is not present in federal court, then the Parties hereby agree and
consent to the exclusive jurisdiction of the state courts of Xxxx County,
Tennessee. Each Party hereto hereby irrevocably waives, to the fullest extent
permitted by Law, (a) any objection that it may now or hereafter have to laying
venue of any suit, action or proceeding brought in such court, (b) any claim
that any suit, action or proceeding brought in such court has been brought in an
inconvenient forum, and (c) any defense that it may now or hereafter have based
on lack of personal jurisdiction in such forum.
10.10 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10.11 CAPTIONS; ARTICLES AND SECTIONS.
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement. Unless otherwise indicated, all
references to particular Articles or Sections shall mean and refer to the
referenced Articles and Sections of this Agreement.
10.12 INTERPRETATIONS.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against any Party, whether under any rule of construction
or otherwise. No Party to this Agreement shall be considered the draftsman. The
Parties acknowledge and agree that this Agreement has been reviewed, negotiated,
and accepted by all Parties and their attorneys and shall be construed and
interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all Parties hereto.
52
10.13 ENFORCEMENT OF AGREEMENT.
The Parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the Parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
10.14 SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
BUYER
By:
--------------------------------------------
Its: President
Name:
--------------------------------------------
SELLER
By:
--------------------------------------------
Its: President
Name:
--------------------------------------------
54
EXHIBIT 1
FORM OF PLAN OF EXCHANGE
55
EXHIBIT 2
FORM OF SHAREHOLDER SUPPORT AGREEMENTS
56
EXHIBIT 3
FORM OF OPINION OF SELLER COUNSEL
57
EXHIBIT 4
FORM OF OPINION OF BUYER COUNSEL
58
