EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of this 30th day of May, 2003, by and between CUMBERLAND
NATIONAL BANK, a national banking association (hereinafter "Cumberland"),
COMMUNITY NATIONAL BANCORPORATION, a Georgia corporation (hereinafter
"Community"), THE HERITAGE BANK, a Georgia banking corporation (hereinafter
"Heritage"), and LIBERTY SHARES, INC., a Georgia corporation (hereinafter
"Liberty").
R E C I T A L S:
WHEREAS, the respective boards of directors of Cumberland, Community,
Heritage and Liberty deem it advisable and in the best interests of each such
entity and their respective shareholders that Cumberland merge with Heritage
(the "Merger"), with Heritage being the surviving bank and with all of the
issued and outstanding shares of common stock, $5.00 par value per share, of
Cumberland ("Cumberland Stock") being surrendered to Heritage in exchange for
the Aggregate Offering Price (as defined below in Section 2.2), all upon the
terms and conditions hereinafter set forth and as set forth in the Agreement and
Plan of Merger attached hereto as Exhibit A and incorporated herein by reference
(the "Merger Agreement");
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
CLOSING
The transactions contemplated herein shall be consummated (the
"Closing") at the offices of Powell, Goldstein, Xxxxxx & Xxxxxx LLP 191
Peachtree Street, NE, 16th Floor, Atlanta, Georgia, on the third business day
following receipt of all approvals from governmental authorities having
jurisdiction over the transactions contemplated by this Agreement and the Merger
Agreement, and the expiration of any waiting or similar period required by
applicable law (the "Closing Date"), or at such other time and place as may be
mutually satisfactory to the parties hereto.
ARTICLE II
MERGER
2.1 MERGER OF CUMBERLAND WITH AND INTO HERITAGE. (a) Upon the
terms and subject to the conditions of this Agreement and in consideration of
the Aggregate Offering
Price (as defined in Section 2.2), to be paid by Heritage to Community at the
Closing, on the Effective Date Cumberland and Heritage shall be merged in
accordance with and in the manner set forth in the Merger Agreement. The
surviving bank following the Merger will operate under the Articles of
Incorporation of Heritage and Liberty will continue to be the parent holding
company of Heritage.
(b) Notwithstanding Section 2.1(a), or any other
provisions or recital of this Agreement or the Merger Agreement, the parties
agree that, upon the advice of counsel of Heritage and Liberty, the manner of
effecting or carrying out the transactions contemplated by this Agreement and
the Merger Agreement may, for tax or regulatory purposes, be changed, altered,
or amended in writing at any time before Closing, and that Cumberland and
Community each agree to fully cooperate with any reasonable request of Heritage
and Liberty in furtherance of any such change, alteration, or amendment.
2.2 ADJUSTMENT TO AGGREGATE OFFERING PRICE. (a) The aggregate
consideration for the Merger shall be $3,400,000 (the "Aggregate Offering
Price"), subject to adjustment as hereinafter provided. The Aggregate Offering
Price shall be due and payable in immediately available funds on the Closing
Date.
(b) If the total shareholders' equity shown on the
Closing Financial Statements (as defined in Section 3.12) of Cumberland is less
than its total shareholders' equity as of March 31, 2003 (the "First Quarter
Equity Amount"), as reported in the Cumberland Financial Statements (as defined
in Section 4.2.6), by more than $235,000, then the Aggregate Offering Price
shall be reduced, dollar for dollar, in the amount equal to the difference
between (i) the First Quarter Equity Amount, less $235,000, and (ii) the amount
of total shareholders' equity set forth in the Closing Financial Statements.
(c) The Closing Financial Statements shall become final
upon all parties to this Agreement in the event Liberty and Heritage,
individually or collectively, do not give Community written notice at Closing of
any disagreement with the Closing Financial Statements (a "Notice of
Disagreement"). In the event Liberty or Heritage provides a Notice of
Disagreement to Community as permitted in this Section 2.2, the parties agree to
use their best efforts to resolve the disagreements raised. If such
disagreements cannot be resolved by the parties within thirty (30) days after
the Closing Date, the parties agree that Xxxxxxx, Xxxxx & Co., LLP (or other
comparable accounting firm agreed upon by the parties) will conduct an
independent review of the Closing Financial Statements to determine total
shareholders' equity of Cumberland as of the ending period of the Closing
Financial Statements. If the total shareholders' equity of Cumberland, as
determined by Xxxxxxx, Xxxxx & Co., LLP (or other comparable accounting firm),
results in an adjustment to the Aggregate Offering Price that is fifteen percent
(15%) or more than the adjustment amount calculated under the Closing Financial
Statements delivered by Cumberland prior to the Closing, Community shall bear
any and all costs and expenses associated with or arising out of Xxxxxxx, Xxxxx
& Co., LLP's (or other comparable accounting firm's) review and determination of
the adjustment amount and any reasonable fees, costs, or expenses incurred by
Liberty or Heritage in the collection of the adjustment amount. The parties
agree that the determination by Xxxxxxx, Xxxxx & Co., LLP (or other comparable
accounting firm) shall be final and binding upon the parties and enforceable in
a court of competent jurisdiction. Any adjustment payment shall be due and
payable by
Community within two (2) business days after final resolution of the Closing
Financial Statements. The method of payment of the adjustment amount shall be in
accordance with the reasonable instructions of Heritage or Liberty.
ARTICLE III
OTHER AGREEMENTS
3.1 ABSENCE OF BROKERS. Except as disclosed in the Cumberland
Disclosure Memorandum (as defined in Section 4.1), each party hereto represents
and warrants to the other that no broker, finder or other financial consultant
has acted on its behalf in connection with this Agreement or the transactions
contemplated hereby. Community and Liberty each agree to indemnify each other
(and their respective affiliates) and hold each other (and their respective
affiliates) harmless from any claim or demand for commissions or other
compensation by any broker, finder, financial consultant or similar agent,
whether or not described in the Cumberland Disclosure Memorandum, claiming to
have been employed by or on behalf of such indemnifying party or an affiliate of
such party. This Section 3.1 shall survive the Closing and the consummation of
the Merger.
3.2 ACCESS TO PROPERTIES, BOOKS, ETC. Cumberland and Community
shall allow Heritage and Liberty and their authorized representatives full
access during normal business hours from and after the date hereof and prior to
the Closing Date to all of the respective properties, books, contracts,
commitments and records of or pertaining to Cumberland and shall furnish to
Heritage and Liberty and their authorized representatives such information
concerning Community's affairs and the affairs of its subsidiaries, which is
reasonably related to the transactions contemplated by this Agreement.
Cumberland and Community shall cause their respective personnel, employees and
other representatives to assist Heritage and Liberty in making any such
investigation. During such investigation, Liberty and Heritage and their
authorized representatives, subject to Section 3.3, shall have the right to make
copies of such records, files, tax returns and other materials as it may deem
advisable. No investigation made heretofore or hereafter by Liberty and Heritage
and their authorized representatives shall affect the representations and
warranties of either such party hereunder.
3.3 CONFIDENTIALITY. Prior to consummation of the Merger, the
parties to this Agreement will share information which may be deemed by each
party providing the information to be confidential. The parties agrees that they
will hold confidential and protect all information provided to them by another
party to this Agreement or such party's affiliates, except that the obligations
contained in this Section 3.3 shall not in any way restrict the rights of any
party or person to use information that (i) was known to such party prior to the
disclosure by the other party; (ii) is or becomes generally available to the
public other than by breach of this Agreement; or (iii) otherwise becomes
lawfully available to a party to this Agreement on a nonconfidential basis from
a third party who is not under an obligation of confidence to the party
providing such information. If a party is requested or required by a
governmental authority or agency (by oral questions, interrogatories, requests
for information or documents, subpoena, civil/criminal investigative demand or
similar process) to disclose any information supplied by an unaffiliated party,
the requested party will provide such affected party with prompt notice of such
request(s) so that the affected party may seek an appropriate protective order
and/or
waive the requested party's compliance with this Section 3.3 as to the requested
information. It is further agreed that if in the absence of a protective order
or the receipt of a waiver hereunder and the requested party is nonetheless, in
the opinion of its legal counsel and despite the requested party's best efforts,
compelled to disclose any such information to a tribunal or else stand liable
for contempt or suffer other censure or penalty, the requested party may
disclose such information without liability hereunder, provided that the
disclosure is limited to that which is necessary to avoid the sanctions herein
described. If this Agreement is terminated prior to the Closing, each party
hereto agrees to return all documents, statements and other written materials,
whether or not confidential, and all copies thereof, provided to it by or on
behalf of an unaffiliated party to this Agreement. The provisions of this
Section 3.3 shall survive termination, for any reason whatsoever, of this
Agreement, and, without limiting the remedies of any party hereto in the event
of any breach of this Section 3.3, each party hereto will be entitled to seek
injunctive relief against another party in the event of a breach or threatened
breach of this Section 3.3.
3.4 FULL COOPERATION. The parties shall cooperate fully with each
other in connection with any acts or actions required to be taken as part of
their respective obligations under this Agreement.
3.5 EXPENSES. All of the expenses incurred by Liberty or Heritage
in connection with the authorization, preparation, execution and performance of
this Agreement and the Merger Agreement including, without limitation, all fees
and expenses of its agents, representatives, counsel and accountants and the
fees and expenses related to all regulatory applications with state and federal
authorities in connection with the transactions contemplated hereby and thereby,
shall be paid by Liberty or Heritage, as the case may be. All expenses incurred
by Cumberland or Community in connection with the authorization, preparation,
execution and performance of this Agreement and the Merger Agreement, including,
without limitation, all fees and expenses of its agents, representatives,
counsel and accountants and the cost of reproducing and mailing any proxy
materials, shall be paid by Community.
3.6 PRESERVATION OF GOODWILL. Cumberland shall (and Community
shall cause Cumberland) to use its best efforts to preserve its business
organization and the business organization of its subsidiaries, if any, to keep
available the services of its present employees (unless otherwise provided for
herein) and of the present employees of its subsidiaries, and to preserve the
goodwill of customers and others having business relations with such party or
its subsidiaries.
3.7 APPROVALS AND CONSENTS. Each party hereto represents and
warrants to and covenants with the other that it will use its best efforts, and
will cause its officers, directors, employees and agents and its subsidiaries
and any subsidiary's officers, directors, employees and agents to use their best
efforts, to obtain as soon as is reasonably practicable all approvals and
consents of state and federal departments or agencies required or deemed
necessary for consummation of the transactions contemplated by this Agreement
and the Merger Agreement.
3.8 AGREEMENT BY COMMUNITY EXECUTIVE OFFICERS AND DIRECTORS. Each
of the directors and executive officers of Community will, contemporaneously
with the execution of this Agreement, execute and deliver to Heritage and
Liberty an agreement, the form of which
is attached hereto as Exhibit B, pursuant to which each of them agrees, subject
to their fiduciary duty, (i) to recommend to Community shareholders approval of
the Merger, and (ii) to vote the capital stock of Community owned or controlled
by them in favor of the Merger.
3.9 PRESS RELEASES. Prior to the Effective Date, the parties shall
agree 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, however, that nothing in this Section 3.9 shall
be deemed to prohibit any party from making any disclosure which its counsel
deems necessary or advisable in order to satisfy such party's disclosure
obligations imposed by law.
3.10 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Date,
officers and employees of Cumberland who continue employment with Heritage shall
be offered employee benefits on terms and conditions which, when taken as a
whole, are substantially similar to those then currently provided by Heritage to
its other similarly situated officers and employees. For purposes of eligibility
to participate and any vesting determinations in connection with the provision
of any such employee benefits, service with Cumberland prior to the Effective
Date shall be counted. Other than those employment, severance, consulting,
option and other contracts of a compensatory nature specifically disclosed in
the Cumberland Disclosure Memorandum (as defined in Section 4.1) and entered
into between Cumberland and/or Community and any current or former director,
officer, employee, or consultant thereof, no contracts of the types described
shall be deemed to be assumed by Liberty or Heritage by reason of this Section
3.10.
3.11 PROXY STATEMENT. Community and Cumberland agree not to take
any action or fail to take any action in connection with any proxy statement or
other document, form or report filed with the Securities and Exchange Commission
pursuant to any federal securities law, statute, rule, or regulation applicable
to Community and/or Cumberland as a result of the transactions contemplated by
this Agreement and/or the Merger Agreement which causes the shareholders of
Community to vote on the approval of this Agreement and the Merger Agreement and
the transactions contemplated hereby and thereby after November 13, 2003.
3.12 CLOSING FINANCIAL STATEMENTS OF CUMBERLAND. Prior to the
Closing, Cumberland shall provide to Heritage an income statement for the period
beginning on the date of this Agreement and ending as of a date within three (3)
business days prior to the Closing and a balance sheet as of the ending date of
the closing income statement required to be delivered under this Section 3.12,
each of which shall be prepared in accordance with generally accepted accounting
principles (collectively, the "Closing Financial Statements"). Notwithstanding
the generality of the foregoing, the parties agree that the Closing Financial
Statements shall exclude, unless otherwise agreed to in writing, any costs,
fees, expenses, or taxes resulting from the transactions contemplated by this
Agreement, including (without limitation) any legal, accounting, broker, or
other professional fees paid in the preparation or negotiation of this Agreement
and its contemplated transactions (as such costs, fees, expenses, or taxes shall
be paid by Community and not out of the assets of Cumberland), any action or
inaction of Cumberland or Community which was taken or not taken, as the case
may be, in violation of any their respective covenants agreed to under this
Agreement or other related agreements, or resulting from the settlement of any
intercompany accounts with any affiliate of Cumberland.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CUMBERLAND AND COMMUNITY
As an inducement to Liberty and Heritage to enter into this Agreement
and to consummate the transactions contemplated hereby, Cumberland and Community
represents, warrants, covenants and agrees as follows:
4.1 CUMBERLAND DISCLOSURE MEMORANDUM. Cumberland has delivered to
Heritage a memorandum (the "Cumberland Disclosure Memorandum") containing
certain information regarding Cumberland as indicated at various places in this
Agreement. All information set forth in the Cumberland Disclosure Memorandum or
in documents incorporated by reference in the Cumberland Disclosure Memorandum
is true, correct and complete, does not omit to state any fact necessary in
order to make the statements therein not misleading, and shall be deemed for all
purposes of this Agreement to constitute part of the representations and
warranties of Cumberland under this Article IV. The information contained in the
Cumberland Disclosure Memorandum shall be deemed to be part of and qualify all
representations and warranties contained in this Article IV and the covenants in
Article V to the extent applicable. All information in each of the documents and
other writings furnished to Liberty or Heritage pursuant to this Agreement or
the Cumberland Disclosure Memorandum is or will be true, correct and complete
and does not and will not omit to state any fact necessary in order to make the
statements therein not misleading. Cumberland shall promptly provide Liberty and
Heritage with written notification of any event, occurrence or other information
necessary to maintain the Cumberland Disclosure Memorandum and all other
documents and writings furnished to Liberty or Heritage pursuant to this
Agreement as true, correct and complete in all material respects at all times
prior to and including the Closing.
4.2 CORPORATE AND FINANCIAL.
4.2.1 AUTHORITY. Subject to the approval of various federal
and state regulators and any requisite shareholder approval, the execution,
delivery and performance of this Agreement and the other transactions
contemplated or required in connection herewith will not, with or without the
giving of notice or the passage of time, or both, (a) violate any provision of
federal or state law applicable to Cumberland or Community, the violation of
which could be reasonably expected to have a material adverse effect on the
business, operations, properties, assets, financial condition or prospects of
Cumberland; (b) violate any provision of the articles of
incorporation/association or bylaws of Cumberland or Community; (c) conflict
with or result in a breach of any provision of, or termination of, or constitute
a default under any instrument, license, agreement, or commitment to which
Cumberland or Community is a party, which, singly or in the aggregate, could
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, financial condition or prospects of Cumberland;
or (d) constitute a violation of any order, judgment or decree to which
Cumberland or Community is a party, or by which Cumberland, Community, or their
respective assets or properties are bound. This Agreement constitutes a valid
and binding obligation of Cumberland and Community, and is enforceable in
accordance with its terms, except as limited by laws affecting creditors' rights
generally and by the discretion of courts to compel specific performance.
4.2.2 CORPORATE STATUS. Cumberland is a national
association duly organized and validly existing under the laws of the United
States of America and Cumberland has no direct or indirect subsidiaries.
Cumberland has all of the requisite corporate power and authority and is
entitled to own or lease its properties and assets and to carry on its business
as and in the places where such properties or assets are now owned, leased or
operated and such business is now conducted.
4.2.3 CAPITAL STRUCTURE. (a) As of the date hereof,
Cumberland has 400,000 issued and outstanding shares of capital stock, par value
$5.00 per share. All of the issued and outstanding shares of Cumberland Stock
are duly and validly issued, fully paid and non-assessable and were offered,
issued and sold in compliance with all applicable federal and state securities
laws. No person has any right of rescission or claim for damages under federal
or state securities laws with respect to the issuance of any shares of
Cumberland Stock previously issued. None of the shares of Cumberland Stock have
been issued in violation of any preemptive or other rights of its shareholders.
All of the issued and outstanding shares of Cumberland Stock are owned, free and
clear of any lien or other encumbrance, by Community.
(b) Cumberland does not have outstanding any securities
which are either by their terms or by contract convertible or exchangeable into
capital stock of Cumberland, or any other securities or debt, of Cumberland, or
any preemptive or similar rights to subscribe for or to purchase, or any options
or warrants or agreements or understandings for the purchase or the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock or securities convertible into its
capital stock. Cumberland is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire, or to register, any
shares of its capital stock.
(c) There is no agreement, arrangement or understanding
to which Cumberland is a party restricting or otherwise relating to the transfer
of any shares of capital stock of Cumberland.
(d) All shares of common stock or other capital stock, or
any other securities or debt, of Cumberland, which have been purchased or
redeemed by Cumberland have been purchased or redeemed in accordance with all
applicable federal, state and local laws, rules, and regulations, including,
without limitation, all federal and state securities laws and rules and
regulations of any securities exchange or system on which such stock, securities
or debt are, or at such time were, traded, and no such purchase or redemption
has resulted or will, with the giving of notice or lapse of time, or both,
result in a default or acceleration of the maturity of, or otherwise modify, any
agreement, note, mortgage, bond, security agreement, loan agreement or other
contract or commitment of Cumberland.
4.2.4 CORPORATE RECORDS. The stock records and minute books
of Cumberland, whether heretofore or hereafter furnished or made available to
Liberty and/or Heritage, (a) fully and accurately reflect all issuances,
transfers and redemptions of Cumberland Stock, (b) correctly show the record
addresses and the number of shares of such stock issued and outstanding on the
date hereof held by the shareholders of Cumberland, (c) correctly show all
corporate action taken by the directors and shareholders of Cumberland
(including actions taken by consent without a meeting) and (d) contain true and
correct copies or originals of the
respective articles of association and all amendments thereto, bylaws as amended
and currently in force, and the minutes of all meetings or consent actions of
its directors and shareholders. No resolutions, regulations or bylaws have been
passed, enacted, consented to or adopted by such directors or shareholders
except those contained in the minute books. All corporate records have been
maintained in accordance with all applicable statutory requirements and are
complete and accurate.
4.2.5 TAX RETURNS; TAXES. (a) Cumberland and Community have
delivered to Heritage and/or Liberty all federal and state tax returns and
reports filed by Cumberland and Community since December 31, 2000. Cumberland
and Community each have duly filed (i) all required federal and state tax
returns and reports, and (ii) all required returns and reports of other
governmental units having jurisdiction with respect to taxes imposed upon their
incomes, properties, revenues, franchises, operations or other assets or taxes
imposed which might create a material lien or encumbrance on any of such assets
or affect materially and adversely their business or operations. To the
knowledge of Cumberland or Community, such returns or reports are, and when
filed will be, true, complete and correct, and Cumberland and/or Community has
paid, to the extent such taxes or other governmental charges have become due,
all taxes and other governmental charges set forth in such returns or reports.
To the knowledge of Cumberland or Community, all federal, state and local taxes
and other governmental charges paid or payable by Cumberland and/or Community
have been paid, or have been accrued or reserved on Cumberland's books and
financial statements in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods. To the knowledge of Cumberland
or Community, adequate reserves for the payment of taxes have been established
on the books and financial statements of Cumberland for all periods through the
date hereof, whether or not due and payable and whether or not disputed. Until
the Closing Date, Cumberland shall continue to provide adequate reserves for the
payment of expected tax liabilities in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods.
Cumberland (and Community as it pertains or effects the continued operations and
business of Cumberland) has not received any notice of a tax deficiency or
assessment of additional taxes of any kind and, to the knowledge of Cumberland
or Community, there is no threatened claim against Cumberland, or to the
knowledge of Cumberland or Community, any basis for any such claim, for payment
of any additional federal, state, local or foreign taxes for any period prior to
the date of this Agreement in excess of the accruals or reserves with respect to
any such claim shown in the Cumberland Financial Statements (described in
Section 4.2.6 below) or disclosed in the notes with respect thereto. There are
no waivers or agreements by Cumberland or Community for the extension of time
for the assessment of any taxes. The federal income tax returns of Cumberland
and Community have not been examined by the Internal Revenue Service for any
period since its inception.
(b) Except as set forth in the Cumberland Disclosure
Memorandum, to the knowledge of Cumberland or Community, proper and accurate
amounts have been withheld by Cumberland from its employees for all periods in
full and complete compliance with the tax withholding provisions of applicable
federal, state and local tax laws, and proper and accurate federal, state and
local tax returns have been filed by Cumberland and/or Community for all periods
for which returns were due with respect to withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and payable have
been paid in full.
4.2.6 FINANCIAL STATEMENTS. Cumberland has delivered to
Heritage true, correct and complete copies of the audited, consolidated
financial statements of Community for the years ended December 31, 2002 and 2001
(with supporting documentation and consolidating worksheets and schedules for
the years ended December 31, 2002 and 2001) and, on an unaudited, unconsolidated
basis, financial statements of Cumberland for the three months ended March 31,
2003, including balance sheets, statements of income, statements of
shareholders' equity, statements of cash flows and related notes (collectively
referred to as the "Cumberland Financial Statements"). All of such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied and present fairly the assets, liabilities and
financial condition of Cumberland as of the dates indicated therein and the
results of its operations for the respective periods then ended.
4.2.7 REGULATORY REPORTS. Cumberland has made available to
Liberty and/or Heritage for review and inspection the Report of Condition and
Report of Income and Dividends as filed by Cumberland with the Office of the
Comptroller of the Currency (the "OCC"), for the quarter ended March 31, 2003
and each of the three years ended December 31, 2002, 2001 and 2000, together
with all such other reports filed for the same periods with the Federal Deposit
Insurance Corporation (the "FDIC") and other applicable regulatory agencies
(collectively, the "Cumberland Reports"). All of the Cumberland Reports, as
amended, have been prepared in accordance with applicable rules and regulations
applied on a basis consistent with prior periods and contain in all material
respects all information required to be presented therein in accordance with
such rules and regulations.
4.2.8 ACCOUNTS. The Cumberland Disclosure Memorandum
contains a list of each and every bank and other institution in which Cumberland
maintains an account or safety deposit box, the account numbers, and the names
of all persons who are presently authorized to draw thereon, have access thereto
or give instructions regarding distribution of funds or assets therein.
4.2.9 NOTES AND OBLIGATIONS. (a) Except as set forth in the
Cumberland Disclosure Memorandum or as provided for in the loss reserve
described in subsection (b) below, all notes receivable or other obligations
owned by Cumberland or due to it shown in the Cumberland Financial Statements
and any such notes receivable and obligations on the date hereof and on the
Closing Date are and will be genuine, legal, valid and collectible obligations
of the respective makers thereof and are not and will not be subject to any
offset or counterclaim. Except as set forth in subsection (b) below, all such
notes and obligations are evidenced by written agreements, true and correct
copies of which will be made available to Liberty or Heritage for examination
prior to the Closing Date. All such notes and obligations were entered into by
Cumberland in the ordinary course of its business and in compliance with all
applicable laws and regulations.
(b) Cumberland has established a loss reserve in the
Cumberland Financial Statements as of the date of this Agreement and will
establish a loan loss reserve as of the Closing Date which, to the best of
Cumberland and Community's knowledge, is adequate (under generally accepted
accounting principles and applicable federal securities laws regarding
disclosure of financial information for banks and bank holding companies) to
cover anticipated losses which might result from such items as the insolvency or
default of borrowers or obligors
on such loans or obligations, defects in the notes or evidences of obligation
(including losses of original notes or instruments), offsets or counterclaims
properly chargeable to such reserve, or the availability of legal or equitable
defenses which might preclude or limit the ability of Cumberland to enforce the
note or obligation, and the representations set forth in subsection (a) above
are qualified in their entirety by the aggregate of such loss reserve.
4.2.10 LIABILITIES. Except as already reserved against or
disclosed in the Cumberland Financial Statements, Cumberland has no debt,
liability or obligation of any kind required to be shown pursuant to generally
accepted accounting principles on the Cumberland Financial Statements, whether
accrued, absolute, known or unknown, contingent or otherwise, including, but not
limited to (a) liability or obligation on account of any federal, state or local
taxes or penalty, interest or fines with respect to such taxes, (b) liability
arising from or by virtue of the distribution, delivery or other transfer or
disposition of goods, personal property or services of any type, kind or
variety, (c) unfunded liabilities with respect to any pension, profit sharing or
employee stock ownership plan, whether operated by Cumberland or any other
entity covering employees of Cumberland, or (d) environmental liabilities.
4.2.11 ABSENCE OF CHANGES. Except as specifically provided
for in this Agreement or specifically set forth in the Cumberland Disclosure
Memorandum, since December 31, 2002:
(a) there has been no change in the business, assets,
liabilities, results of operations or financial condition of Cumberland, or in
any of its relationships with customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had, or which Cumberland or Community believes may have, a
material adverse effect on such business or properties;
(b) there has been no material damage, destruction or
loss to the assets, properties or business of Cumberland, whether or not covered
by insurance, which has had, or which Cumberland or Community believes may have,
an adverse effect thereon;
(c) the business of Cumberland has been operated in the
ordinary course, and not otherwise;
(d) the properties and assets of Cumberland used in its
business have been maintained in good order, repair and condition, ordinary wear
and tear excepted;
(e) the books, accounts and records of Cumberland have
been maintained in the usual, regular and ordinary manner; 0 (f) there has been
no declaration, setting aside or payment of any dividend or other distribution
on or in respect of the capital stock of Cumberland;
(g) there has been no increase in the compensation or in
the rate of compensation or commissions payable or to become payable by
Cumberland to any director or executive officer, or to any employee earning
$35,000 or more per annum, or any general increase in the compensation or in the
rate of compensation payable or to become payable to employees of Cumberland
earning less than $35,000 per annum ("general increase" for the
purpose hereof meaning any increase generally applicable to a class or group of
employees, but not including increases granted to individual employees for
merit, length of service, change in position or responsibility or other reasons
applicable to specific employees and not generally to a class or group thereof),
or any director, officer, or employee hired at a salary in excess of $35,000 per
annum, or any increase in any payment of or commitment to pay any bonus, profit
sharing or other extraordinary compensation to any employee;
(h) there has been no change in the articles of
association or bylaws of Cumberland;
(i) there has been no labor dispute, unfair labor
practice charge or employment discrimination charge, nor, to the knowledge of
Cumberland, any organizational effort by any union, or institution or threatened
institution, of any effort, complaint or other proceeding in connection
therewith, involving Cumberland, or affecting its operations;
(j) there has been no issuance, sale, repurchase,
acquisition, or redemption by Cumberland of any of its capital stock, bonds,
notes, debt or other securities, and there has been no modification or amendment
of the rights of the holders of any outstanding capital stock, bonds, notes,
debt or other securities thereof;
(k) there has been no mortgage, lien or other encumbrance
or security interest (other than liens for current taxes not yet due or purchase
money security interests arising in the ordinary course of business) created on
or in (including without limitation, any deposit for security consisting of) any
asset or assets of Cumberland or assumed by it with respect to any asset or
assets;
(l) there has been no indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise) incurred by
Cumberland which would be required to be reflected on a balance sheet of
Cumberland prepared as of the date hereof in accordance with generally accepted
accounting principles applied on a consistent basis, except as incurred in the
ordinary course of business;
(m) no obligation or liability of Cumberland has been
discharged or satisfied, other than in the ordinary course of business;
(n) there have been no sales, transfers or other
dispositions of any asset or assets of Cumberland, other than sales in the
ordinary course of business; and
(o) there has been no amendment, termination or waiver of
any right of Cumberland under any contract or agreement or governmental license,
permit or permission which has had or may have an adverse effect on its
business, operations, or assets.
4.2.12 LITIGATION AND PROCEEDINGS. Except as set forth on
the Cumberland Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or investigations,
pending or, to the knowledge of Cumberland or Community, threatened against, by
or affecting Cumberland, or any officer, director, employee or agent in such
person's capacity as an officer, director, employee or agent of Cumberland or
relating to the business or affairs of Cumberland, in any court or before any
arbitrator or governmental agency, and no judgment, award, order or decree of
any nature has been rendered against or with respect thereto by any agency,
arbitrator, court, commission or other authority, nor does Cumberland or
Community have any unasserted contingent liabilities which might have an adverse
effect on the assets or operations of Cumberland or which might prevent or
impede the consummation of the transactions contemplated by this Agreement.
4.2.13 PROXY MATERIALS. Neither the Community proxy
materials nor other materials furnished by Community to the Community
shareholders in connection with the transactions contemplated by this Agreement
or the Merger Agreement, or in any amendments thereof or supplements thereto,
will, at the times such documents are distributed to the Community shareholders
and through the acquisition of shares of Cumberland Stock by Heritage pursuant
to the Merger, contain with respect to Cumberland any untrue statement of a
material fact or omit to state any information required to be stated therein or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they are made with respect to
Cumberland, not misleading.
4.3 BUSINESS OPERATIONS.
4.3.1 CUSTOMERS. Cumberland or Community has no knowledge
of any presently existing facts which could reasonably be expected to result in
the loss of any material borrower or depositor or, subject to 4.2.9(b), in
Cumberland's inability to collect amounts due therefrom or to return funds
deposited thereby, except as set forth on the Cumberland Disclosure Memorandum.
4.3.2 PERMITS; COMPLIANCE WITH LAW. (a) Cumberland has all
permits, licenses, approvals, authorizations and registrations under all
federal, state, local and foreign laws required for Cumberland to carry on its
business as presently conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect, and no suspension
or cancellation of any of them is pending or, to the knowledge of Cumberland or
Community, threatened.
(b) Cumberland has complied with all laws, regulations,
ordinances, rules, and orders applicable to it or its business, except for any
non-compliance which would not have a material adverse effect on Cumberland. The
Cumberland Disclosure Memorandum contains a list of any known violations of such
laws, regulations, ordinances, rules or orders by any present officer, director,
or employee of Cumberland, and which resulted in any order, proceeding, judgment
or decree which would be required to be disclosed pursuant to Item 401(f) of
Regulation S-K promulgated by the Securities and Exchange Commission. No past
violation of any such law, regulation, ordinance, rule or order has occurred
which could impair the right or ability of Cumberland to conduct its business.
(c) Except as set forth in the Cumberland Disclosure
Memorandum, no notice or warning from any governmental authority with respect to
any failure or alleged failure of Cumberland to comply in any respect with any
law, regulation, ordinance, rule or order has been received, nor is any such
notice or warning proposed or, to the knowledge of Cumberland or Community,
threatened.
4.3.3 ENVIRONMENTAL. (a) Except as set forth in the
Cumberland Disclosure Memorandum, Cumberland or Community:
(i) has not caused or permitted the generation,
manufacture, use, handling, release or presence of, any
Hazardous Material (as defined below) on, in, under or from
any properties or facilities currently owned or leased by
Cumberland or adjacent to any properties so owned or leased
and has no knowledge of any claim or request for information
regarding the environmental condition of such properties or
facilities; and
(ii) has complied in all material respects with,
and has kept all records and made all filings or reports
required by, and is otherwise in compliance with any federal,
state or local law, statute, ordinance, code, rule,
regulation, license, authorization, decision, order,
injunction, decree, or rule of common law (including, but not
limited to, nuisance, trespass, negligence or toxic tort
claims), and any judicial interpretation of any of the
foregoing, which pertains to health, safety, any Hazardous
Material, or the environment (including, but not limited to,
ground, air, water or noise pollution or contamination, and
underground or above-ground storage tanks) and any other state
or federal environmental statutes, and all rules, regulations,
orders and decrees now or hereafter promulgated under any of
the foregoing, as any of the foregoing now exist or may be
changed or amended or come into effect in the future
(hereinafter, "Environmental Laws") relating to the
generation, treatment, manufacture, use, handling, release or
presence of any Hazardous Material on, in, under or from any
properties or facilities currently owned or leased by
Cumberland; and
(iii) there are no above-ground or underground
storage tanks, whether in use or closed, in, on or under any
properties or facilities currently owned or leased by
Cumberland. The Cumberland Disclosure Memorandum contains a
detailed description of all above-ground or underground
storage tanks removed by or on behalf of Cumberland at or from
any properties or facilities currently or formerly owned or
leased by Cumberland. All such tank removals were performed in
accordance with applicable Environmental Laws and no soil or
groundwater contamination resulted from the operation or
removal of such tanks; and
(iv) Cumberland has delivered to Heritage true
and complete copies and results of any reports, studies,
analyses, tests, or monitoring possessed or initiated by
Cumberland pertaining to Hazardous Materials in, on, or under
any properties or facilities currently owned or leased by
Cumberland, or concerning compliance by Cumberland or any
other person for whose conduct it is or may be held
responsible, with Environmental Laws.
(b) Except as set forth in the Cumberland Disclosure
Memorandum, neither Cumberland nor any of its officers, directors, employees or
agents, in the course of such
individual's employment by Cumberland, has given advice with respect to, or
participated in any respect in, the management or operation of any entity or
concern whose business relates in any way to the generation, storage, handling,
disposal, transfer, production, use or processing of Hazardous Material, nor to
Cumberland's or Community's knowledge has Cumberland foreclosed on any property
on which there is a release or threatened release of any Hazardous Material.
(c) Except as set forth in the Cumberland Disclosure
Memorandum, neither Cumberland, Community, nor any of their respective officers,
directors, employees, or agents, is aware of, has been told of, or has observed,
the presence or release of any Hazardous Material on, in, under, or around
property on which Cumberland holds a legal or security interest, in violation
of, or creating a liability or potential liability under, any Environmental Law.
(d) The term "Hazardous Material" means any substance,
whether solid, liquid or gaseous: (i) which is listed, defined or regulated as a
"hazardous substance," "hazardous waste," "hazardous material" or "solid waste,"
or otherwise classified or regulated as dangerous, hazardous or toxic, in or
pursuant to any Environmental Law; (ii) which is or contains asbestos, radon,
lead, mold, any polychlorinated biphenyl, any polybrominated diphenyl ether,
urea formaldehyde foam insulation, explosive or radioactive material,
infectious, biological or chemical agent or substance, medical waste or motor
fuel or other petroleum hydrocarbons or constituents; or (iii) which causes
contamination or nuisance, or threat of the same, on any properties or
facilities currently owned or leased by Cumberland or any adjacent property, or
a hazard or potential harm to the public health, human health or the
environment; provided, however, the term "Hazardous Material" shall not include
those substances which are normally and reasonably used in full compliance with
Environmental Laws in connection with the occupancy or operation of office
buildings (such as cleaning fluids, and supplies normally used in the day to day
operation of business offices) in amounts which do not constitute a material
violation of, or could give rise to a material liability under, applicable
Environmental Laws.
4.3.4 INSURANCE. The Cumberland Disclosure Memorandum
contains a complete list and description (including the expiration date, premium
amount and coverage thereunder) of all policies of insurance and bonds presently
maintained by, or providing coverage for, Cumberland or any of its officers,
directors and employees, all of which are, and will be maintained through the
Closing Date, in full force and effect, together with a complete list of all
pending claims under any of such policies or bonds. All terms, obligations and
provisions of each of such policies and bonds have been complied with, all
premiums due thereon have been paid, and no notice of cancellation with respect
thereto has been received. Except as set forth in the Cumberland Disclosure
Memorandum, such policies and bonds provide adequate coverage to insure the
properties and businesses of Cumberland and the activities of its officers,
directors and employees against such risks and in such amounts as are prudent
and customary. Cumberland will not as of the Closing Date have any liability for
premiums or for retrospective premium adjustments for any period prior to the
Closing Date. Cumberland has heretofore made, or will hereafter make, available
to Heritage a true, correct and complete copy of each insurance policy and bond
in effect since its inception with respect to the business and affairs of
Cumberland.
4.4 PROPERTIES AND ASSETS.
4.4.1 CONTRACTS AND COMMITMENTS. The Cumberland Disclosure
Memorandum contains a list identifying and briefly describing all written
contracts, purchase orders, agreements, security deeds, guaranties or
commitments to which Cumberland is a party or by which it may be bound involving
the payment or receipt, actual or contingent, of more than $25,000 or having a
term or requiring performance over a period of more than ninety (90) days. Each
such contract, agreement, guaranty and commitment of Cumberland is in full force
and effect and is valid and enforceable in accordance with its terms, and
constitutes a legal and binding obligation of the respective parties thereto and
is not the subject of any notice of default, termination, partial termination or
of any ongoing, pending, completed or threatened investigation, inquiry or other
proceeding or action that may give rise to any notice of default, termination or
partial termination. Cumberland has complied in all material respects with the
provisions of such contracts, agreements, guaranties and commitments. A true and
complete copy of each such document has been or will be made available to
Heritage and/or Liberty for examination.
4.4.2 LICENSES; INTELLECTUAL PROPERTY. Cumberland has all
patents, trademarks, trade names, service marks, copyrights, trade secrets and
know-how reasonably necessary to conduct its business as presently conducted
and, except as described in the Cumberland Disclosure Memorandum and other than
any software that has been purchased by Cumberland in off-the-shelf, commercial
packaging at a purchase price of Five Thousand Dollars ($5,000) or less,
Cumberland is not a party, either as licensor or licensee, to any agreement for
any patent, process, trademark, service xxxx, trade name, copyright, trade
secret or other confidential information and there are no rights of third
parties with respect to any trademark, service xxxx, trade secrets, confidential
information, trade name, patent, patent application, copyright, invention,
device or process owned or used by Cumberland or presently expected to be used
by it in the future. All patents, copyrights, trademarks, service marks, trade
names, and applications therefor or registrations thereof, owned or used by
Cumberland, are listed in the Cumberland Disclosure Memorandum. Cumberland has
complied with all applicable laws relating to the filing or registration of
"fictitious names" or trade names.
4.4.3 PERSONAL PROPERTY. Cumberland has good and marketable
title to all of its personalty, tangible and intangible, reflected in the
Cumberland Financial Statements (except as since sold or otherwise disposed of
by it in the ordinary course of business), free and clear of all encumbrances,
liens or charges of any kind or character, except (i) those referred to in the
notes to the Cumberland Financial Statements as securing specified liabilities
(with respect to which no default exists or, to the knowledge of Cumberland, is
claimed to exist), (ii) those described in the Cumberland Disclosure Memorandum
and (iii) liens for taxes not due and payable.
4.4.4 CUMBERLAND LEASES. (a) All leases (the "Cumberland
Leases") pursuant to which Cumberland is lessor or lessee of any real or
personal property (such property, the "Leased Property") are valid and
enforceable in accordance with their terms; there is not under any of the
Cumberland Leases any default or, to the knowledge of Cumberland or Community,
any claimed default by Cumberland, or event of default or event which with
notice
or lapse of time, or both, would constitute a default by Cumberland and in
respect of which adequate steps have not been taken to prevent a default on its
part from occurring.
(b) The copies of the Cumberland Leases heretofore or
hereafter furnished or made available by Cumberland to Heritage and/or Liberty
are true, correct and complete, and the Cumberland Leases have not been modified
in any respect other than pursuant to amendments, copies of which have been
concurrently delivered or made available to Heritage and/or Liberty, and are in
full force and effect in accordance with their terms.
(c) Except as set forth in the Cumberland Disclosure
Memorandum, there are no contractual obligations, agreements in principle or
present plans for Cumberland to enter into new leases of real property or to
renew or amend existing Cumberland Leases prior to the Closing Date.
4.4.5 REAL PROPERTY. (a) Cumberland does not own any
interest in any real property (other than as lessee) except as set forth in the
Cumberland Disclosure Memorandum (such properties being referred to herein as
"Cumberland Realty"). Except as disclosed in the Cumberland Disclosure
Memorandum, Cumberland has good title to the Cumberland Realty and the titles to
the Cumberland Realty are covered by title insurance policies providing coverage
in the amount of the original purchase price, true, correct and complete copies
of which have been or will be furnished to Heritage and/or Liberty with the
Cumberland Disclosure Memorandum. Cumberland has not encumbered the Cumberland
Realty since the effective dates of the respective title insurance policies.
(b) Except as set forth in the Cumberland Disclosure
Memorandum, the interests of Cumberland in the Cumberland Realty and in and
under each of the Cumberland Leases are free and clear of any and all liens and
encumbrances and are subject to no present claim, contest, dispute, action or,
to the knowledge of Cumberland or Community, threatened action at law or in
equity.
(c) The present and past use and operations of, and
improvements upon, the Cumberland Realty and all real properties included in the
Leased Properties (the "Cumberland Leased Real Properties") are in compliance in
all material respects with all applicable building, fire, zoning and other
applicable laws, ordinances and regulations and with all deed restrictions of
record, no notice of any violation or alleged violation thereof has been
received, and to the knowledge of Cumberland or Community there are no proposed
changes therein that would affect the Cumberland Realty, the Cumberland Leased
Real Properties or their uses.
(d) Except as set forth in the Cumberland Disclosure
Memorandum, no rent has been paid in advance and no security deposit has been
paid by, nor is any brokerage commission payable by or to, Cumberland with
respect to any Lease pursuant to which it is lessor or lessee.
(e) Cumberland or Community is not aware of any proposed
or pending change in the zoning of, or of any proposed or pending condemnation
proceeding with respect to, any of the Cumberland Realty or the Cumberland
Leased Real Properties which may
adversely affect the Cumberland Realty or the Cumberland Leased Real Properties
or the current or currently contemplated use thereof.
(f) The buildings and structures owned, leased or used by
Cumberland are, taken as a whole, in good operating order (except for ordinary
wear and tear), usable in the ordinary course of business, and are sufficient
and adequate to carry on the business and affairs of Cumberland.
4.5 EMPLOYEES AND BENEFITS.
4.5.1 DIRECTORS OR OFFICERS OF OTHER CORPORATIONS. (a)
Except as set forth in the Cumberland Disclosure Memorandum, Cumberland does not
provide and is not obligated to provide, directly or indirectly, any benefits
for directors, consultants, or other non-employee services providers, including,
without limitation, any pension, profit sharing, stock option, retirement bonus,
hospitalization, medical, insurance, vacation or other employee benefits under
any practice, agreement or understanding.
(b) Except as set forth in the Cumberland Disclosure
Memorandum, no director, officer, or employee of Cumberland serves, or in the
past five years has served, as a director or officer of any other corporation on
behalf of or as a designee of Cumberland or any of its subsidiaries.
4.5.2 EMPLOYEE BENEFITS. (a) Except as set forth in the
Cumberland Disclosure Memorandum, Cumberland does not provide and is not
obligated to provide, directly or indirectly, any benefits for employees,
including, without limitation, any pension, profit sharing, stock option,
retirement bonus, hospitalization, medical, insurance, vacation or other
employee benefits under any practice, agreement or understanding.
(b) The Cumberland Disclosure Memorandum lists separately
any employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") sponsored by
Cumberland (collectively, "ERISA Plans"). True, correct and complete copies of
all ERISA Plans and, to the extent applicable, all related trust agreements,
insurance contracts, summary plan descriptions, Internal Revenue Service
determination letters and filings, the past three years of actuarial reports and
valuations, annual reports and Form 5500 filings (including attachments), and
any other related documents requested by Heritage or Liberty or their counsel
have been, or prior to the Closing Date will be, made available to Heritage
and/or Liberty.
(c) Cumberland is not currently and has never been in the
past required to contribute to a multiemployer plan as defined in Section
3(37)(A) of ERISA. Cumberland does not maintain or contribute to, nor within the
past six years has it maintained or contributed to, an employee pension benefit
plan as defined in Section 3(2) of ERISA that is or was subject to Title IV of
ERISA.
(d) Each ERISA Plan has been operated and administered in
all material respects in accordance with, and has been amended to comply with
(unless such amendment is not yet required), all applicable laws, rules and
regulations, including, without limitation, ERISA, the Internal Revenue Code of
1986, as amended ("Code"), and the regulations issued under ERISA and the Code.
With respect to each ERISA Plan, other than
routine claims for benefits submitted in the ordinary course of the benefits
process, no litigation or administrative or other proceeding is pending or, to
the knowledge of Cumberland or Community, threatened involving such ERISA Plan
or any of its fiduciaries. With respect to each ERISA Plan, neither Cumberland
nor any of its directors, officers, employees or agents, nor to Cumberland's or
Community's knowledge, any "party in interest" or "disqualified person" (as such
terms are defined in Section 3(14) of ERISA and Section 4975 of the Code) has
been engaged in or been a party to any transaction relating to the ERISA Plan
which would constitute a breach of fiduciary duty under ERISA or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code), unless such transaction is specifically permitted under Sections 407
or 408 of ERISA, Section 4975 of the Code or a class or administrative exemption
issued by the Department of Labor. Each ERISA Plan that is a group health plan
within the meaning of Section 607(l) of ERISA and Section 4980B of the Code is
in material compliance with the continuation coverage requirements of Section
601 of ERISA and Section 4980B of the Code. Each ERISA Plan that is a group
health plan within the meaning of Section 733 of ERISA is in material compliance
with the group health plan requirements of Part 7 of Subtitle B, Title I of
ERISA.
(e) Of the ERISA Plans, the "employee pension benefit
plans" within the meaning of Section 3(2) of ERISA (collectively, the "Employee
Pension Benefit Plans") are separately identified on the Cumberland Disclosure
Memorandum. Each Employee Pension Benefit Plan is the subject of a determination
letter issued by the Internal Revenue Service to the effect that such plan
qualifies under Section 401(a) of the Code and that the related trust is exempt
from taxation under Section 501(a) of the Code and such determination letter
remains in effect and has not been revoked. Each Employee Pension Benefit Plans
currently complies in form with the requirements of Section 401(a) of the Code,
other than changes required by statutes, regulations and rulings for which
amendments are not yet required. With respect to each Employee Pension Benefit
Plan, except as set forth on the Cumberland Disclosure Memorandum: (i) such
Employee Pension Benefit Plan constitutes a qualified plan within the meaning of
Section 401(a) of the Code and the trust is exempt from federal income tax under
Section 501(a) of the Code; (ii) all contributions required by such plan have
been made or will be made on a timely basis; and (iii) no termination, partial
termination or discontinuance of contributions has occurred without a
determination by the IRS that such action does not affect the tax-qualified
status of such plan.
(f) As of the Closing Date, with respect to each ERISA
Plan, Cumberland will have provided adequate reserves, or insurance or qualified
trust funds, to provide for all payments and contributions required, or
reasonably expected to be required, to be made under the provisions of such
ERISA Plan or required to be made under applicable laws, rules and regulations,
with respect to any period prior to the Closing Date to the extent reserves are
required under generally accepted accounting principles, based on an actuarial
valuation satisfactory to the actuaries of Cumberland representing a projection
of claims expected to be incurred under such ERISA Plan.
(g) Except as disclosed on the Cumberland Disclosure
Memorandum, Cumberland does not provide and has no obligation to provide
benefits, including, without limitation, death, health or medical benefits
(whether or not insured) with respect to current or former employees of
Cumberland beyond their retirement or other termination of service with
Cumberland other than (i) coverage mandated by applicable Law, (ii) benefits
under the Employee Pension Benefit Plans, or (iii) benefits the full cost of
which is borne by the current or former employee or his beneficiary.
(h) Except as described in the Cumberland Disclosure
Memorandum, neither this Agreement nor any transaction contemplated hereby will
(i) entitle any current or former employee, officer or director of Cumberland to
severance pay, unemployment compensation or any similar or other payment, or
(ii) accelerate the time of payment or vesting of, or increase the amount of
compensation or benefits due any such employee, officer or director.
4.5.3 LABOR-RELATED MATTERS. Except as described in the
Cumberland Disclosure Memorandum, Cumberland is not, and has not been, a party
to any collective bargaining agreement or agreement of any kind with any union
or labor organization or to any agreement with any of its employees which is not
terminable at will or upon ninety (90) days notice at the election of, and
without cost or penalty to, Cumberland. Cumberland has not received at any time
in the past five (5) years, any demand for recognition from any union, and no
attempt has been made, or will have been made as of the Closing Date, to
organize any of its employees. Cumberland has complied in all material respects
with all obligations under the National Labor Relations Act, as amended, the Age
Discrimination in Employment Act, as amended, and all other federal, state and
local labor laws and regulations applicable to employees. There are no unfair
labor practice charges pending or threatened against Cumberland, and there are,
and in the past three (3) years there have been, no charges, complaints, claims
or proceedings, no slowdowns or strikes pending or threatened against, or
involving, as the case may be, Cumberland with respect to any alleged violation
of any legal duty (including but not limited to any wage and hour claims,
employment discrimination claims or claims arising out of any employment
relationship) by Cumberland as to any of its employees or as to any person
seeking employment therefrom, and no such violations exist.
4.5.4 RELATED PARTY TRANSACTIONS. Except for (a) deposits,
all of which are on terms and conditions identical to those made available to
all customers of Cumberland at the time such deposits were entered into, and (b)
transactions specifically described in the Cumberland Disclosure Memorandum,
there are no contracts with or loans or commitments to present or former 5% or
greater shareholders, directors, officers, or employees of Cumberland or
Community (other than contracts or commitments relating to services to be
performed by any officer, director or employee as a currently-employed employee
of Cumberland and described in the Cumberland Disclosure Memorandum).
4.6 OTHER MATTERS.
4.6.1 REGULATORY REPORTS. Cumberland will make available to
Heritage and/or Liberty for review and inspection all applications, reports or
other documents filed by it for each of its past three full fiscal years with
any regulatory or governmental agencies. All of such applications, reports and
other documents have been prepared in accordance with applicable rules and
regulations of the regulatory agencies with which they were filed.
4.6.2 APPROVALS, CONSENTS AND FILINGS. Except for the
approval of the Department of Banking and Finance of the State of Georgia (the
"Department of Banking") and the FDIC, or as set forth in the Cumberland
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby or thereby will (a)
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, or (b) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Cumberland, or any of Cumberland's assets.
4.6.3 DEFAULT. (a) Except for those consents described in
or set forth pursuant to Section 4.6.2 above, neither the execution of this
Agreement nor consummation of the transactions contemplated herein (i)
constitutes a breach of or default under any contract or commitment to which
Cumberland is a party or by which Cumberland or its properties, securities, or
assets are bound, (ii) does or will result in the creation or imposition of any
security interest, lien, encumbrance, charge, equity or restriction of any
nature whatsoever in favor of any third party upon any assets of Cumberland or
upon the Cumberland Stock, or (iii) constitutes an event permitting termination
of any agreement or the acceleration of any indebtedness of Cumberland.
(b) Cumberland is not in default under its articles of
association or bylaws or under any term or provision of any security deed,
mortgage, indenture or security agreement or of any other contract or instrument
to which Cumberland is a party or by which it or any of its property is bound.
4.6.4 REPRESENTATIONS AND WARRANTIES. No representation or
warranty contained in this Article IV or in any written statement delivered by
or at the direction of Cumberland or Community pursuant hereto or in connection
with the transactions contemplated hereby contains or shall contain any untrue
statement, nor shall such representations and warranties taken as a whole omit
any statement necessary in order to make any statement not misleading. Copies of
all documents that have been or will be furnished to Heritage or Liberty in
connection with this Agreement or pursuant hereto are or shall be true, correct
and complete.
4.6.5 INTERCOMPANY ACCOUNTS. Except has described in the
Cumberland Disclosure Memorandum, Cumberland has no intercompany accounts to
which it owes (or is owed) money, goods, or services to (or from) Community or
any of its affiliates.
ARTICLE V
CONDUCT OF BUSINESS OF CUMBERLAND PENDING CLOSING
Except as expressly provided otherwise herein, Cumberland and Community
covenant and agree that, without the prior written consent of Heritage between
the date hereof and the Closing Date:
5.1 CONDUCT OF BUSINESS. Cumberland will conduct its business only
in the ordinary course, without the creation of any indebtedness for borrowed
money (other than
deposit and similar accounts and customary credit arrangements between banks in
the ordinary course of business).
5.2 MAINTENANCE OF PROPERTIES. Cumberland will maintain its
properties and assets in good operating condition, ordinary wear and tear
excepted, and will not write-off or write-down the value of any of its assets
other than in accordance with amortization or depreciation schedules established
in accordance with past practices and generally accepted accounting principles.
5.3 INSURANCE. Cumberland will maintain and keep in full force and
effect all of the insurance referred to in Section 4.3.4 hereof or other
insurance equivalent thereto in all material respects.
5.4 CAPITAL STRUCTURE. No change will be made in the authorized or
issued capital stock or other securities of Cumberland, and Cumberland will not
issue or grant any right or option to purchase or otherwise acquire any of the
capital stock or other securities of Cumberland.
5.5 DIVIDENDS. No dividend, distribution or payment will be
declared or made in respect to the Cumberland Stock and Cumberland will not,
directly or indirectly, redeem, purchase or otherwise acquire any of its capital
stock.
5.6 AMENDMENT OF ARTICLES; CORPORATE EXISTENCE. Cumberland will
not amend its articles of association or bylaws, and Cumberland will maintain
its corporate existence and powers.
5.7 NO ACQUISITIONS. Cumberland shall not, without the express
written consent of Heritage, acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other entity or
division thereof or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to it.
5.8 NO DISPOSITIONS. Cumberland will not sell, mortgage, lease,
buy or otherwise acquire, transfer or dispose of any real property or interest
therein (except for sales in the ordinary course of business) and Cumberland
will not, except in the ordinary course of business, sell or transfer, mortgage,
pledge or subject to any lien, charge or other encumbrance any other tangible or
intangible asset.
5.9 BANKING ARRANGEMENTS. No change will be made in the banking
and safe deposit arrangements referred to in Section 4.2.8 hereof (except as
required by Section 7.8 in connection with intercompany accounts) and no new or
existing deposit product or arrangement (including without limitation any new or
existing certificate of deposit) will be offered, renewed, changed, or amended
by Cumberland which will result in the payment of interest thereon at an annual
percentage yield in excess of 250 basis points (or 2.50%).
5.10 CONTRACTS. Except for renewals of existing contracts in effect
as of the date hereof, or entering into a contract for the purpose of
substituting a vendor under any such
existing contract, Cumberland will not enter into any contract of the kind
described in Section 4.4.1 hereof.
5.11 BOOKS AND RECORDS. The books and records of Cumberland will be
maintained in the usual, regular and ordinary course.
5.12 ADVICE OF CHANGES AND LITIGATION. Cumberland shall promptly
advise Heritage orally and in writing of any litigation or settlement matter
covered by Section 5.15 or any change or event having, or which Cumberland or
Community believes could have, a material adverse effect on the assets,
liabilities, business, operations or financial condition of Cumberland.
5.13 REPORTS. Cumberland shall file all reports required to be
filed with any regulatory or governmental agencies between the date of this
Agreement and the Closing Date and shall deliver to Heritage copies of all such
reports promptly after the same are filed.
5.14 EMPLOYEE PAYMENTS AND ARRANGEMENTS. Cumberland (a) shall not
grant or commit to grant any severance or termination pay to any of its
directors, officers or other employees, or adopt any new severance plan, (b)
shall not grant or commit to grant any new or additional employee benefit or
increase in compensation for services to any of its directors, officers or other
employees, (c) except for the termination of the employment agreement of Xxxx X.
Xxxxxx, shall not enter into, amend, or terminate any employee agreement or
compensation arrangement involving any of its directors, officers or other
employees, or (d) shall not create or offer to create any new employment
position, and (e) shall preserve its officer-level management team, with the
exception of Xxxx X. Xxxxxx, including without limitation their
responsibilities, functions, job descriptions, titles, and officer status.
5.15 SETTLEMENT OF CLAIMS. Cumberland shall not commence any
litigation or settle any litigation involving any liability or asset of
Cumberland for money damages or restrictions upon the operations of Cumberland.
5.16 LENDING LIMIT. Cumberland shall not enter into, modify, or
amend any new or existing loan arrangement or relationship with any person under
which Cumberland or its affiliates are or may be required to extend or fund new
or additional credit in the amount of $75,000 or more.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HERITAGE AND LIBERTY
As an inducement to Cumberland and Community to enter into this
Agreement and to consummate the transactions contemplated hereby, Liberty and
Heritage represents, warrants, covenants and agrees as follows:
6.1 CORPORATE STATUS. Heritage is a bank chartered under the laws
of Georgia and duly organized, validly existing and in good standing under the
laws of the State of Georgia. Heritage is entitled to own or lease its
properties and to carry on its business in the places where such properties are
now owned, leased or operated and such business is now conducted.
6.2 AUTHORITY. Subject to the approval of various state and
federal regulators, the execution, delivery and performance of this Agreement
and the other transactions contemplated or required in connection herewith will
not, with or without the giving of notice or the passage of time, or both, (a)
violate any provision of federal or state law applicable to Liberty or Heritage,
the violation of which could be reasonably expected to have a material adverse
effect on the business, operations, properties, assets, financial condition or
prospects of Heritage; (b) violate any provision of the articles of
incorporation or bylaws of Liberty or Heritage; (c) conflict with or result in a
breach of any provision of, or termination of, or constitute a default under any
instrument, license, agreement, or commitment to which Liberty or Heritage is a
party, which, singly or in the aggregate, could reasonably be expected to have a
material adverse effect on the business, operations, properties, assets,
financial condition or prospects of Heritage; or (d) constitute a violation of
any order, judgment or decree to which Liberty or Heritage is a party, or by
which Heritage or any of its assets or properties are bound. This Agreement
constitutes a valid and binding obligation of Liberty and Heritage, and is
enforceable in accordance with its terms, except as limited by laws affecting
creditors' rights generally and by the discretion of courts to compel specific
performance.
6.3 ABILITY TO OBTAIN CONSENTS. Liberty and Heritage have no
reason to believe that Heritage will be unable to secure any necessary
regulatory consents which it is required or obligated to obtain pursuant to
applicable law or otherwise in connection with the transactions contemplated by
this Agreement.
6.4 LITIGATION AND PROCEEDINGS. There are no actions, decrees,
suits, counterclaims, claims, proceedings or governmental actions or
investigations, pending or, to the knowledge of Liberty or Heritage, threatened
against, by or affecting Heritage, any officer, director, employee or agent in
such person's capacity as an officer, director, employee or agent of Heritage or
relating to the business or affairs of Heritage, in any court or before any
arbitrator or governmental agency, and no judgment, award, order or decree of
any nature has been rendered against or with respect thereto by any agency,
arbitrator, court, commission or other authority, nor does Heritage have any
unasserted contingent liabilities, which may have a material adverse effect on
its assets or on the operation of its businesses or which might prevent or
impede the consummation of the transactions contemplated by this Agreement.
6.5 REPRESENTATIONS AND WARRANTIES. No representation or warranty
contained in this Article VI or in any written statement delivered by or at the
direction of Liberty or Heritage pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of all
documents that have been or will be furnished to Cumberland or Community in
connection with this Agreement or pursuant hereto are or shall be true, correct
and complete.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF LIBERTY AND HERITAGE
All of the obligations of Liberty and Heritage under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by Liberty and
Heritage in writing:
7.1 VERACITY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Cumberland and Community contained herein or
in any certificate, schedule or other document delivered pursuant to the
provisions hereof, or in connection herewith, shall be true in all material
respects as of the date when made and shall be deemed to be made again at and as
of the Closing Date and shall be true in all material respects at and as of such
time, except as a result of changes or events expressly permitted or
contemplated herein.
7.2 PERFORMANCE OF AGREEMENTS. Cumberland and Community shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or on the Closing
Date.
7.3 CERTIFICATES, RESOLUTIONS, OPINION. Cumberland and Community
shall have delivered to Liberty and Heritage:
(a) certificates executed by the President, Chief Financial
Officer and Secretary of Cumberland and the Chief Executive Officer and
Secretary of Community, dated as of the Closing Date, and certifying in such
detail as Liberty and Heritage may reasonably request to the fulfillment of the
conditions specified in Sections 7.1 and 7.2 hereof;
(b) duly adopted resolutions of the Board of Directors and
shareholders of Cumberland and Community certified by the Secretaries thereof,
dated the Closing Date, (i) authorizing and approving the execution of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated herein and therein in accordance with their respective terms and
(ii) authorizing all other necessary and proper corporate action to enable
Cumberland and Community to comply with the terms hereof and thereof;
(c) a certificate of the valid existence of Cumberland under the
laws of the United States of America, executed by the OCC, and dated not more
than five (5) business days prior to the Closing Date;
(d) certificates from the appropriate public officials of the
State of Georgia, dated not more than five (5) business days prior to the
Closing Date, certifying that Cumberland and Community has filed all corporate
tax returns required by the laws of such state and has paid all taxes shown
thereon to be due; and
(e) an opinion of Xxxxxxxxxx Xxxxxx & Xxxxxxx, LLP counsel for
Cumberland and Community, dated the Closing Date, in the form attached hereto as
Exhibit C.
7.4 SHAREHOLDER APPROVAL. The Agreement and Merger Agreement shall
have been approved by (a) the vote of the holders a majority of the issued and
outstanding shares of common stock of Community, and (b) Community, as the sole
shareholder of Cumberland.
7.5 REGULATORY APPROVALS. Liberty and Heritage shall have received
from any and all governmental authorities, bodies or agencies having
jurisdiction over the transactions contemplated by this Agreement and the Merger
Agreement, including, but not limited to the Department of Banking and the FDIC,
such consents, authorizations and approvals as are necessary for the
consummation hereof and thereof without conditions on Liberty or Heritage which
impose on Heritage or Liberty ongoing obligations other than those conditions
which are customary in merger approvals by the Department of Banking and the
FDIC or would, in the opinion of the Boards of Directors of Liberty and
Heritage, have individually or in the aggregate a material adverse effect on the
business, operations, or assets of Heritage or Liberty and all applicable
waiting or similar periods required by law shall have expired.
7.6 CERTIFICATE OF MERGER. The Secretary of State of the State of
Georgia shall have issued a certificate of merger with regard to the Merger in
accordance with the provisions of the Financial Institutions Code of Georgia.
7.7 TERMINATION OF EMPLOYMENT AGREEMENT. On or before the Closing
Date, Cumberland shall (and Community shall cause Cumberland to) terminate any
and all existing employment agreements or arrangements with Xxxx X. Xxxxxx, and
Community shall indemnify, defend and hold harmless Heritage and Liberty for,
from and against all claims, losses, liabilities, costs and expenses (including
without limitation, interest, penalties, costs of preparation and investigation,
and the reasonable fees, disbursements and expenses of attorneys, accountants
and other professional advisors), directly or indirectly relating to, resulting
from or arising out of the termination of Xx. Xxxxxx' employment agreements or
arrangements with Cumberland. The indemnification provided in this Section 7.8
shall survive the Closing and the consummation of the Merger.
7.8 SETTLEMENT OF INTERCOMPANY ACCOUNTS. Prior to the Closing
Date, Cumberland shall settle, to their full satisfaction, any and all
intercompany accounts described in the Cumberland Disclosure Memorandum.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF CUMBERLAND AND COMMUNITY
All of the obligations of Cumberland and Community under this Agreement
are subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived Cumberland or
Community in writing:
8.1 VERACITY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Liberty and Heritage contained herein or in
any certificate, schedule or other document delivered pursuant to the provisions
hereof, or in connection herewith, shall be true in all material respects as of
the date when made and shall be deemed to be made again at and as of
the Closing Date and shall be true in all material respects at and as of such
time, except as a result of changes or events expressly permitted or
contemplated herein.
8.2 PERFORMANCE OF AGREEMENTS. Liberty and Heritage shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or at the Closing
Date.
8.3 CERTIFICATES, RESOLUTIONS, OPINION. Liberty and Heritage shall
have delivered to Cumberland:
(a) a certificate executed by the President and Secretary of
Heritage and the Chief Executive Officer and Secretary of Liberty, dated the
Closing Date, certifying in such detail as Cumberland may reasonably request to
the fulfillment of the conditions specified in Sections 8.1 and 8.2 hereof;
(b) duly adopted resolutions of the board of directors of Liberty
and Heritage, certified by the Secretaries thereof, dated the Closing Date, (i)
authorizing and approving the execution of this Agreement and the Merger
Agreement on behalf of Liberty and Heritage, and the consummation of the
transactions contemplated herein and therein in accordance with their respective
terms, and (ii) authorizing all other necessary and proper corporate actions to
enable Liberty and Heritage to comply with the terms hereof and thereof; and
(c) an opinion of Powell, Goldstein, Xxxxxx & Xxxxxx, LLP, counsel
for Liberty and Heritage, dated the Closing Date, in the form attached hereto as
Exhibit D.
8.4 SHAREHOLDER APPROVAL. The Agreement and Merger Agreement shall
have been approved by (a) the vote of the holders a majority of the issued and
outstanding shares of common stock of Community, and (b) Liberty, as the sole
shareholder of Heritage.
8.5 REGULATORY APPROVALS. Any and all governmental authorities,
bodies or agencies having jurisdiction over the transactions contemplated by
this Agreement and the Merger Agreement, including, but not limited to the
Department of Banking and the FDIC shall have granted such consents,
authorizations and approvals as are necessary for the consummation hereof and
thereof and all applicable waiting or similar periods required by law shall have
expired.
8.6 CERTIFICATE OF MERGER. The Secretary of State of the State of
Georgia shall have issued a certificate of merger with regard to the Merger in
accordance with the provisions of the Financial Institutions Code of Georgia.
ARTICLE IX
WARRANTIES, NOTICES, ETC.
9.1 WARRANTIES. All statements contained in any certificate or
other instrument delivered by or on behalf of a party pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties hereunder by such party.
9.2 SURVIVAL OF REPRESENTATIONS. All representations, warranties,
covenants, and agreements made by either party hereto in or pursuant to this
Agreement or in any instrument, exhibit, or certificate delivered pursuant
hereto shall be deemed to have been material and to have been relied upon by the
party to which made, and such representations, warranties, covenants, and
agreements shall survive the Closing and consummation of the Merger, unless
expressly stated otherwise herein, for a period of twenty-four (24) months after
the Closing Date.
9.3 NOTICES. All notices or other communications required or
permitted to be given or made hereunder shall be in writing and delivered
personally or sent by pre-paid, first class certified or registered mail, return
receipt requested, or by facsimile transmission, to the intended recipient
thereof at its address or facsimile number set out below. Any such notice or
communication shall be deemed to have been duly given immediately (if given or
made in person or by facsimile confirmed by mailing a copy thereof to the
recipient in accordance with this Section 9.3 on the date of such facsimile), or
five days after mailing (if given or made by mail), and in proving same it shall
be sufficient to show that the envelope containing the same was delivered to the
delivery service and duly addressed, or that receipt of a facsimile was
confirmed by the recipient as provided above. The party may change the address
to which notices or other communications to such party shall be delivered or
mailed by giving notice thereof to the other parties hereto in the manner
provided herein.
(a) To Cumberland
and Community: Community National Bancorporation
000 Xxxx Xxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx,
President and Chief Executive Officer
Facsimile: (000) 000-0000
With copies to: Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: X. Xxxx Xxxxxxx, Esquire
Facsimile: (000) 000-0000
(b) To Heritage
and Liberty: 000 X. Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Xx.
President and Chief Executive Officer
Facsimile: (000) 000-0000
With copies to: Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, XX
Facsimile: (000) 000-0000
9.4 ENTIRE AGREEMENT. This Agreement and the Merger Agreement
supersede all prior discussions and agreements between the parties with respect
to the Merger and the other matters contained herein and therein, and this
Agreement and the Merger Agreement contain the sole and entire agreement between
the parties with respect to the transactions contemplated herein and therein.
9.5 WAIVER; AMENDMENT. Prior to or on the Closing Date, Liberty
and/or Heritage shall have the right to waive any default in the performance of
any term of this Agreement by Cumberland and/or Community, to waive or extend
the time for the fulfillment by Cumberland and/or Community of any or all of
their/its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of Liberty and Heritage under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any law or applicable governmental regulation. Prior to or on the
Closing Date, Cumberland and/or Community shall have the right to waive any
default in the performance of any term of this Agreement by Liberty and/or
Heritage, to waive or extend the time for the fulfillment by Liberty and/or
Heritage of any or all of their/its obligations under this Agreement, and to
waive any or all of the conditions precedent to the obligations of Cumberland
and Community under this Agreement, except any condition which, if not
satisfied, would result in the violation of any law or applicable governmental
regulation. No waiver of any condition nor breach of any term contained in this
Agreement or the Merger Agreement in one or more instances shall be deemed to be
construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or breach of any other term of this Agreement or
the Merger Agreement, nor shall the failure of any party at any time or times to
require performance of any provision of this Agreement or the Merger Agreement
affect the right of such party at a later time to enforce the same or any other
provision of this Agreement or the Merger Agreement or to seek any remedy as may
be available to such party, in law or equity, as to the matter or matters
waived, including without limitation any claim for indemnification. This
Agreement may be amended by a subsequent writing signed by the parties hereto,
provided, however, that the provisions of Sections 7.5 and 8.5 requiring
regulatory approval shall not be amended by the parties hereto without
regulatory approval.
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time
prior to or on the Closing Date upon written notice as follows:
10.1.1 MATERIAL ADVERSE CHANGE. By Liberty and/or Heritage,
if, after the date hereof, a material adverse change in the financial condition
or business of
Cumberland shall have occurred which change would reasonably be expected to have
individual or in the aggregate a material adverse affect on the business,
operations, or assets of Cumberland.
10.1.2 NONCOMPLIANCE OR BREACH. (a) By any party (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a material breach by any unaffiliated party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach and
which breach is reasonably likely, in the opinion of the non-breaching party, to
have, individually or in the aggregate, a material adverse effect on the
breaching party. (b) By any party (provided that the terminating party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach or
noncompliance by any unaffiliated party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach or noncompliance.
10.1.3 FAILURE TO DISCLOSE. By Liberty and/or Heritage, if
it learns of any fact or condition not disclosed in this Agreement, the
Cumberland Disclosure Memorandum, or the Cumberland Financial Statements, which
was required to be disclosed by Cumberland pursuant to the provisions of this
Agreement at or prior to the date of execution hereof with respect to the
business, properties, assets or earnings of Cumberland which materially and
adversely affects such business, properties, assets or earnings or the
ownership, value or continuance thereof.
10.1.4 ADVERSE PROCEEDINGS; FAILURE TO OBTAIN REGULATORY
CONSENTS. (a) By any party, if any action, suit or proceeding shall have been
instituted or threatened against an unaffiliated party to this Agreement to
restrain or prohibit, or to obtain substantial damages in respect of, this
Agreement or the consummation of the transactions contemplated herein, which, in
the good faith opinion of the terminating party makes consummation of the
transactions herein contemplated inadvisable. (b) By any 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
transactions contemplated hereby shall have been denied by final non-appealable
action of such authority or if any action taken by such authority is not
appealed within the time limit for appeal.
10.1.5 TERMINATION DATE. By any party, if the Closing Date
shall not have occurred on or before November 15, 2003.
10.1.6 SHAREHOLDERS VOTE. By either party, if the Merger
Agreement is not approved by the shareholders of Community.
10.1.7 ENVIRONMENTAL LIABILITY OF CUMBERLAND. By Liberty
and/or Heritage, if it learns of any potential liability of Cumberland arising
from noncompliance with any federal, state or local environmental law by
Cumberland, or any potential liability of Cumberland arising from any
environmental condition of the properties or assets of Cumberland, including any
properties or assets in which Cumberland holds a security interest.
10.1.8 MUTUAL CONSENT. By a party upon the written consent
of all other parties to this Agreement.
10.2 TERMINATION LIABILITY. In the event of the termination and
abandonment of this Agreement by Liberty or Heritage for any uncured, willful
and material breach, as permitted under Section 10.1.2, or for the failure to
obtain shareholder approval as permitted under Section 10.1.6, Cumberland and/or
Community shall pay Heritage a sum of $250,000. In the event of the termination
and abandonment of this Agreement by Cumberland or Community for any uncured,
willful and material breach, as permitted under Section 10.1.2, Heritage and/or
Liberty shall pay Cumberland a sum of $250,000. The foregoing termination
payment shall not relieve a breaching party from liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination, nor shall it preclude any party from pursuing any remedy as
may be available to such party in equity to enforce performance of the
provisions of this Agreement. The termination payment referenced herein shall
not be deemed to be a penalty but represents the good faith estimate of the
parties associated with the direct and indirect costs, expenses expected to be
incurred by a terminating party.
ARTICLE XI
COUNTERPARTS, HEADINGS, ETC.
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The headings herein set out are for
convenience of reference only and shall not be deemed a part of this Agreement.
A pronoun in one gender includes and applies to the other genders as well.
ARTICLE XII
BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement may not be assigned by a party without the prior
written consent of all non-affiliate parties.
ARTICLE XIII
GOVERNING LAW
The validity and effect of this Agreement and the Merger Agreement and
the rights and obligations of the parties hereto and thereto shall be governed
by and construed and enforced in accordance with the laws of the State of
Georgia.
ARTICLE XIV
INDEMNIFICATION
14.1 INDEMNIFICATION BY COMMUNITY. Community agrees to defend,
indemnify and hold harmless Liberty, Heritage, and their affiliates, and shall
reimburse Liberty, Heritage, and their affiliates, for, from and against each
claim, loss, liability, cost and expense (including without limitation,
interest, penalties, costs of preparation and investigation, and the reasonable
fees, disbursements and expenses of attorneys, accountants and other
professional advisors), directly or indirectly relating to, resulting from or
arising out of: (a) any debt, obligation, or liability (known, contingent,
unknown or otherwise) of Cumberland based upon facts, situations, or actions
arising prior to the Closing Date which have not been reserved against or
disclosed in the Cumberland Financial Statements or the Cumberland Disclosure
Memorandum; (b) a charge-off or charge-offs associated with any loan(s) held by
Cumberland as of the Closing Date reflecting any actual loss(es) if such actual
loss(es), individually or in the aggregate, exceed(s) the sum of (i) One Million
Dollars ($1,000,000) and (ii) Cumberland's allowance for loan and lease loss
reserve amount as of the Closing Date; and, (c) any untrue representation,
misrepresentation, breach of warranty or nonfulfillment of any covenant,
agreement or other obligation by or of Cumberland or Community contained herein
or in any certificate, document or instrument delivered to Liberty or Heritage
pursuant hereto.
14.2 INDEMNIFICATION BY LIBERTY. Liberty hereby agrees to defend,
indemnify and hold harmless Community and its affiliates, and shall reimburse
Community and its affiliates, for, from and against each claim, loss, liability,
cost and expense (including without limitation, interest, penalties, costs of
preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and other professional advisors), directly or
indirectly relating to, resulting from or arising out of: (a) any debt,
obligation, or liability (known, contingent, unknown or otherwise) of Cumberland
based upon facts, situations, or actions arising after the Closing Date (unless
based upon facts, situations, or actions of Cumberland or its affiliates
following the Closing Date or otherwise subject to indemnification by Community
by this Agreement); and, (b) any untrue representation, misrepresentation,
breach of warranty or nonfulfillment of any covenant, agreement or other
obligation by or of Heritage or Liberty contained herein or in any certificate,
document or instrument delivered to Cumberland or Community pursuant hereto.
14.3 PROCEDURE. If any claim is made or lawsuit, proceeding or
enforcement action is filed (collectively "Claims" and each a "Claim") against
any party entitled to the benefit of indemnity hereunder, written notice thereof
shall be given to the indemnifying party as promptly as practicable (and in any
event within twenty (20) days after receipt of the Claim or the service of the
citation or summons), provided, that the failure of any indemnified party to
give timely notice shall not affect rights to indemnification hereunder except
to the extent that the indemnifying party demonstrates actual damage caused by
such failure. The indemnifying party shall be entitled, if it so selects, to
take control of defense and investigation of such Claim, and to employ and
engage attorneys of its own choice who are reasonably acceptable to the
indemnified party to handle and defend the same, at the indemnifying party's
cost, risk and
expense. The indemnifying party shall notify the indemnified party in writing of
its election to defend in good faith any such Claim as soon as it is
practicable, but in no event more than fifteen (15) days after receipt of
written notice thereof by the indemnifying party from the indemnified party. The
indemnifying party shall have the right to settle or compromise any such Claim
without the consent of the indemnified party at any time utilizing its own funds
to do so, if in connection with such settlement or compromise the indemnified
party is fully released by third party and is paid any indemnification amounts
due hereunder. If the indemnifying party fails, or does not elect, to assume the
defense of such Claim within fifteen (15) days after receipt of notice pursuant
to this Section, the indemnified party will (upon delivering notice to such
effect to the indemnifying party) have the right to undertake, at the
indemnified party's cost and expense, the defense, compromise or settlement of
such Claim on behalf of, for the account, and at the risk of the indemnifying
party; provided, however, that such Claim shall not be compromised or settled
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld. In the event the indemnified party assumes defense of
the Claim, the indemnified party will keep the indemnifying party reasonably
informed of progress of any such defense, compromise of settlement. The
indemnifying party shall be liable for any settlement of any Claim effected
pursuant to and in accordance with this Section and or any final judgment or
assessment (subject to any right of appeal), and the indemnifying party agrees
to indemnify and hold harmless the indemnified party from and against any
damages by reason of such settlement or judgment (subject to the limitations
contained herein).
The indemnified party shall cooperate in all reasonable respects with
the indemnifying party and its attorneys in any investigation, trial and defense
relating to a Claim and any appeal arising therefrom; provided, however, that
the indemnified party may, at its own cost, participate in the investigation,
trial and defense of such claim and any appeal arising therefrom.
14.4 SURVIVAL; EXCLUSIVE REMEDY AFTER CLOSING. The indemnification
provisions of this Article XIV (a) shall survive the Closing and consummation of
the Merger for a period twenty-four (24) months after the Closing Date, and (b)
shall be the exclusive remedy of the parties with respect to claims under this
Agreement after consummation of the Merger; provided, however that any party may
pursue such remedies as may be available to such party in equity to enforce
performance of the provisions of this Agreement.
14.5 LIMITATION OF INDEMNIFICATION LIABILITY; AGGREGATE DEDUCTIBLE.
Neither Community nor Liberty shall, in any event, be required to make
indemnification payments under this Article XIV that in the aggregate exceeds
the Aggregate Offering Price, as adjusted pursuant to this Agreement. Neither
Community nor Liberty shall have any obligation to indemnify any person under
this Agreement for any claim, loss, liability, cost or expense incurred or
suffered by such party except to the extent that such indemnified claims,
losses, liabilities, costs and expenses, taken together, exceed Thirty-Five
Thousand Dollars ($35,000), and then only to the extent of such excess.
[signatures on following page]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized corporate officers and their
respective corporate seals to be affixed hereto as of the day and year first
above written.
CUMBERLAND NATIONAL BANK
(CORPORATE SEAL) By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
------------------------------
Attest: Title: President/CEO
------------------------------
/s/ Xxxxx X. Xxxxxxx
----------------------------
Secretary/Asst. Cashier
COMMUNITY NATIONAL BANCORPORATION
(CORPORATE SEAL) By: /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
------------------------------
Attest: Title: President
------------------------------
Secretary
THE HERITAGE BANK
(CORPORATE SEAL) By: /s/ Xxxxx X. Xxxxx, Xx.
------------------------------
Xxxxx X. Xxxxx, Xx.
Attest: President and Chief Executive
Officer
/s/ Xxxxxxx X. Xxxxx
----------------------------
Secretary
LIBERTY SHARES, INC.
(CORPORATE SEAL) By:/s/ Xxxxx X. Xxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxx, Xx.
Attest: President and Chief Executive Officer
/s/ Xxxxx X. Xxxxxx
----------------------------
Secretary
AMENDMENT TO THE AGREEMENT AND PLAN OF REORGANIZATION
AMENDMENT TO THE AGREEMENT AND PLAN OF REORGANIZATION (the "Amendment")
made this 27th day of June, 2003 by and between CUMBERLAND NATIONAL BANK, a
national banking association (hereinafter "Cumberland"), COMMUNITY NATIONAL
BANCORPORATION, a Georgia corporation (hereinafter "Community"), THE HERITAGE
BANK, a Georgia banking corporation (hereinafter "Heritage"), and LIBERTY
SHARES, INC., a Georgia corporation (hereinafter "Liberty") dated May 30, 2003.
WHEREAS, in Section 2.1(b) of the Agreement and Plan of Reorganization
dated May 30, 2003 by and between the parties thereto (the "Agreement"), such
parties anticipated that the manner of effecting or carrying out the
transactions contemplated by the Agreement and the Merger Agreement (as defined
in Section 1 of this Amendment) may, for tax or regulatory purposes, be changed,
altered, or amended in writing at any time before Closing, and Cumberland and
Community agreed to fully cooperate with any reasonable request of Heritage and
Liberty in furtherance of any such change, alteration or amendment; and
WHEREAS, pursuant to such Section 2.1(b), and as described in the
amended whereas clause set forth in Section 1 of this Amendment, Heritage and
Liberty have proposed, for tax purposes, a change in the manner of effecting or
carrying out the transactions contemplated by the Agreement and the Merger
Agreement; and
WHEREAS, pursuant to such Section 2.1(b), Cumberland and Community are
cooperating fully with Heritage and Liberty to change the manner of effecting
the transactions contemplated by the Agreement and the Merger Agreement as
described herein; and
WHEREAS, for the foregoing reasons, the parties desire to amend the
Agreement by means of this Amendment.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties to this Amendment, and in
further consideration of the following mutual promises, covenants, and
undertakings, the parties hereby amend the Agreement as follows:
1. The whereas clause provided in the "Recitals" section of the Agreement
shall be deleted in its entirety and replaced with the following:
"WHEREAS, all upon the terms and conditions hereinafter set forth and
as set forth in the Agreement and Plan of Merger, as amended and
restated, attached hereto as Exhibit A and incorporated herein by
reference (the "Merger Agreement"), the respective boards of directors
of Cumberland, Community, Heritage and Liberty deem it advisable and in
the best interests of each such entity and their respective
shareholders that: (a)
Liberty purchase from Community all of the issued and outstanding
common stock, $5.00 par value per share, of Cumberland ("Cumberland
Stock") in exchange for the Aggregate Offering Price (as defined below
in Section 2.2), as may be adjusted in accordance with the Agreement;
and (b) subsequent to, but contemporaneously with, the aforementioned
stock purchase transaction, Cumberland shall, at the sole discretion of
Liberty as its then sole shareholder, merge with and into Heritage (the
"Merger"), with Heritage being the surviving bank;"
2. Article I of the Agreement shall be deleted in its entirety and
replaced with the following:
"ARTICLE I
CLOSING
The Stock Purchase (as defined in Section 2.1(a)) shall be consummated
(the "Closing") at the offices of Powell, Goldstein, Xxxxxx & Xxxxxx
LLP 191 Peachtree Street, NE, 16th Floor, Atlanta, Georgia, on the
third business day following receipt of all approvals from governmental
authorities having jurisdiction over the transactions contemplated by
this Agreement and the Merger Agreement, and the expiration of any
waiting or similar period required by applicable law (the "Closing
Date"), or at such other time and place as may be mutually satisfactory
to the parties hereto."
3. Section 2.1(a) of the Agreement shall be deleted in its entirety and
replaced with the following:
"2.1 AGREEMENT TO SELL AND PURCHASE CUMBERLAND'S COMMON STOCK. (a)
Subject to the terms and conditions hereof, Community hereby agrees to
sell to Liberty and Liberty hereby agrees to purchase from Community
all of the issued and outstanding shares of Cumberland Stock (the
"Stock Purchase") in exchange for the Aggregate Offering Price (as
defined in Section 2.2), less any adjustment to the Aggregate Offering
Price pursuant to Section 2.2, which consideration shall be paid by
Liberty to Community at Closing. Subsequent to the consummation of such
Stock Purchase, and subject to the conditions of this Agreement and the
Merger Agreement and the sole discretion of Liberty, Cumberland shall
merge with and into Heritage in accordance with and in the manner set
forth in the Merger Agreement."
4. Section 2.2(a) of the Agreement shall be deleted in its entirety and
replaced with the following:
"(a) The aggregate consideration for the Stock Purchase shall be
$3,400,000 (the "Aggregate Offering Price"), subject to adjustment as
hereinafter provided. The Aggregate Offering Price shall be due and payable in
immediately
available funds on the Closing Date."
5. Section 4.2.13 of the Agreement shall be deleted in its entirety and
replaced with the following:
"4.2.13 PROXY MATERIALS. Neither the Community proxy materials nor
other materials furnished by Community to the Community shareholders in
connection with the transactions contemplated by this Agreement or the
Merger Agreement, or in any amendments thereof or supplements thereto,
will, at the times such documents are distributed to the Community
shareholders and through the acquisition of shares of Cumberland Stock
by Liberty pursuant to the Stock Purchase, contain with respect to
Cumberland any untrue statement of a material fact or omit to state any
information required to be stated therein or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they are made with respect to Cumberland, not
misleading.
6. Section 7.6 of the Agreement shall be deleted in its entirety and
replaced with the following:
"7.6 [RESERVED]"
7. Section 8.6 of the Agreement shall be deleted in its entirety and
replaced with the following:
"8.6 [RESERVED]"
8. Section 10.1.6 of the Agreement shall be deleted in its entirety and
replaced with the following:
"10.1.6 SHAREHOLDERS VOTE. By either party, if the Agreement and all
transactions contemplated thereby are not approved by the shareholders
of Community."
9. Section 14.4 of the Agreement shall be deleted in its entirety and
replaced with the following:
"14.4 SURVIVAL; EXCLUSIVE REMEDY AFTER CLOSING. The indemnification
provisions of this Article XIV (a) shall survive the Closing,
consummation of the Stock Purchase and consummation of the Merger for a
period twenty-four (24) months after the Closing Date, and (b) shall be
the exclusive remedy of the parties with respect to claims under this
Agreement after consummation of the Stock Purchase; provided, however
that any party may pursue such remedies as may be available to such
party in equity to enforce performance of the provisions of this
Agreement."
10. Exhibit A of the Agreement is deleted in its entirety and replaced with
the Agreement and Plan of Merger, as amended and restated, attached as Exhibit A
to this Amendment and incorporated herein.
11. Exhibit C of the Agreement is deleted in its entirety and replaced with
the form of opinion of Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel for Cumberland
and Community, attached as Exhibit C to this Amendment and incorporated herein.
12. Exhibit D of the Agreement is deleted in its entirety and replaced with
the form of opinion of Powell, Goldstein, Xxxxxx & Xxxxxx, LLP, attached as
Exhibit D to this Amendment and incorporated herein.
13. Notwithstanding any other provision of the Agreement, the amendments
made herein shall govern any actual or potential conflicts or ambiguities raised
by or arising out of this Amendment.
14. Terms not otherwise defined herein shall have the same meanings as set
forth in the Agreement.
[signatures on following page]
IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement by
their authorized representatives as of the day first written above.
CUMBERLAND NATIONAL BANK
(CORPORATE SEAL) By: /s/ Xxx X. Xxxxxxxx
-----------------------------
Name: Xxx X. Xxxxxxxx
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Attest: Title: Chairman Board of Directors
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/s/ Xxxxx X. Xxxxxxx
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Secretary
COMMUNITY NATIONAL
BANCORPORATION
(CORPORATE SEAL) By: /s/ Xxxxxx X. Xxxx
-----------------------------
Name: Xxxxxx X. Xxxx
-----------------------------
Attest: Title: President & CEO
-----------------------------
/s/ T. Xxxxxxx Xxxxx, Xx.
-------------------------------
Secretary
THE HERITAGE BANK
(CORPORATE SEAL) By:/s/ Xxxxx X. Xxxxx, Xx.
--------------------------------
Xxxxx X. Xxxxx, Xx.
Attest: President and Chief Executive
Officer
/s/ Xxxxxxx X. Xxxxx
-------------------------------
Secretary
LIBERTY SHARES, INC.
(CORPORATE SEAL) By:/s/ Xxxxx X. Xxxxx, Xx.
---------------------------------
Xxxxx X. Xxxxx, Xx.
Attest: President and Chief Executive
Officer
/s/ Xxxxx X. Xxxxxx
-------------------------------
Secretary
EXHIBIT A
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the
"Agreement") is made and entered into as of this ___ day of ______, 2003, by and
between The Heritage Bank, Liberty County, a Georgia bank ("Heritage"), and
Cumberland National Bank, Camden County, a national banking association
("Cumberland") (hereinafter collectively referred to as the "Constituent
Banks").
R E C I T A L S:
WHEREAS, the issued and outstanding shares of capital stock of
Cumberland, $5.00 par value per share, consists of 400,000 shares (the
"Cumberland Stock"); and
WHEREAS, the respective Boards of Directors of the Constituent Banks,
the Board of Directors of Community National Bancorporation ("Community"), the
sole shareholder of Cumberland, and the Board of Directors of Liberty Shares,
Inc ("Liberty"), the sole shareholder of Heritage, deem it advisable and in the
best interests of each of the Constituent Banks and their respective
shareholders that Cumberland merge with Heritage, with Heritage being the
surviving bank, contemporaneously with but subsequent to the completion of
Liberty's purchase of the Cumberland Stock from Community pursuant to the
Agreement and Plan of Reorganization, of even date herewith, by and between
Cumberland, Community, Heritage and Liberty (the "Acquisition Agreement"); and
WHEREAS, the respective Boards of Directors of the Constituent Banks,
by resolutions duly adopted, have unanimously approved and adopted this
Agreement and directed that it be submitted to the sole shareholder of
Cumberland, the shareholders of Community, and the sole shareholder of Heritage
for their approval.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and adequacy of which as legally sufficient consideration are hereby
acknowledged, the parties hereto have agreed and do hereby agree, as follows:
1. MERGER.
Subsequent to Community's sale of the Cumberland Stock to Liberty in
accordance with the Acquisition Agreement, and pursuant to and with the effects
provided in the applicable provisions of Article 2 of the Financial Institutions
Code of Georgia, Chapter 1 of Title 7 of the Official Code of Georgia (the
"Code"), Cumberland (hereinafter sometimes referred to as the "Merged Bank")
shall be merged with and into Heritage (the "Merger"). Heritage shall be the
surviving bank (the "Surviving Bank") and shall continue under the name "The
Heritage Bank". On the Effective Date (as defined herein) of the Merger, the
individual existence of the Merged Bank shall cease and terminate.
2. ACTIONS TO BE TAKEN.
The acts and things required to be done by the Code in order to make
this Agreement effective, including the submission of this Agreement to the
shareholders of the Constituent Banks and the filing of the articles of merger
relating hereto in the manner provided in said Code, shall be attended to and
done by the proper officers of the Constituent Banks with the assistance of
counsel as soon as practicable.
3. EFFECTIVE DATE.
The Merger shall be effective upon the approval of this Agreement by
the shareholders of the Merged Bank and the filing of the articles of merger
relating hereto in the manner provided in the Code (the "Effective Date").
4. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING BANK.
(a) The Articles of Incorporation of Heritage, as heretofore
amended, as in effect on the Effective Date shall be the
Articles of Incorporation of the Surviving Bank.
(b) Until altered, amended or repealed, as therein provided, the
Bylaws of Heritage as in effect on the Effective Date shall be
the Bylaws of the Surviving Bank.
5. DIRECTORS.
Upon the Merger contemplated herein becoming effective, the directors
of the Surviving Bank shall be the individuals set forth on Attachment 1 hereto.
Said persons shall hold office until the next annual meeting of the shareholders
of the Surviving Bank and until their successors are elected in accordance with
the Bylaws of the Surviving Bank. If on the Effective Date any vacancy shall
exist on the Board of Directors of the Surviving Bank, such vacancy shall be
filled in the manner specified in the Bylaws of the Surviving Bank.
6. SURRENDER OF SHARES OF CUMBERLAND CAPITAL STOCK; CAPITAL STRUCTURE OF
THE SURVIVING BANK.
Upon the Effective Date, all of the shares of Cumberland Stock
outstanding on the Effective Date shall be cancelled. Upon the Effective Date,
each share of common stock of the Surviving Bank issued and outstanding
immediately prior to the Effective Date shall remain unaffected by the Merger.
7. TERMINATION OF SEPARATE EXISTENCE.
Upon the Effective Date, the separate existence of the Merged Bank
shall cease and the Surviving Bank shall possess all of the rights, privileges,
immunities, powers and franchises, as well of a public nature as of a private
nature, of each of the Constituent Banks; and all property, real, personal and
mixed, and all debts due on whatever account, and all other choses in action,
and all and every other interest of or belonging to or due to each of the
Constituent Banks shall
be taken and deemed to be transferred to and vested in the Surviving Bank
without further act or deed, and the title to any real estate or any interest
therein, vested in either of the Constituent Banks shall not revert or be in any
way impaired by reason of the Merger. The Surviving Bank shall thenceforth be
responsible and liable for all the liabilities, obligations and penalties of
each of the Constituent Banks; and any claim existing or action or proceeding,
civil or criminal, pending by or against either of said Constituent Banks may be
prosecuted as if the Merger had not taken place, or the Surviving Bank may be
substituted in its place, and any judgment rendered against either of the
Constituent Banks may thenceforth be enforced against the Surviving Bank; and
neither the rights of creditors nor any liens upon the property of either of the
Constituent Banks shall be impaired by the Merger.
8. FURTHER ASSIGNMENTS.
If at any time the Surviving Bank shall consider or be advised that any
further assignments or assurances in law or any other things are necessary or
desirable to vest in said bank, according to the terms hereof, the title to any
property or rights of the Merged Bank, the proper officers and directors of the
Merged Bank shall and will execute and make all such proper assignments and
assurances and do all things necessary and proper to vest title in such property
or rights in the Surviving Bank, and otherwise to carry out the purposes of this
Agreement.
9. CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER.
This Agreement is subject to, and consummation of the Merger is
conditioned upon, the fulfillment as of the Effective Date of each of the
following conditions:
(a) Completion of the sale of the Cumberland Stock to Liberty in
accordance with the Acquisition Agreement;
(b) Approval of this Agreement by the affirmative vote of the
holders of a two-thirds of the outstanding voting shares of
Cumberland Stock, the affirmative vote of the holders of a
majority of the outstanding voting shares of Community and the
sole shareholder of Heritage; and
(c) All the terms, covenants, agreements, obligations and
conditions of the Acquisition Agreement to be complied with,
satisfied and performed on or prior to the Closing Date (as
defined therein), shall have been complied with, satisfied and
performed in all material respects unless accomplishment of
such covenants, agreements, obligations and conditions has
been waived by the party benefited thereby.
10. TERMINATION.
This Agreement may be terminated and the Merger abandoned in accordance
with the terms of the Acquisition Agreement at any time before or after adoption
of this Agreement notwithstanding favorable action on the Merger by the
shareholders of the Constituent Banks and Community, but not later than the
issuance of the certificate of merger by the Secretary of State
of Georgia with respect to the Merger in accordance with the provisions of the
Code.
11. COUNTERPARTS; TITLE; HEADINGS.
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The title of this Agreement and the
headings herein set out are for the convenience of reference only and shall not
be deemed a part of this Agreement.
12. AMENDMENTS; ADDITIONAL AGREEMENTS.
At any time before or after approval and adoption by the shareholders
of the Constituent Banks and Community, this Agreement may be modified, amended
or supplemented by additional agreements, articles or certificates as may be
determined in the judgment of the respective Boards of Directors of the parties
to the Acquisition Agreement to be necessary, desirable, or expedient to further
the purposes of this Agreement, to clarify the intention of the parties, to add
to or modify the covenants, terms or conditions contained herein or to
effectuate or facilitate any governmental approval of the Merger or this
Agreement, or otherwise to effectuate or facilitate the consummation of the
transactions contemplated hereby; provided, however, that no such modification,
amendment or supplement shall reduce the Aggregate Offering Price pursuant to
Section 6 hereof.
[Remainder of this page left intentionally blank.]
IN WITNESS WHEREOF, the Constituent Banks have each caused this
Agreement to be executed on their respective behalves and their respective bank
seals to be affixed hereto as of the day and year first above written.
THE HERITAGE BANK
(BANK SEAL)
By:
-----------------------------------
Xxxxx X. Xxxxx, Xx.
Chief Executive Officer
ATTEST:
-------------------------
Secretary
CUMBERLAND NATIONAL BANK
(BANK SEAL)
By:
Name:
---------------------------------
Title:
ATTEST: --------------------------------
-------------------------
Secretary
