EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made and
entered into as of this 24th day of August, 2004, by and between LIBERTY
NATIONAL BANCSHARES, INC., a Georgia business corporation (hereinafter "LIBERTY"
and, unless the context otherwise requires, the term "Liberty" shall include
Liberty and its wholly-owned subsidiary, LIBERTY NATIONAL BANK, a bank chartered
under the laws of the United States ("BANK"), and UNITED COMMUNITY BANKS, INC.,
a Georgia business corporation (hereinafter "UNITED").
WHEREAS, the respective boards of directors of Liberty and United deem it
advisable and in the best interests of each such entity and their respective
shareholders that Liberty merge with United (the "MERGER"), with United being
the surviving corporation and with the issued and outstanding shares of common
stock, $0.50 par value per share, of Liberty ("LIBERTY STOCK") and the
outstanding options to acquire Liberty Stock (the "LIBERTY STOCK OPTIONS"),
being converted into the right to receive shares of common stock, $1.00 par
value per share, of United ("UNITED STOCK") and cash, as elected by the
shareholders of Liberty up to a maximum amount of cash, 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"); and
WHEREAS, the respective boards of directors of Liberty and United deem it
advisable and in the best interests of each such entity and their respective
shareholders that Bank merge with United's Georgia banking subsidiary, United
Community Bank ("UCB GEORGIA"), with UCB Georgia being the surviving bank (the
"BANK MERGER"), all upon the terms hereinafter set forth and as set forth in the
Agreement and Plan of Merger attached hereto as Exhibit B and incorporated
herein by reference (the "BANK MERGER AGREEMENT"); and
WHEREAS, the boards of directors of the respective entities believe that
the merger of Liberty and United and their subsidiary banks and the operating
effectiveness and synergies produced thereby will enhance and strengthen the
franchises and future prospects of both companies and each of the banks;
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 Xxxxxxxxxx Xxxxxxxx LLP, Suite 2800, 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx, xx the first business day following receipt of all approvals
from any governmental authorities having jurisdiction over the transactions
contemplated by this Agreement, the Merger Agreement and
the Bank 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
Pursuant to the terms and conditions provided herein, on the Closing Date
Liberty shall be merged with and into United in accordance with and in the
manner set forth in the Merger Agreement, and Bank shall be merged with and into
UCB Georgia in accordance with and in the manner set forth in the Bank Merger
Agreement. The surviving corporation following the Merger will operate under the
articles of incorporation of United. Upon the terms and conditions of this
Agreement and the Merger Agreement, United shall make available on or before the
Effective Date (as defined in the Merger Agreement) for delivery to the holders
of Liberty Stock: (a) the number of shares of United Stock to be issued upon
conversion of the shares of Liberty Stock for stock elections, as provided in
the Merger Agreement; and (b) sufficient funds to make cash election payments
and payments in lieu of the issuance of fractional shares, as provided in the
Merger Agreement. If any Liberty Stock certificate shall have been lost, stolen
or destroyed, United may, in its reasonable discretion and as a condition
precedent to the issuance of any United Stock or cash election payment, require
the owner of such lost, stolen or destroyed Liberty Stock certificate to provide
a bond and an appropriate affidavit and indemnity agreement (reasonably
satisfactory to United) as indemnification against any claim that may be made
against United with respect to such Liberty Stock certificate.
ARTICLE III
OTHER AGREEMENTS
3.1 REGISTRATION AND LISTING OF UNITED STOCK. (a) United agrees to file
with the Securities and Exchange Commission (the "SEC") as soon as reasonably
practicable a registration statement (the "UNITED REGISTRATION STATEMENT") under
the Securities Act of 1933, as amended (the "1933 ACT"), on Form S-4 or some
other appropriate form covering the issuance of the shares of United Stock to
the shareholders of Liberty pursuant to this Agreement and the Merger Agreement
and to use its reasonable best efforts to cause the United Registration
Statement to become effective and to remain effective through the Closing Date.
United agrees to take any action required to be taken under the applicable state
securities laws in connection with the issuance of shares of United Stock upon
consummation of the Merger. Liberty agrees to provide United reasonable
assistance as necessary in the preparation of the United Registration Statement,
including, without limitation, providing United with all material facts
regarding the operations, business, assets, liabilities and personnel of
Liberty, together with the audited financial statements of Liberty, all as and
to the extent required by the 1933 Act and the rules, regulations and practices
of the SEC, for inclusion in the United Registration Statement. The United
Registration Statement shall not cover resales of United Stock by any of the
shareholders of Liberty, and United shall have no obligation to cause the United
Registration Statement to
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continue to be effective after the Closing or to prepare or file any
post-effective amendments to the United Registration Statement after the
Closing.
(b) United agrees to list on the Nasdaq National Market, by
the Closing Date, the shares of United Stock to be issued to the shareholders of
Liberty pursuant to this Agreement and the Merger Agreement.
3.2 MEETING OF LIBERTY SHAREHOLDERS. Liberty shall call a special meeting
of its shareholders (the "SPECIAL MEETING") to be held not more than thirty (30)
days after the United Registration Statement becomes effective under the 1933
Act for the purpose of submitting the Merger Agreement to such shareholders for
their approval. In connection with the Special Meeting, United and Liberty shall
prepare and submit to the Liberty shareholders a notice of meeting, proxy
statement and proxy (the "LIBERTY PROXY MATERIALS"), which shall include the
final prospectus from the United Registration Statement in the form filed with
the SEC.
3.3 ABSENCE OF BROKERS. Except for Xxxxx Capital Group, which has provided
financial advisory services to Liberty, 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. Each party agrees to indemnify the other and hold and save
it harmless from any claim or demand for commissions or other compensation by
any broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party.
3.4 ACCESS TO PROPERTIES, BOOKS, ETC. Each party hereto shall allow the
other party and its 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
such party and its subsidiaries and shall furnish the other party and its
authorized representatives such information concerning its affairs and the
affairs of its subsidiaries as the other party may reasonably request provided
that such request shall be reasonably related to the transactions contemplated
by this Agreement and shall not interfere unreasonably with normal operations.
Each party shall cause its and its subsidiaries' personnel, employees and other
representatives to assist the other party in making any such investigation.
During such investigation, the investigating party and its authorized
representatives shall have the right to make copies of such records, files, tax
returns and other materials as it may deem advisable and shall advise the other
party of those items of which copies are made. No investigation made heretofore
or hereafter by either party and its authorized representatives shall affect the
representations and warranties of either such party hereunder.
3.5 CONFIDENTIALITY. Prior to consummation of the Merger, the parties to
this Agreement will provide one another with information which may be deemed by
the party providing the information to be confidential. Each party agrees that
it will hold confidential and protect all information provided to it by the
other party to this Agreement or such party's affiliates, except that the
obligations contained in this Section 3.5 shall not in any way restrict the
rights of any party or person to use information that: (a) was known to such
party prior to the disclosure by the other party; (b) is or becomes generally
available to the public other than by breach of this Agreement; (c) is provided
by one party for disclosure concerning such party in
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the United Registration Statement; or (d) otherwise becomes lawfully available
to a party to this Agreement on a non-confidential basis from a third party who
is not under an obligation of confidence to the other party to this Agreement.
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 the
other party to this Agreement. The provisions of this Section 3.5 shall survive
termination, for any reason whatsoever, of this Agreement, and, without limiting
the remedies of the parties hereto in the event of any breach of this Section
3.5, the parties hereto will be entitled to seek injunctive relief against the
other party in the event of a breach or threatened breach of this Section 3.5.
3.6 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.
3.7 EXPENSES. All of the expenses incurred by United 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 filing the United Registration Statement and all regulatory
applications with state and federal authorities in connection with the
transactions contemplated hereby and thereby, (the "UNITED EXPENSES") shall be
paid by United. All expenses incurred by Liberty in connection with the
authorization, preparation, execution and performance of this Agreement, the
Merger Agreement and the Bank Merger Agreement, including, without limitation,
all fees and expenses of its agents, representatives, counsel and accountants
(the "LIBERTY EXPENSES"), shall be paid by Liberty. The cost of reproducing and
mailing the Liberty Proxy Materials shall be shared by the parties, with each
party paying fifty percent (50%).
3.8 PRESERVATION OF GOODWILL. Each party hereto shall use its best efforts
to preserve its business organization and the business organization of its
subsidiaries, to keep available the services of its present employees 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.
3.9 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.
3.10 AGREEMENT BY LIBERTY EXECUTIVE OFFICERS AND DIRECTORS. Each of the
directors and executive officers of Liberty will, contemporaneously with the
execution of this Agreement, execute and deliver to United an agreement, the
form of which is attached hereto as Exhibit C, pursuant to which each of them
agrees: (a) to recommend, subject to any applicable fiduciary duty, to Liberty
shareholders approval of the Merger; (b) to vote the capital stock of Liberty
owned or controlled by them in favor of the Merger; and (c) to transfer or
assign shares of United
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Stock received by them in connection with the Merger only in compliance with the
1933 Act, applicable state securities laws and the rules and regulations
promulgated under either.
3.11 PRESS RELEASES. Prior to the Effective Date, United and Liberty shall
each approve 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 3.11 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.
3.12 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Date, United
shall provide generally to officers and employees of Liberty who continue
employment with United employee benefits on terms and conditions which, when
taken as a whole, are substantially similar to those then currently provided by
United to its other similarly situated officers and employees. Subject to
applicable legal requirements, United will take action to enable the employees
of Liberty to transfer through a rollover contribution their proceeds from the
Liberty 401(k) plan into a separate third party individual retirement account,
provided that the Liberty Board of Directors must adopt resolutions to terminate
the Liberty 401(k) plan prior to the Closing Date. For purposes of eligibility
to participate and any vesting determinations (but not benefit accruals) in
connection with the provision of any such employee benefits by United to the
former officers and employees of Liberty who continue employment with United,
service with Liberty prior to the Effective Date shall be counted. If, during
the calendar year in which falls the Effective Date, United shall terminate any
"group health plan", within the meaning of Section 4980B(g)(2) of the Internal
Revenue Code, in which one or more Liberty employees participated immediately
prior to the Effective Date (a "LIBERTY PLAN"), United shall cause any successor
group health plan to waive any pre-existing condition limitations to the same
extent they are waived for United employees, give credit for such calendar year
for any such Liberty employee's participation in the Liberty Plan prior to the
Effective Date for purposes of applying any such pre-existing condition
limitations set forth therein, and give credit for such calendar year covered
expenses paid by any such Liberty employee under a Liberty Plan prior to the
Effective Date towards satisfaction of any annual deductible limitation and
out-of pocket maximum applied under such successor group health plan. United
also shall be considered a successor employer for and shall provide to
"qualified beneficiaries", determined immediately prior to the Effective Date,
under any Liberty Plan appropriate "continuation coverage" (as those terms are
defined in Section 4980B of the Internal Revenue Code) following the Effective
Date under either the Liberty Plan or any successor group health plan maintained
by United.
3.13 DIRECTORS AND OFFICERS INSURANCE COVERAGE. Prior to Closing, Liberty
shall purchase for, and on behalf of, its current and former officers and
directors, extended coverage under the current directors' and officers'
liability insurance policy maintained by Liberty to provide for continued
coverage of such insurance for a period of six years from the Effective Time,
unless United's directors' and officers' liability insurance policy provides for
equivalent coverage.
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3.14 DIVIDENDS. From the date hereof through the Effective Time, United
shall not declare or pay any dividends other than quarterly cash dividends not
to exceed $0.06 per share or stock dividends.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LIBERTY
As an inducement to United to enter into this Agreement and to consummate
the transactions contemplated hereby, Liberty represents, warrants, covenants
and agrees as follows. For purposes of this Article IV, "knowledge of Liberty"
shall mean the actual knowledge of any of the officers of Liberty.
4.1 LIBERTY DISCLOSURE MEMORANDUM. Liberty has delivered to United a
memorandum (the "LIBERTY DISCLOSURE MEMORANDUM") containing certain information
regarding Liberty as indicated at various places in this Agreement. All
information set forth in the Liberty Disclosure Memorandum or in documents
incorporated by reference in the Liberty 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 Liberty
under this Article IV. The information contained in the Liberty 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 United pursuant to this Agreement or the Liberty 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. Liberty shall promptly provide United with written notification of
any event, occurrence or other information necessary to maintain the Liberty
Disclosure Memorandum and all other documents and writings furnished to United
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 CORPORATE STATUS. Liberty is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia and
has no direct or indirect subsidiaries other than Bank. Bank is a national bank
duly organized, validly existing, and in good standing under the laws of the
United States and has no direct or indirect subsidiaries. Liberty and Bank have
all of the requisite corporate power and authority and are entitled to own or
lease their respective properties and assets and to carry on their businesses as
and in the places where such properties or assets are now owned, leased or
operated and such businesses are now conducted.
4.2.2 AUTHORITY. Except as set forth in the Liberty Disclosure
Memorandum and subject to the required regulatory approvals and notice filing,
as stated in Section 4.6.2 and the approval of Liberty shareholders, 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:
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(a) violate any provision of federal or state law applicable
to Liberty, 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 Liberty;
(b) violate any provision of the charter documents or bylaws
of Liberty;
(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 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 Liberty; or
(d) constitute a violation of any order, judgment or decree to
which Liberty is a party, or by which Liberty or any of its assets or
properties are bound.
Assuming this Agreement constitutes the valid and binding obligation of United,
this Agreement constitutes the valid and binding obligation of Liberty, 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.
4.2.3 CAPITAL STRUCTURE. (a) As of the date of this Agreement,
Liberty has authorized capital stock consisting solely of 10,000,000 shares of
Liberty Stock, of which 1,598,399 shares are issued and outstanding as of the
date hereof, exclusive of 97,534 shares reserved for issuance upon exercise of
Liberty Stock Options. Bank has authorized capital stock consisting solely of
10,000,000 shares of common stock, par value $5.00 per share ("BANK STOCK"), all
of which are issued and outstanding as of the date hereof. All of the issued and
outstanding shares of Liberty Stock and Bank 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 Liberty Stock or Bank Stock previously
issued. None of the shares of Liberty Stock or Bank Stock has been issued in
violation of any preemptive or other rights of its respective shareholders. All
of the issued and outstanding shares of Bank Stock are owned by Liberty.
(b) Except for the Liberty Stock Options and as otherwise
described in the Liberty Disclosure Memorandum, Liberty does not have
outstanding any securities which are either by their terms or by contract
convertible or exchangeable into capital stock of Liberty, or any other
securities or debt, of Liberty, 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. Except as otherwise described in
the Liberty Disclosure Memorandum, Liberty 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.
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(c) There is no agreement, arrangement or understanding to
which Liberty is a party restricting or otherwise relating to the transfer of
any shares of capital stock of Liberty.
(d) All shares of common stock or other capital stock, or any
other securities or debt, of Liberty, which have been purchased or redeemed by
Liberty 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 Liberty.
(e) To the knowledge of Liberty, no person beneficially owns
greater than 5% of the issued and outstanding shares of Liberty Stock.
4.2.4 CORPORATE RECORDS. The stock records and minute books of
Liberty, whether heretofore or hereafter furnished or made available to United
by Liberty, (a) fully and accurately reflect all issuances, transfers and
redemptions of the Common 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 Liberty; (c) correctly show all corporate action taken by
the directors and shareholders of Liberty (including actions taken by consent
without a meeting); and (d) contain true and correct copies or originals of the
respective charter documents 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) Liberty has 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 its income, 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 its
business or operations. Such returns or reports were true, complete and correct,
and Liberty 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. All unpaid federal, state and local taxes and other
governmental charges payable by Liberty have been accrued or reserved on its
books in accordance with generally accepted accounting principles applied on a
basis consistent with prior periods. Adequate reserves for the payment of taxes
have been established on the books of Liberty for all periods through the date
hereof, whether or not due and payable and whether or not disputed. Until the
Closing Date, Liberty 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. Liberty
has not received any notice of a tax deficiency or assessment of additional
taxes of any kind and, to the knowledge of Liberty, there
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is no threatened claim against Liberty or 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 Liberty Financial Statements (as defined
in Section 4.2.6) or disclosed in the notes thereto. There are no waivers or
agreements by Liberty for the extension of time for the assessment of any taxes.
The federal income tax returns of Liberty have not been examined by the Internal
Revenue Service for any period since December 31, 1998 and no tax return is
currently the subject of an audit.
(b) Except as set forth in the Liberty Disclosure Memorandum,
proper and accurate amounts have been withheld by Liberty 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 Liberty 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. (a) Liberty has delivered to United
true, correct and complete copies, including notes, of the financial statements
of Liberty for the years ended December 31, 2003, 2002 and 2001, and the
financial statements of Liberty for the six (6) month period ended June 30,
2004, including consolidated balance sheets, consolidated statements of
earnings, consolidated statements of cash flows, consolidated statements of
comprehensive income and consolidated statements of changes in shareholders'
equity (the financial statements for the years ended December 31, 2003, 2002 and
2001 and the financial statements for the six (6) month period ended June 30,
2004 being herein referred to as the "LIBERTY FINANCIAL STATEMENTS"). All of
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied ("GAAP") (except, in the
case of unaudited interim financial statements, as may be permitted by Form
10-QSB), and present fairly the assets, liabilities and financial condition of
Liberty as of the dates indicated therein and the results of its operations for
the respective periods indicated therein.
(b) Liberty has maintained a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
4.2.7 REGULATORY REPORTS. Liberty has made available to United for
review and inspection the year-end and quarterly Reports of Condition and Income
filed by Liberty with the Office of the Comptroller of the Currency (the "OCC")
and the Forms F.R. Y-6 and F.R. Y-9C filed by Liberty with the Board of
Governors of the Federal Reserve System (the "FEDERAL RESERVE") for each of the
three (3) years ended December 31, 2003, 2002, and 2001 and quarters ended March
31, 2004 and June 30, 2004, together with all such other reports filed for the
same three-year period with the Georgia Department of Banking and Finance (the
"GEORGIA
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DEPARTMENT") and other applicable regulatory agencies (collectively, the
"LIBERTY REPORTS"). All of the Liberty 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 Liberty Disclosure Memorandum contains a list of
each and every bank and other institution in which Liberty 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 Liberty
Disclosure Memorandum or as provided for in the loss reserve described in
subsection (b) below, all notes receivable or other obligations owned by Liberty
or due to it shown in the Liberty 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 United for examination prior to the Closing
Date. All such notes and obligations were entered into by Liberty in the
ordinary course of its business and in compliance with all applicable laws and
regulations.
(b) Liberty has established a loss reserve in the Liberty
Financial Statements and as of the date of this Agreement and will establish a
loan loss reserve as of the Closing Date which is adequate to cover losses
reasonably anticipated to 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 Liberty 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. Liberty has no debt, liability or obligation of
any kind required to be shown pursuant to generally accepted accounting
principles on the consolidated balance sheet of Liberty, 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 Liberty or any other entity covering
employees of Liberty; or (d) environmental liabilities, except: (i) those
reflected in the Liberty Financial Statements; and (ii) as disclosed in the
Liberty Disclosure Memorandum.
4.2.11 ABSENCE OF CHANGES. Except as specifically provided for in
this Agreement or specifically set forth in the Liberty Disclosure Memorandum,
since June 30, 2004:
(a) there has been no change in the business, assets,
liabilities, results of operations or financial condition of Liberty, or in any
of its relationships with customers,
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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 could
reasonably be expected to have, a material adverse effect on such businesses or
properties;
(b) there has been no material damage, destruction or loss to
the assets, properties or business of Liberty, whether or not covered by
insurance, which has had, or which may reasonably be expected to have, an
adverse effect thereon;
(c) the business of Liberty has been operated in the ordinary
course, and not otherwise;
(d) the properties and assets of Liberty 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 Liberty have been
maintained in the usual, regular and ordinary manner;
(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
Liberty;
(g) there has been no increase in the compensation or in the
rate of compensation or commissions payable or to become payable by Liberty 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 Liberty 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
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 charter or bylaws of
Liberty or Bank;
(i) there has been no labor dispute, unfair labor practice
charge or employment discrimination charge, nor, to the knowledge of Liberty,
any organizational effort by any union, or institution or threatened
institution, of any effort, complaint or other proceeding in connection
therewith, involving Liberty, or affecting its operations;
(j) there has been no issuance, sale, repurchase, acquisition,
or redemption by Liberty 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
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deposit for security) any asset or assets of Liberty 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
Liberty which would be required to be reflected on a balance sheet of Liberty
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 Liberty 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 Liberty, other than sales in the ordinary course of
business; and
(o) there has been no amendment, termination or waiver of any
right of Liberty under any contract or agreement or governmental license, permit
or permission which has had, or could reasonably be expected to have, an adverse
effect on its business or properties.
4.2.12 LITIGATION AND PROCEEDINGS. Except as set forth on the
Liberty Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or investigations,
pending or, to the knowledge of Liberty, threatened against, by or affecting
Liberty, or any officer, director, employee or agent in such person's capacity
as an officer, director, employee or agent of Liberty or relating to the
business or affairs of Liberty, 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 Liberty have, to the knowledge of
Liberty, any unasserted contingent liabilities which are reasonably likely to
have an adverse effect on its assets or on the operation of its businesses or
which could reasonably be expected to prevent or impede the consummation of the
transactions contemplated by this Agreement.
4.2.13 PROXY MATERIALS. Neither the Liberty Proxy Materials nor
other materials furnished by Liberty to the Liberty 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 holders of shares of Liberty Stock and through
the acquisition of shares of Liberty Stock by United pursuant to the Merger,
contain with respect to Liberty 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, not misleading.
4.2.14 DISCLOSURE REPORTS. Liberty has a class of securities
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "1934 ACT"), and has delivered to United copies of:
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(a) its Annual Report on Form 10-KSB for its fiscal year ended
December 31, 2003 (and those portions of its 2003 Annual Report to Shareholders
incorporated therein by reference);
(b) the Proxy Statement for its 2004 Annual Meeting of
Shareholders;
(c) its Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 2004 and June 30, 2004; and
(d) its Current Reports on Form 8-K filed on January 23, 2004,
April 28, 2004 and July 28, 2004.
The report, proxy statement and quarterly reports noted above include all of the
annual and periodic reports and proxy statements required to be filed by Liberty
with the SEC since December 31, 2003, and are herein collectively referred to as
the "LIBERTY SEC REPORTS". The Liberty SEC Reports taken together correctly
describe, among other things, the business, operations and principal properties
of Liberty in accordance with the requirements of the applicable report forms of
the SEC. As of the respective dates of filing (or, if amended or superceded by a
filing prior to the date of this Agreement, then on the date of such amended or
superceded filing), none of the Liberty SEC Reports contained any untrue
statement of a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The financial
statements contained in the Liberty SEC Reports have been prepared in accordance
with applicable SEC requirements and present fairly the financial condition of
Liberty as of the dates thereof and the results of operations for the periods
covered thereby.
4.2.15 NO MATERIAL ADVERSE CHANGE. Since December 31, 2003, there
has not been any change in the condition of Liberty, any contracts entered into
by Liberty, or other changes in the operations of Liberty which, in any case,
has had, or is reasonably likely to have, a material adverse effect on Liberty
on a consolidated basis taken as a whole.
4.3 BUSINESS OPERATIONS.
4.3.1 CUSTOMERS. To the knowledge of Liberty, there are no presently
existing facts which could reasonably be expected to result in the loss of any
material borrower or depositor or in Liberty's inability to collect amounts due
therefrom or to return funds deposited thereby, except as set forth on the
Liberty Disclosure Memorandum.
4.3.2 PERMITS; COMPLIANCE WITH LAW. (a) Liberty has all permits,
licenses, approvals, authorizations and registrations under all federal, state,
local and foreign laws required for Liberty 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 the executive
officers of Liberty, threatened.
(b) Liberty has complied with all laws, regulations,
ordinances, rules, and orders applicable to it or its business, except for any
non-compliance which could not
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reasonably be expected to have a material adverse effect on Liberty. The Liberty
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 Liberty, 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 SEC. No past violation of any such law,
regulation, ordinance, rule or order has occurred which could impair the right
or ability of Liberty to conduct its business.
(c) Except as set forth in the Liberty Disclosure Memorandum,
no notice or warning from any governmental authority with respect to any failure
or alleged failure of Liberty to comply in any respect with any law, regulation,
ordinance, rule or order has been received, nor, to the knowledge of Liberty, is
any such notice or warning proposed or threatened.
4.3.3 ENVIRONMENTAL. (a) Except as set forth in the Liberty
Disclosure Memorandum:
(i) Liberty has not caused or permitted the generation,
manufacture, use, or handling or the release or presence of, any Hazardous
Material (as defined below) on, in, under or from any properties or facilities
currently owned or leased by Liberty or adjacent to any properties so owned or
leased;
(ii) to the knowledge of Liberty, no claim has been asserted
or threatened against Liberty arising from or relating to the environmental
condition of any property or the generation, manufacture, use, or handling or
the release or presence of, any Hazardous Material at any property;
(iii) Liberty 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 all applicable federal, state and local laws,
regulations, orders, permits and licenses 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
Liberty; and
(iv) to the knowledge of Liberty, the improvements on the
property are free from the presence or growth of mold, fungi, spores or bacteria
that could be reasonably expected to cause property damage or personal injury,
and the improvements on the property are, and have been, free of conditions that
could lead to the growth or presence of mold, fungi, spores or bacteria,
including, without limitation, air conditioner malfunction, water intrusion,
water leaks, sewage backflows and construction defects.
(b) Neither Liberty nor any of its officers, directors,
employees or agents, in the course of such individual's employment by Liberty,
has given advice with respect to, or participated in any respect in, the
management or operation of any entity or concern regarding the generation,
storage, handling, disposal, transfer, production, use or processing of
Hazardous Material.
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(c) To the knowledge of Liberty, except as set forth in the
Liberty Disclosure Memorandum, Liberty has not foreclosed on any property on
which there is a threatened release of any Hazardous Material, or on which there
has been such a release and full remediation has not been completed, or any
property on which contained (not released) Hazardous Material is or was located.
(d) Except as set forth in the Liberty Disclosure Memorandum,
neither Liberty nor any of its executive officers or directors is aware of, has
been told of, or has observed, the presence of any Hazardous Material on, in,
under, or around property on which Liberty holds a legal or security interest,
in violation of, or creating a liability under, federal, state, or local
environmental statutes, regulations, or ordinances.
(e) The term "HAZARDOUS MATERIAL" means any substance whose
nature, use, manufacture, or effect render it subject to federal, state or local
regulation governing that material's investigation, remediation or removal as a
threat or potential threat to human health or the environment and includes,
without limitation, any substance within the meaning of "hazardous substances"
under the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601, "hazardous wastes" within the meaning of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6921, any petroleum product,
including any fraction of petroleum, or any asbestos containing materials.
However, the term "HAZARDOUS MATERIAL" shall not include those substances which
are normally and reasonably used 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 quantities reasonable in relation
to such use and in compliance with applicable law.
4.3.4 INSURANCE. The Liberty 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, Liberty or through Liberty for 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 material
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
Liberty Disclosure Memorandum, such policies and bonds provide coverage to
insure the properties and businesses of Liberty and the activities of its
officers, directors and employees against such risks and in such amounts as are
customary. Liberty 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. Liberty has heretofore made, or will hereafter make, available to
United a true, correct and complete copy of each insurance policy and bond in
effect since December 31, 1998 with respect to the business and affairs of
Liberty.
4.4 PROPERTIES AND ASSETS.
4.4.1 CONTRACTS AND COMMITMENTS. The Liberty Disclosure Memorandum
contains a list identifying and briefly describing all written contracts,
purchase orders, agreements, security deeds, guaranties or commitments (other
than loans, loan commitments and
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deposits made by or with Liberty in the ordinary course of business), to which
Liberty 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 Liberty 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. Liberty 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 United for
examination.
4.4.2 LICENSES; INTELLECTUAL PROPERTY. Liberty 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 Liberty Disclosure Memorandum, Liberty 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 Liberty 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 Liberty, are listed in the
Liberty Disclosure Memorandum. Liberty has complied with all applicable laws
relating to the filing or registration of "fictitious names" or trade names.
4.4.3 PERSONAL PROPERTY. Liberty has good and marketable title to
all of its personalty, tangible and intangible, reflected in the most recent
Liberty 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: (a) those referred to in the
notes to the Liberty Financial Statements as securing specified liabilities
(with respect to which no default exists or, to the knowledge of the executive
officers of Liberty, is claimed to exist); (b) those described in the Liberty
Disclosure Memorandum; and (c) liens for taxes not due and payable.
4.4.4 LIBERTY LEASES. (a) All leases (the "LIBERTY LEASES") pursuant
to which Liberty 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 Liberty Leases, to the knowledge of
Liberty, any default or any claimed default by Liberty, or event of default or
event which with notice or lapse of time, or both, would constitute a default by
Liberty 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 Liberty Leases heretofore or hereafter
furnished or made available by Liberty to United are true, correct and complete,
and the Liberty Leases have not been modified in any respect other than pursuant
to amendments, copies of which have
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been concurrently delivered or made available to United, and are in full force
and effect in accordance with their terms.
(c) Except as set forth in the Liberty Disclosure Memorandum,
there are no contractual obligations, agreements in principle or present plans
for Liberty to enter into new leases of real property or to renew or amend
existing Liberty Leases prior to the Closing Date.
4.4.5 REAL PROPERTY. (a) Liberty does not own any interest in any
real property (other than as lessee) except as set forth in the Liberty
Disclosure Memorandum (such properties being referred to herein as "LIBERTY
REALTY"). Except as disclosed in the Liberty Disclosure Memorandum, Liberty has
good title to the Liberty Realty and the titles to the Liberty 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 United with the Liberty Disclosure Memorandum. Liberty has
not encumbered the Liberty Realty since the effective dates of the respective
title insurance policies.
(b) Except as set forth in the Liberty Disclosure Memorandum,
the interests of Liberty in the Liberty Realty and in and under each of the
Liberty 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
Liberty, threatened action at law or in equity.
(c) The present and past use and operations of, and
improvements upon, the Liberty Realty and all real properties included in the
Leased Properties (the "LIBERTY 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 there are no proposed changes therein that would affect the
Liberty Realty, the Liberty Leased Real Properties or their uses.
(d) Except as set forth in the Liberty 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, Liberty with respect to any Lease
pursuant to which it is lessor or lessee.
(e) Liberty 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 Liberty Realty or the Liberty Leased Real Properties
which may adversely affect the Liberty Realty or the Liberty Leased Real
Properties or the current or currently contemplated use thereof.
(f) The buildings and structures owned, leased or used by
Liberty 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 Liberty.
4.5 EMPLOYEES AND BENEFITS.
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4.5.1 DIRECTORS OR OFFICERS OF OTHER CORPORATIONS. Except as set
forth in the Liberty Disclosure Memorandum, no director, officer, or employee of
Liberty 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 Liberty.
4.5.2 EMPLOYEE BENEFITS. (a) Except as set forth in the Liberty
Disclosure Memorandum, Liberty 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 Liberty 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
Liberty (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 United or its counsel have been, or
prior to the Closing Date will be, made available to United.
(c) Liberty 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. Liberty 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 Liberty,
threatened involving such ERISA Plan or any of its fiduciaries. With respect to
each ERISA Plan, neither Liberty nor any of its directors, officers, employees
or agents, nor 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
501 of ERISA and Section 4980B of the Code.
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(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 Liberty Disclosure Memorandum.
With respect to each Employee Pension Benefit Plan, except as set forth on the
Liberty 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,
Liberty 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 Liberty representing a projection of claims
expected to be incurred under such ERISA Plan.
(g) Except as disclosed on the Liberty Disclosure Memorandum,
Liberty 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 Liberty beyond their retirement
or other termination of service with Liberty 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 set forth in the Liberty Disclosure Memorandum,
neither this Agreement nor any transaction contemplated hereby will: (i) entitle
any current or former employee, officer or director of Liberty 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 Liberty
Disclosure Memorandum, Liberty 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, Liberty. Liberty 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. Liberty 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. Except as described in
the Liberty Disclosure Memorandum, there are no unfair labor practice charges
pending or threatened against Liberty, and there are, and in the past three (3)
years there have been, no charges, complaints, claims or
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proceedings, no slowdowns or strikes pending or threatened against, or
involving, as the case may be, Liberty 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 Liberty 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) loans and
extensions of credit made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions by Liberty with other persons who are not affiliated with Liberty,
and which do not involve more than the normal risk of repayment or present other
unfavorable features; (b) deposits, all of which are on terms and conditions
identical to those made available to all customers of Liberty at the time such
deposits were entered into; and (c) transactions specifically described in the
Liberty Disclosure Memorandum, there are no contracts with or commitments to
present or former five percent (5%) or greater shareholders, directors,
officers, or employees involving the expenditure of more than $60,000 as to any
one individual, including with respect to any business directly or indirectly
controlled by any such person, or $100,000 for all such contracts or commitments
in the aggregate for all such individuals (other than contracts or commitments
relating to services to be performed by any officer, director or employee as a
currently-employed employee of Liberty).
4.6 OTHER MATTERS.
4.6.1 REGULATORY REPORTS. Liberty will make available to United for
review and inspection all applications, reports or other documents filed by it
or Bank for each of its past three (3) 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 Federal
Reserve, the Federal Deposit Insurance Corporation (the "FDIC") and the Georgia
Department, the notice filing to be made with the OCC, or as set forth in the
Liberty 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 Liberty, or any of Liberty's assets.
4.6.3 DEFAULT. (a) Except for those consents described in or set
forth pursuant to Section 4.6.2 above and as described in the Liberty Disclosure
Memorandum, 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 Liberty is a party or by which any of
Liberty's material properties or assets are bound;
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(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
Liberty; or
(iii) constitutes an event permitting termination of any
agreement or the acceleration of any indebtedness of Liberty.
(b) Liberty is not in violation of its charter documents or
bylaws or in default under any term or provision of any material security deed,
mortgage, indenture or security agreement, or of any other material contract or
instrument to which Liberty is a party or by which it or any of its material
properties 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 Liberty pursuant hereto or in connection with the transactions
contemplated hereby contains or will contain any untrue statement, nor will 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 United in connection with this Agreement or
pursuant hereto are or shall be true, correct and complete.
ARTICLE V
CONDUCT OF BUSINESS OF LIBERTY PENDING CLOSING
Except as expressly otherwise provided herein or in the Liberty Disclosure
Memorandum, Liberty covenants and agrees that, without the prior written consent
of United between the date hereof and the Closing Date:
5.1 CONDUCT OF BUSINESS. Liberty 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. Liberty will maintain its properties and
assets in good operating condition, ordinary wear and tear excepted.
5.3 INSURANCE. Liberty 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 Liberty (except for the issuance of shares
of Liberty Stock upon the exercise of presently outstanding Liberty Stock
Options), and Liberty will not issue or grant any right or option to purchase or
otherwise acquire any of the capital stock or other securities of Liberty.
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5.5 DIVIDENDS. No dividend, distribution or payment will be declared or
made in respect to the Liberty Stock and Liberty will not, directly or
indirectly, redeem, purchase or otherwise acquire any of its capital stock.
5.6 AMENDMENT OF CHARTER DOCUMENTS OR BYLAWS; CORPORATE EXISTENCE. Liberty
will not amend its charter documents or bylaws, and Liberty will maintain its
corporate existence and powers.
5.7 NO ACQUISITIONS. Liberty shall not, without the express written
consent of United, 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 Liberty.
5.8 NO REAL ESTATE ACQUISITIONS ON DISPOSITIONS. Liberty 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 Liberty 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.
5.10 CONTRACTS. Liberty will not, without the express written consent of
United, enter into any contract or renew any contract of the kind described in
Section 4.4.1 hereof.
5.11 BOOKS AND RECORDS. The books and records of Liberty will be
maintained in the usual, regular and ordinary course.
5.12 ADVICE OF CHANGES. Liberty shall promptly advise United orally and in
writing of any change or event having, or which could reasonably be expected to
have, a material adverse effect on the assets, liabilities, business, operations
or financial condition of Liberty.
5.13 REPORTS. Liberty 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 United copies of all such reports promptly
after the same are filed.
5.14 NO SEVERANCE OR TERMINATION PAYMENTS. Liberty shall not grant any
severance or termination pay to any director, officer or other employee, or
adopt any new severance plan.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF UNITED
As an inducement to Liberty to enter into this Agreement and to consummate
the transactions contemplated hereby, United represents, warrants, covenants and
agrees as follows:
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6.1 CORPORATE STATUS. United is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia. United 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 required regulatory approvals and notice
filing, as stated in Section 4.6.2, and the approval of Liberty shareholders,
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
United, 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 United;
(b) violate any provision of the articles of incorporation or bylaws
of United;
(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 United 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
United; or
(d) constitute a violation of any order, judgment or decree to which
United is a party, or by which United or any of its assets or properties are
bound.
Assuming this Agreement constitutes the valid and binding obligation of Liberty,
this Agreement constitutes the valid and binding obligation of United, 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 CAPITAL STRUCTURE. (a) As of the date of this Agreement, United has
authorized capital stock consisting solely of 100,000,000 shares of common
stock, par value $1.00 per share, of which 36,253,892 shares are issued and
outstanding as of the date hereof, exclusive of 366,862 shares held as treasury
shares, 372,000 shares reserved for issuance upon conversion of United's prime
plus one-quarter percent (-1/4%) Convertible Subordinated Debentures due
December 31, 2006 (the "2006 DEBENTURES") and 2,171,648 shares reserved for
issuance upon the exercise of outstanding options and vesting of restricted
stock (the "UNITED STOCK OPTIONS AND AWARDS") and 10,000,000 shares of preferred
stock, par value $1.00 per share (the "PREFERRED STOCK"), of which 48,300 shares
are issued and outstanding as of the date hereof. All of the issued and
outstanding shares of United Stock are duly and validly issued, fully paid and
nonassessable and were offered, issued and sold in compliance with all
applicable federal or 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 shares of United Stock previously issued. None of the
shares of United Stock have been issued in violation of the preemptive or other
rights of its shareholders.
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(b) Except for the 2006 Debentures and the United Stock Options and
Awards, United does not have outstanding any securities which are either by
their terms or by contract convertible or exchangeable into United Stock or
Preferred Stock, or any other securities or debt, of United, 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. United 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 material agreement, arrangement or understanding to
which United is a party restricting or otherwise relating to the transfer of any
shares of United Stock other than restrictions required by applicable federal
and state securities laws.
(d) All shares of common stock or other capital stock, or any other
securities or debt, of United, which have been purchased or redeemed by United
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 United.
6.4 FINANCIAL STATEMENTS. (a) United has delivered to Liberty true,
correct and complete copies of the audited financial statements of United for
the years ended December 31, 2003, 2002, and 2001, and unaudited financial
statements of United for the six (6) month period ended June 30, 2004, including
consolidated balance sheets, consolidated statements of income, consolidated
statements of comprehensive income, consolidated statements of changes in
shareholders' equity and consolidated statements of cash flows and (the audited
financial statements for the years ended December 31, 2003, 2002 and 2001 and
the unaudited financial statements for the six (6) month period ended June 30,
2004 being referred to as the "UNITED FINANCIAL STATEMENTS"). All of such
financial statements have been prepared in accordance with GAAP, and present
fairly the assets, liabilities and financial condition of United as of the dates
indicated therein and the results of its operations for the respective periods
indicated therein.
(b) United has maintained a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
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6.5 DISCLOSURE REPORTS. United has a class of securities registered
pursuant to Section 12(g) of the 1934 Act, and has delivered to Liberty copies
of:
(a) its Annual Report on Form 10-K for its fiscal year ended
December 31, 2003 (and those portions of its 2003 Annual Report to Shareholders
incorporated therein by reference) filed pursuant to Section 13 of the Act;
(b) the Proxy Statement for its 2004 Annual Meeting of Shareholders;
(c) its Quarterly Reports on Form 10-Q for the quarters ended March
31, 2004 and June 30, 2004; and
(d) its Current Reports on Form 8-K filed on January 27, 2004, March
15, 2004, April 20, 2004 and July 26, 2004.
The report, proxy statement and quarterly reports noted above include all of the
annual and periodic reports and proxy statements required to be filed by United
with the SEC since December 31, 2003, and are herein collectively referred to as
the "UNITED SEC REPORTS". The United SEC Reports taken together correctly
describe, among other things, the business, operations and principal properties
of United in accordance with the requirements of the applicable report forms of
the SEC. As of the respective dates of filing (or, if amended or superceded by a
filing prior to the date of this Agreement, then on the date of such amended or
superceded filing), none of the United SEC Reports contained any untrue
statement of a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
6.6 NO MATERIAL ADVERSE CHANGE. Since the date of its latest published
financial statements included in the United SEC Reports, there has not been any
change in the condition of United or other changes in the operations of United
which, in any case, have had, or are reasonably likely to have, a material
adverse effect on United on a consolidated basis taken as a whole.
6.7 REPRESENTATIONS AND WARRANTIES. No representation or warranty
contained in this Article VI or in any written statement delivered by or at the
direction of United pursuant hereto or in connection with the transactions
contemplated hereby contains or will contain any untrue statement, nor will 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 Liberty in connection with this Agreement or
pursuant hereto are or shall be true, correct and complete.
6.8 PROXY MATERIALS. Neither the Liberty Proxy Materials nor other
materials furnished by United to the Liberty 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 holders of shares of Liberty Stock and through the
acquisition of shares of United Stock by Liberty pursuant to the Merger, contain
with respect to United any untrue statement of a material fact or omit to state
any information
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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, not misleading.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF UNITED
All of the obligations of United 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 United:
7.1 VERACITY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Liberty contained herein or in any certificate, schedule or other
document delivered pursuant to the provisions hereof, or in connection herewith,
shall be true 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 at and as of such time, except as a
result of changes or events expressly permitted or contemplated herein or where
the failure to be so, either individually or in the aggregate, is not reasonably
likely to have a material adverse effect on the business, operations or
financial condition of Liberty on a consolidated basis.
7.2 PERFORMANCE OF AGREEMENTS. Liberty shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
7.3 CERTIFICATES, RESOLUTIONS, OPINION. Liberty shall have delivered to
United:
(a) a certificate executed by the President of Liberty, dated as of
the Closing Date, and certifying in such detail as United may reasonably request
to the fulfillment of the conditions specified in Sections 7.1 and 7.2 hereof;
(b) a certificate executed by the Secretary of Liberty, dated as of
the Closing Date, certifying and attesting to the: (i) articles of incorporation
of Liberty; (ii) bylaws of Liberty; and (iii) duly adopted resolutions of the
Board of Directors and shareholders of Liberty (1) 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 (2) authorizing all other necessary and proper corporate action to
enable Liberty to comply with the terms hereof and thereof;
(c) a certificate executed by the Secretary or equivalent officer of
Bank, dated as of the Closing Date, certifying and attesting to the: (i) charter
of Bank; (ii) bylaws of Bank; and (iii) duly adopted resolutions of the Board of
Directors and sole shareholder of Bank (1) authorizing and approving the
execution of the Bank Merger Agreement and the consummation of the transactions
contemplated herein and therein, and (2) authorizing all other necessary and
proper corporate action to enable Bank to comply with the terms hereof and
thereof.
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(d) certificates of the valid existence of Liberty and Bank under
the laws of Georgia and of the United States, respectively, executed by the
Secretary of State of Georgia and the OCC, and dated not more than five (5)
business days prior to the Closing Date;
(e) 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 Liberty has filed all corporate tax returns required by
the laws of such state and has paid all taxes shown thereon to be due; and
(f) an opinion of Xxxxx, Xxxxxxxx & Xxxxxxx, LLP, counsel for
Liberty, dated the Closing Date, in the form attached hereto as Exhibit D.
7.4 SHAREHOLDER APPROVAL. The Merger Agreement shall have been approved by
the vote of the holders of at least a majority of the issued and outstanding
shares of Liberty Stock.
7.5 REGULATORY APPROVALS. Any and all governmental authorities, bodies or
agencies having jurisdiction over the transactions contemplated by this
Agreement, the Merger Agreement and the Bank Merger Agreement, including, but
not limited to the Federal Reserve, the FDIC, the OCC and the Georgia Department
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.
7.6 EFFECTIVE REGISTRATION STATEMENT. The United Registration Statement
shall have been declared effective by the SEC and no stop order shall have been
entered with respect thereto.
7.7 CERTIFICATE OF MERGER. The Secretary of State of the State of Georgia
shall have issued a certificate of merger, with respect to the Merger, in
accordance with the provisions of the Georgia Business Corporation Code, and
with respect to the Bank Merger, in accordance with the Financial Institution
Code of Georgia and the National Bank Act.
7.8 ACCOUNTANTS' LETTER. United shall have received a letter from Xxxxxx
Xxxxxx Xxxxx, LLP, dated the Closing Date, to the effect that: At the request of
Liberty they have carried out procedures to a specified date not more than five
(5) business days prior to the Closing Date, which procedures did not constitute
an examination in accordance with generally accepted auditing standards, of the
financial statements of Liberty, as follows:
(a) read the unaudited consolidated balance sheets, consolidated
statements of earnings, consolidated statements of cash flows, consolidated
statements of comprehensive income and consolidated statements of changes in
shareholders' equity, of Liberty from December 31, 2003 through the date of the
most recent monthly financial statements available in the ordinary course of
business;
(b) read the minutes of the meetings of shareholders and Board of
Directors of Liberty from December 31, 2003 to said date not more than five (5)
business days prior to the Closing Date; and
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(c) consulted with certain officers and employees of Liberty
responsible for financial and accounting matters and, based on such procedures,
nothing has come to their attention which would cause them to believe that:
(i) such unaudited financial statements are not fairly
presented in conformity with generally accepted accounting principles
applied on a basis consistent with that of the December 31, 2003 Liberty
Financial Statements;
(ii) as of said date not more than five (5) business
days prior to the Closing Date, the shareholders' equity, long-term debt,
reserve for possible loan losses and total assets of Liberty, in each case
as compared with the amounts shown in the June 30, 2004 Liberty Financial
Statements, are not different except as set forth in such letter, or
(iii) for the period from December 31, 2003 to said date
not more than five (5) business days prior to the Closing Date, the net
interest income, total and per-share amounts of consolidated income and
net income of Liberty, as compared with the corresponding portion of the
preceding twelve (12) month period, are not different except as set forth
in such letter.
7.9 TERMINATION OF EMPLOYMENT AGREEMENTS. United shall have received
evidence of the buy-out and termination of that certain Employment Agreement,
dated May 26, 2004, by and between Liberty, Bank and Xxxxxxx X. Xxxxxx and that
certain Employment Agreement, dated January 2, 2002, by and between Liberty,
Bank and Xxxxxxx X. Xxxxxx, XX, in form and content satisfactory to United.
7.10 EMPLOYMENT AGREEMENTS. Each of Xxxxxxx X. Xxxxxx and Xxxxxxx X.
Xxxxxx, XX shall have executed an employment agreement in form and content
satisfactory to United and Xx. Xxxxxx and Xx. Xxxxxx, respectively.
7.11 LOSS RESERVE. Except as described in the Liberty Disclosure
Memorandum, at the Closing Date, the ratio of the loss reserve, established on
such date in good faith by Liberty, to total loans outstanding at such time
shall not exceed the ratio of the loan loss reserve to the total loans
outstanding as reflected in the balance sheet of Liberty as of June 30, 2004.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF LIBERTY
All of the obligations of Liberty 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 it:
8.1 VERACITY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of United contained herein or in any certificate, schedule or other
document delivered pursuant to the provisions hereof, or in connection herewith,
shall be true as of the date when
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made and shall be deemed to be made again at and as of the Closing Date and
shall be true at and as of such time, except as a result of changes or events
expressly permitted or contemplated herein or where the failure to be so, either
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on the business, operations or financial condition of United on a
consolidated basis.
8.2 PERFORMANCE OF AGREEMENTS. United shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing Date.
8.3 CERTIFICATES, RESOLUTIONS, OPINION. United shall have delivered to
Liberty:
(a) a certificate executed by the President or an Executive Vice
President of United, dated the Closing Date, certifying in such detail as
Liberty may reasonably request to the fulfillment of the conditions specified in
Sections 8.1 and 8.2 hereof;
(b) a certificate executed by the Secretary or an Assistant
Secretary of United, dated as of the Closing Date, certifying and attesting to
the: (i) articles of incorporation of United; (ii) bylaws of United; and (iii)
duly adopted resolutions of the board of directors of United (1) authorizing and
approving the execution of this Agreement and the Merger Agreement on behalf of
United, and the consummation of the transactions contemplated herein and therein
in accordance with their respective terms, and (2) authorizing all other
necessary and proper corporate actions to enable United to comply with the terms
hereof and thereof;
(c) a certificate of the valid existence of United, under the laws
of the State of Georgia executed by the Secretary of State of the State of
Georgia, dated not more than five (5) business days prior to the Closing Date;
(d) an opinion of Xxxxxxxxxx Xxxxxxxx LLP, counsel for United, dated
the Closing Date, in the form attached hereto as Exhibit E; and
(e) 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 United has filed all corporate tax returns required by the
laws of such state and has paid all taxes shown thereon to be due.
8.4 SHAREHOLDER APPROVAL. The Merger Agreement shall have been approved by
the vote of the holders of at least a majority of the issued and outstanding
shares of Liberty Stock.
8.5 REGULATORY APPROVALS. Any and all governmental authorities, bodies or
agencies having jurisdiction over the transactions contemplated by this
Agreement, the Merger Agreement and the Bank Merger Agreement, including, but
not limited to the Federal Reserve, the FDIC, the OCC and the Georgia Department
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.
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8.6 EFFECTIVE REGISTRATION STATEMENT. The United Registration Statement
shall have been declared effective by the SEC and no stop order shall have been
entered with respect thereto.
8.7 TAX OPINION. Liberty shall have received from Xxxxxxxxxx Xxxxxxxx LLP
its opinion, in form and substance reasonably satisfactory to Liberty, to the
effect that:
(a) The Merger and the issuance of shares of United Stock in
connection therewith, as described herein and in the Merger Agreement, will
constitute a tax-free reorganization under Section 368(a)(1)(A) of the Code;
(b) No gain or loss will be recognized by holders of Liberty Stock
upon the exchange of such stock for United Stock as a result of the Merger;
(c) Gain or loss will be recognized pursuant to Section 302 of the
Code by holders of Liberty Stock upon their receipt of cash, including cash (i)
in lieu of fractional shares of United Stock, and (ii) upon their exercise of
dissenters' rights;
(d) No gain or loss will be recognized by Liberty as a result of the
Merger or the Bank Merger;
(e) The aggregate tax basis of United Stock received by shareholders
of Liberty pursuant to the Merger will be the same as the tax basis of the
shares of Liberty Stock exchanged therefor (i) decreased by any portion of such
tax basis allocated to fractional shares of United Stock that are treated as
redeemed by United, (ii) decreased by the amount of cash received by a Liberty
shareholder in the Merger (other than cash received with respect to fractional
shares), and (iii) increased by the amount of gain recognized by a Liberty
shareholder in the Merger (other than gain recognized with respect to fractional
shares); and
(f) The holding period of the shares of United Stock received by the
shareholders of Liberty will include the holding period of the shares of Liberty
Stock exchanged therefor, provided that the stock of Liberty is held as a
capital asset on the date of the consummation of the Merger.
8.8 CERTIFICATE OF MERGER. The Secretary of State of the State of Georgia
shall have issued a certificate of merger, with respect to the Merger, in
accordance with the provisions of the Georgia Business Corporation Code, and
with respect to the Bank Merger, in accordance with Financial Institution Code
of Georgia and the National Bank Act.
ARTICLE IX
WARRANTIES, NOTICES, ETC.
9.1 WARRANTIES. All statements contained in any certificate or other
instrument delivered by or on behalf of Liberty or United pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties hereunder by them. Unless the context otherwise
requires, the representations and warranties required of
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Liberty shall be required to be made, and shall be considered made, on behalf of
Liberty and Bank.
9.2 SURVIVAL OF PROVISIONS. 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, but, except as set forth hereafter or specifically stated in this
Agreement, such representations, warranties, covenants, and agreements shall
expire and be of no further force and effect upon the consummation of the
Merger; provided, however, that the following shall survive consummation of the
Merger and the transactions contemplated hereby:
(a) the opinions of counsel referred to in Sections 7.3(f) and
8.3(d) of this Agreement;
(b) any intentional misrepresentation of any material fact made by
either party hereto in or pursuant to this Agreement or in any instrument,
document or certificate delivered pursuant hereto; and
(c) the covenant with respect to the confidentiality of certain
information contained in Section 3.5 hereof.
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 (5) 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. Either 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 party hereto in the manner provided herein.
To Liberty: Liberty National Bancshares, Inc.
0000 Xxxxxxx Xxxxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
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With copies to: Xxxxx, Xxxxxxxx & Xxxxxxx, XXX
Xxxxxxxxx XX, Xxxxx 0000
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
To United: United Community Banks, Inc.
X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
President
Facsimile: (000) 000-0000
With copies to: Xxxxxxxxxx Xxxxxxxx LLP
Suite 2800
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 000000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
9.4 ENTIRE AGREEMENT. This Agreement and the Merger Agreement supersede
all prior discussions and agreements between Liberty and United 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
Liberty and United with respect to the transactions contemplated herein and
therein.
9.5 WAIVER; AMENDMENT. Prior to or on the Closing Date, United shall have
the right to waive any default in the performance of any term of this Agreement
by Liberty, to waive or extend the time for the fulfillment by Liberty of any or
all of Liberty's obligations under this Agreement, and to waive any or all of
the conditions precedent to the obligations of United 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,
Liberty shall have the right to waive any default in the performance of any term
of this Agreement by United, to waive or extend the time for the fulfillment by
United of any or all of United's obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of Liberty under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any law or applicable governmental regulation. 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
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This Agreement may be terminated at any time prior to or on the Closing
Date upon written notice to the other party as follows:
10.1 MATERIAL ADVERSE CHANGE.
(a) By United, if, after the date hereof, a material adverse change
in the financial condition or business of Liberty shall have occurred which
change would reasonably be expected to have a material adverse effect on the
market price of Liberty Stock, or if Liberty shall have suffered a material loss
or damage to any of its properties or assets, which change, loss or damage
materially affects or impairs its ability to conduct its business.
(b) By Liberty, if, after the date hereof, a material adverse change
in the financial condition or business of United shall have occurred which
change would reasonably be expected to have a material adverse effect on the
market price of United Stock, or if United shall have suffered a material loss
or damage to any its properties or assets, which change, loss or damage
materially affects or impairs its ability to conduct its business.
10.2 NONCOMPLIANCE.
(a) By United, (i) if the terms, covenants or conditions of this
Agreement to be complied with or performed by Liberty before the Closing shall
not have been substantially complied with or substantially performed at or
before the Closing Date and such noncompliance or nonperformance shall not have
been waived by United; or (ii) in the event of a material breach by Liberty of
any covenant, agreement, or obligation contained in this Agreement which breach
cannot be or has not been cured within 40 days after the giving of written
notice to United of such breach.
(b) By Liberty, (i) if the terms, covenants or conditions of this
Agreement to be complied with or performed by United before the Closing shall
not have been substantially complied with or substantially performed at or
before the Closing Date and such noncompliance or nonperformance shall not have
been waived by Liberty; or (ii) in the event of a material breach by United of
any covenant, agreement, or obligation contained in this Agreement which breach
cannot be or has not been cured within 40 days after the giving of written
notice to Liberty of such breach.
10.3 FAILURE TO DISCLOSE.
(a) By United, if it learns of any fact or condition not disclosed
in this Agreement, the Liberty Disclosure Memorandum, or the Liberty Financial
Statements, which was required to be disclosed by Liberty pursuant to the
provisions of this Agreement with respect to the business, properties, assets or
earnings of Liberty which materially and adversely affects such business,
properties, assets or earnings or the ownership, value or continuance thereof.
(b) By Liberty, if it learns of any fact or condition not disclosed
in this Agreement or the United Financial Statements, which was required to be
disclosed by United pursuant to the provisions of this Agreement with respect to
the business, properties, assets or
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earnings of United which materially and adversely affects such business,
properties, assets or earnings or the ownership, value or continuance thereof.
10.4 ADVERSE PROCEEDINGS. By either party, if any action, suit or
proceeding shall have been instituted or threatened against either 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.
10.5 TERMINATION DATE. By either party, if the Closing Date shall not have
occurred on or before February 28, 2005.
10.6 DISSENTERS. By United, if the holders of more than five percent (5%)
of the shares of the outstanding Liberty Stock elect to exercise their statutory
right to dissent from the Merger and demand payment in cash for the "fair value"
of their shares.
10.7 SHAREHOLDERS VOTE. By either party, if the Merger Agreement is not
approved by the vote of the holders of Liberty Stock as required by applicable
law.
10.8 TERMINATION FEE. (a) If, while a Competing Offer (as defined in (b)
below) is outstanding or after such an offer has been accepted, (i) either party
terminates this Agreement pursuant to Section 10.7, (ii) Liberty terminates this
Agreement other than pursuant to Section 10.1(b), 10.2(b), 10.3(b) or 10.4, or
(iii) United terminates this agreement pursuant to Section 10.2(a) or 10.3(a),
then Liberty shall pay, or cause to be paid to United, at the time of the
termination of this Agreement, an amount equal to $1.2 million (the "TERMINATION
Fee"), which shall be the sole and exclusive remedy of United for all claims
under this Agreement.
(b) "Competing Offer" means any inquiry, proposal or offer,
whether in writing or otherwise, from anyone other than United to acquire
beneficial ownership (as determined under Rule 13d-3 of the Exchange Act) of all
or a material portion of the assets of Liberty or Bank or 15% or more of any
class of equity securities of Liberty or Bank pursuant to a merger,
consolidation or other business combination, sale of shares of capital stock,
sale of assets, tender offer, exchange offer or similar transaction with respect
to either Liberty or Bank, including any single or multi-step transaction or
series of related transactions, which is structured to permit such party to
acquire beneficial ownership of any material portion of the assets of, or 15% or
more of the equity interest in either Liberty or Bank.
10.9 EFFECT OF TERMINATION. Except as set forth in Section 10.8, in the
event of the termination of this Agreement pursuant to this Article X, this
Agreement shall become void and have no effect, and neither party shall have any
liability of any nature whatsoever under this Agreement or in connection with
the transactions contemplated by this Agreement except that (i) the provisions
of this Article X and Section 3.5 shall survive any such termination and (ii)
such termination shall not relieve any party from liability arising from any
willful breach of any provision of this Agreement
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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
NO THIRD PARTY BENEFICIARY
No provision of this Agreement shall be deemed to create any third party
beneficiary rights in any anyone, including any employee or former employee of
Liberty (including any beneficiary or dependent thereof).
ARTICLE XIII
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 either party without the prior
written consent of the other.
ARTICLE XIV
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.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Liberty and United 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.
LIBERTY NATIONAL BANCSHARES, INC.
(CORPORATE SEAL)
ATTEST:
/s/ C. Xxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------ -------------------------------------
Secretary Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
UNITED COMMUNITY BANKS, INC.
(CORPORATE SEAL)
ATTEST:
By: /s/ Xxxxxx X. Xxxxxxxxx
/s/ Xxxx XxXxx -------------------------------------
------------------------------ Xxxxxx X. Xxxxxxxxx
Assistant Secretary Executive Vice President
