EXHIBIT 2.
AGREEMENT
AND
PLAN OF SHARE EXCHANGE
DATED AS OF MARCH 12, 2002
BETWEEN
THE CITIZENS BANK OF PHILADELPHIA
Philadelphia, Mississippi
as party of the first part
AND
CITIZENS BANK & TRUST COMPANY
Louisville, Mississippi
and
CB&T CAPITAL CORPORATION
Louisville, Mississippi
as parties of the second part
TABLE OF CONTENT
ARTICLE 1 1
THE SHARE EXCHANGE AND RELATED MATTERS 1
Section 1.1 Share Exchange 1
Section 1.2 Effect of Share Exchange 1
ARTICLE 2 2
CONVERSION OF STOCK 2
Section 2.1 Conversion 2
Section 2.2 Issuance 2
ARTICLE 3 3
REPRESENTATIONS AND WARRANTIES OF CB&T AND BANK 3
Section 3.1 Organization and Good Standing 3
Section 3.2 Subsidiaries 4
Section 3.3 Capitalization 4
Section 3.4 Authority; Approvals and Consents 4
Section 3.5 Financial Statements 5
Section 3.6 Absence of Undisclosed Liabilities 5
Section 3.7 Absence of Material Adverse Effect; Conduct of Business 6
Section 3.8 Taxes 7
Section 3.9 Legal Matters 8
Section 3.10 Property 8
Section 3.11 Environmental Matters 9
Section 3.12 Reports 11
Section 3.13 Loan Files 11
Section 3.14 Insurance 12
Section 3.15 Contracts; etc 12
Section 3.16 Labor Relations 12
Section 3.17 Employee Benefit Plans 13
Section 3.18 Other Benefit and Compensation Plans or Arrangements 16
Section 3.19 Transactions with Insiders 17
Section 3.20 Propriety of Past Payments 17
Section 3.21 Brokers 17
Section 3.22 Allowance for Loan Losses 18
Section 3.23 Minutes 18
Section 3.24 Disclosure 18
ARTICLE 4 18
REPRESENTATIONS AND WARRANTIES OF CITIZENS 18
Section 4.1 Incorporation of Citizens 18
Section 4.2 Power; Authorization; Consents 19
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Section 4.3 Brokers 19
Section 4.4 Financial Statements 20
ARTICLE 5 20
COVENANTS AND ADDITIONAL AGREEMENTS 20
Section 5.1 Access; Confidentiality 20
Section 5.2 Furnishing Information; Announcements 21
Section 5.3 Government and Third-Party Approval 21
Section 5.4 Certain Changes and Conduct of Business 21
Section 5.5 No InterBank Payables or Receivables 23
Section 5.6 Negotiations 24
Section 5.7 Consents; Cooperation 24
Section 5.8 Additional Agreements 24
Section 5.9 Interim Financial Statements 25
Section 5.10 Notification of Certain Matters 25
Section 5.11 Employee Benefit Plans 25
ARTICLE 6 26
CONDITIONS TO THE OBLIGATIONS
OF CITIZENS TO EFFECT THE CLOSING 26
Section 6.1 Representations and Warranties; Agreements; Covenants 26
Section 6.2 Authorization; Consents 26
Section 6.3 Absence of Litigation 27
Section 6.4 No Material Adverse Effect 27
Section 6.5 Completion of Due Diligence 27
Section 6.6 Certificates 27
Section 6.7 Opinion of CB&T Counsel 27
Section 6.8 Legal Matters 27
Section 6.9 Schedules 28
Section 6.10 Termination of Employment Agreements and Indemnification 28
Section 6.11 Merger 28
Section 6.12 Real Property - Deliver Certificates of Title 28
Section 6.13 Environmental Phase I Report 28
Section 6.14 Dissenters' Rights 29
Section 6. 15 Adequate Loan Loss Reserve 29
Section 6.16 Interim Financial Statements - Calculation of
CB&T's Stockholders' Equity 29
Section 6.17 Appraisal 29
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF CB&T AND THE BANK TO EFFECT THE CLOSING 29
Section 7.1 Representations and Warranties; Agreements 29
Section 7.2 Authorization of the Agreement, Consents 30
Section 7.3 Absence of Litigation 30
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Section 7.4 Certificates 30
Section 7.5 Legal Matters 30
ARTICLE 8
TERMINATION 30
Section 8.1 Termination 30
Section 8.2 Effect of Termination 31
ARTICLE 9 32
INDEMNIFICATION 32
Section 9.1 Directors' and Officers' Liability Insurance Coverage 32
ARTICLE 10 32
MISCELLANEOUS 32
Section 10.1 Survival of Provisions 32
Section 10.2 Fees and Expenses 32
Section 10.3 Headings 32
Section 10.4 Notices 32
Section 10.5 Assignment 33
Section 10.6 Entire Agreement 34
Section 10.7 Waiver and Amendments 34
Section 10.8 Counterparts 34
Section 10.9 Accounting Terms 34
Section 10.10 Certain Definitions 34
Section 10.11 Schedules 36
Section 10.12 Severability 36
Section 10.13 Remedies 36
Section 10.14 Governing Law 36
Section 10.15 Time of the Essence 36
Section 10.16 Merger Agreement between Citizens and Bank 36
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SCHEDULES
Schedule 3.3 - Number of Shares of Stock Authorized, Issued and Outstanding
Schedule 3.5 - Financial Statements That Have Not Been Provided
Schedule 3.6 - Undisclosed Liabilities
Schedule 3.7 - Material Adverse Change or Loss Since December 31, 2001 or
Exceptions to Ordinary Business Operations
Schedule 3.8 - The Basis of Acquired Assets and List of Federal Tax Audits
Since 12/31/95 Schedule 3.9(a) - Pending Legal Matters
Schedule 3.9(b) - List of All Franchises, Licenses, Permits, Registrations,
Certificates, Consents, Approvals or Authorizations
(collectively "Permits") Held by CB&T
Schedule 3.10 - Properties and Assets Owned by or Leased to CB&T and the Bank
Schedule 3.11 - Environmental Matters
Schedule 3.13 - Loans Subject to Claims
Schedule 3.14 - Insurance Policies Held by CB&T and Bank
Schedule 3.15 - Bank Agreements Held by CB&T and/or Bank in Excess of
$25,000.00
Schedule 3.16(b)- Outstanding Employment Agreements
Schedule 3.16(c)- Pending Labor Practice Complaints
Schedule 3.17 - List of Employee Benefit Plans
Schedule 3.18(a)- List of Employee Stock or Welfare Plans
Schedule 3.19 - List of Transactions Between CB&T or the Bank or any ERISA
Plan, on the one hand, and any Insider, on the other hand
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SCHEDULES (Continued)
Schedule 3.22 - Allowance for Loan and Lease Losses
Schedule 4.2 - Exceptions to Citizens' Power, Authorizations and Consents
Schedule 4.4 - List of Financial Statements That Have Not Been Provided to
Bank by Citizens
Schedule 5.5 - List of Outstanding Interbank Payables or Interbank
Receivables Due and/or Owing Between Bank or CB&T
Stockholders and Their Affiliates (other than CB&T and the
Bank) on the one hand and CB&T or the Bank, on the other
hand.
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This AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Plan of Share Exchange"),
dated as of March 12, 2002, is made and entered into by and between The Citizens
Bank of Philadelphia, Philadelphia, Mississippi, a Mississippi banking
corporation ("Citizens"), on the one hand, and CB&T Capital Corporation,
Louisville, Mississippi, a Mississippi corporation ("CB&T"), and Citizens Bank &
Trust Company, Louisville, Mississippi, a Mississippi banking corporation
("Bank"), on the other.
W I T N E S S E T H:
WHEREAS, both Citizens and Bank are engaged in the business of banking; and
WHEREAS, CB&T owns all the outstanding capital stock of Bank, and Bank is,
therefore, a wholly owned subsidiary of CB&T; and
WHEREAS, Citizens desires to acquire all Seven Thousand Two Hundred and
Three (7,203) shares, $10.00 par value per share, of the issued and outstanding
capital stock of CB&T which constitutes 100% of the issued and outstanding
shares of capital stock of CB&T (said shares being referred to herein as the
"Shares" or "CB&T Common Stock");
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
THE SHARE EXCHANGE AND RELATED MATTERS
Section 1.1 Share Exchange.
(a) On the Effective Date and subject to the satisfaction of the provisions
of this Plan of Share Exchange, all of the issued and outstanding Shares shall
be acquired by Citizens in consideration of the payment by Citizens of the Cash
Consideration (which heretofore and shall hereafter be referred to as the "Share
Exchange"), pursuant to the provisions of this Agreement, the provisions of and
with the effect provided in Miss. Code Xxx. 79-4-11.03 and 81-5-2 (Rev. 2001)
and the Share Exchange Agreement in substantially the form of Exhibit A hereto
(the "Share Exchange Agreement"). For purposes of this Agreement, "Cash
Consideration" shall mean an amount equal to 1.504967 times CB&T's Stockholders'
Equity on a consolidated basis at the month end immediately preceding the
Effective Date. The Cash Consideration per share shall be equal to the quotient
of the Cash Consideration divided by the number of Shares.
Section 1.2 Effect of Share Exchange.
(a) Upon consummation of the Share Exchange, all issued and outstanding
Shares, subject to the rights of dissent prescribed by law, shall immediately,
by operation of law, and without
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any further conveyance or transfer, and without further action of any of the
parties to this Plan of Share Exchange become the property of Citizens. The
shareholders of CB&T, on the Effective Date of the Share Exchange, shall have
the rights set forth in Article 2 hereof.
ARTICLE 2
CONVERSION OF STOCK
Section 2.1 Conversion.
The Parties agree that, by virtue of the Share Exchange, and subject to the
terms of this Plan of Share Exchange and the Share Exchange Agreement, each
Share shall be automatically canceled and converted into the right to receive
the Cash Consideration per share, in cash or immediately available funds, and
all presently outstanding certificates representing Shares shall thereafter
represent solely the right to receive a pro rata share of the Cash
Consideration, provided, however, outstanding Shares for which dissenters'
rights have been perfected shall not be converted into a right to receive a pro
rata share of Cash Consideration, but the holder thereof shall be entitled only
to such rights as are granted by Miss. Code Xxx. 79-4-13.01 through -79-4-13.26.
Section 2.2 Issuance.
(a) A check of Citizens shall be issued to holders of CB&T Common Stock as
follows:
(i) Citizens shall issue to each holder of a certificate or
certificates theretofore representing outstanding Shares the Cash
Consideration per share for each Share held on the Effective Date subject
to the provisions herein.
(ii) Each holder of a certificate or certificates theretofore
representing outstanding Shares (any such certificate being hereinafter
referred to as a "Certificate") other than a holder of Certificates who
exercises, perfects and maintains dissenters' rights pursuant to Miss. Code
Xxx. 79-4-13.01 through 79-4-13.26, shall surrender the same to Citizens or
its agent for cancellation, and each such holder shall be entitled upon
such surrender to receive in exchange therefor a pro rata share of the Cash
Consideration to which such holder is entitled as provided herein.
Immediately after the Effective Date, Citizens shall mail to each holder of
record of CB&T Common Stock a form letter of transmittal and instructions,
in the form of that set forth in Exhibit B, for use in effecting the
surrender of the Certificates representing shares of CB&T Common Stock to
be exchanged for a pro rata share of the Cash Consideration pursuant to
this Plan of Share Exchange. Until so surrendered, each Certificate shall
be deemed for all purposes only to evidence ownership of the right to
receive a pro rata share of the Cash Consideration for which the shares
represented by such Certificates have been changed or converted as
aforesaid. If Cash Consideration for any certificate for shares of CB&T
Common Stock is to be issued in a name other than that in which a
Certificate surrendered for exchange is issued, the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer.
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(iii) Citizens reserves the right to withhold any Cash Consideration
payable in respect of Certificates not surrendered by the holder thereof.
Cash Consideration so withheld will be paid to the holder thereof, without
interest, upon proper presentation of Certificates and the documents and
information contemplated by the letter of transmittal as provided in this
Section 2.2. In the event that any such holder fails to surrender either
such Certificate or the documents and information contemplated by the
letter of transmittal and instructions, set forth in Exhibit B attached
hereto, on or before the fifth (5th) anniversary of the Effective Date,
Citizens shall not have any obligation to deliver the amount to which any
such holder would have been entitled in accordance with the provisions of
this Plan of Share Exchange and any such holder shall not be entitled to
receive from Citizens any amount in substitution and exchange for each
Share canceled and extinguished in accordance with this Plan of Share
Exchange upon Citizens's compliance with applicable abandoned property,
escheat or similar laws of the State of Mississippi.
(iv) Upon the Effective Date, the stock transfer books of CB&T shall
be closed and no transfer of CB&T Common Stock shall thereafter be made or
recognized. Any other provision of this Plan of Share Exchange
notwithstanding, neither Citizens or its agent nor any party to the Share
Exchange shall be liable to a holder of CB&T Common Stock for any amount
paid or property delivered in good faith to a public official pursuant to
any applicable abandoned property, escheat or similar laws of the State of
Mississippi.
(v) Shares of CB&T Common Stock held by any holder having rights of a
dissenting shareholder as provided in Miss. Code Xxx. 79-4-13.01 through
79-4-13.26, who shall have properly objected to the Share Exchange and who
shall have properly demanded payment on his stock in accordance with and
subject to the provisions of Miss. Code Xxx. 79-4-13.01 through 79-4-13.26
shall not be converted as provided under this Article 2 until such time as
such holder shall have failed to perfect, or shall have waived or otherwise
effectively surrendered or lost his right to appraisal of and payment for
his shares of CB&T Common Stock, at which time such shares shall be
converted as provided in Section 2.2 hereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CB&T AND BANK
CB&T and the Bank (sometimes herein referred to jointly as the "Bank")
jointly and severally represent and warrant to Citizens as follows:
Section 3.1 Organization and Good Standing.
The Bank is a state chartered banking corporation duly organized, validly
existing and in good standing under the laws of the State of Mississippi and has
the corporate power and authority to own, lease and operate the properties used
in its business and to carry on its business as now being conducted. The Bank is
duly qualified to do business and is in good standing as a foreign corporation
in each state and jurisdiction where qualification as a foreign corporation is
required.
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The Bank has previously delivered to Citizens complete and correct copies of its
certificate of incorporation and by-laws (including comparable governing
instruments with different names), as amended and presently in effect.
CB&T is a corporation duly organized, validly existing and in good standing
under the laws of the state of Mississippi and has the corporate power and
authority to own, lease and operate the properties used in its business and to
carry on its business as now being conducted and is qualified to do business in
all states where the nature of its business requires it to be so qualified. CB&T
has previously delivered to Citizens complete and correct copies of its
certificate of incorporation and by-laws (including comparable governing
instruments with different names), as amended and presently in effect. CB&T is a
Bank Holding Company duly registered and qualified as such pursuant to the Bank
Holding Company Act of 1956, as amended (12 USC 1841, et seq.) and Regulation Y
promulgated by the Federal Reserve Board of Governors pursuant thereto.
Section 3.2 Subsidiaries.
Except for CB&T's ownership of Bank, neither CB&T nor Bank has any interest
or investment in any Person (as defined in Section 10.10 hereof).
Section 3.3 Capitalization.
The authorized stock of CB&T and Bank and the number of shares of capital
stock of each which are issued and outstanding are set forth on Schedule 3.3
hereto. The shares listed on Schedule 3.3 hereto constitute all of the issued
and outstanding shares of capital stock of CB&T and Bank and have been validly
authorized and issued, are fully paid and nonassessable, have not been issued in
violation of any preemptive rights or of any federal or state securities law and
no personal liability attaches to the ownership thereof. There is no security,
option, warrant, right, call, subscription, agreement, commitment or
understanding of any nature whatsoever, fixed or contingent, that directly or
indirectly (i) calls for the issuance, sale, pledge or other disposition of any
shares of capital stock of CB&T or the Bank or any securities convertible into,
or other rights to acquire, any shares of capital stock of CB&T or the Bank,
(ii) obligates CB&T or the Bank to grant, offer or enter into any of the
foregoing; or (iii) relates to the voting or control of such capital stock,
securities or rights, except as set forth on Schedule 3.3 hereto. Neither CB&T
nor the Bank have agreed to register any securities under the Securities Act of
1933, as amended (the "Securities Act").
Section 3.4 Authority; Approvals and Consents.
Each of CB&T and the Bank has the corporate power and authority to enter
into this Plan of Share Exchange and the Documents to which it is a party and to
perform its respective obligations hereunder and thereunder. The execution,
delivery and performance of this Plan of Share Exchange and the Documents and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized and approved by the Board of Directors of Bank and CB&T and no
other corporate proceedings on the part of Bank or CB&T is necessary, or will be
necessary, to authorize and approve this Plan of Share Exchange and the
Documents and the transactions contemplated hereby and thereby. This Plan of
Share Exchange has been, and on the Effective Date the
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Documents will be, duly executed and delivered by CB&T and the Bank, and
constitute or will constitute valid and binding obligations of each of them,
enforceable against both CB&T and the Bank in accordance with their terms. The
execution, delivery and performance of this Plan of Share Exchange and the
Documents by Bank and CB&T and the consummation of the transactions contemplated
hereby and thereby do not and will not:
(i) contravene any provisions of the Certificate of Incorporation or
By-Laws of Bank or CB&T;
(ii) (after notice or lapse of time or both) conflict with, result in
a breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination
or acceleration in respect of, any material contract, agreement,
commitment, understanding, arrangement or restriction to which Bank or CB&T
is a party to or which either of them or any of their respective property
is subject;
(iii) violate or conflict with any Legal Requirements (as defined
below) applicable to CB&T or Bank any of their respective businesses or
properties; or
(iv) require any authorization, consent, order, permit or approval of,
or notice to, or filing, registration or qualification with, any
governmental, administrative or judicial authority, except in connection
with or in compliance with obtaining banking regulatory approval.
Section 3.5 Financial Statements.
Except as otherwise indicated in Schedule 3.5, CB&T and the Bank have
delivered to Citizens true and complete copies of their respective audited
consolidated balance sheets of CB&T and the Bank as of December 31, 1999, 2000
and 2001 (collectively the "Bank Balance Sheet"), and the related consolidated
statements of income, stockholders' equity and cash flow for the fiscal years
ended December 31, 1999, 2000 and 2001, together with the notes thereto and the
auditor's report (1999, 2000 and 2001) thereon (all the foregoing financial
statements, including the notes thereto, being referred to herein collectively
as the "Bank Financial Statements"). The Bank Financial Statements are in
accordance with the books and records of CB&T and the Bank, fairly present the
consolidated financial position, results of operations, stockholders' equity and
changes in financial position of CB&T and the Bank as of the dates and for the
periods indicated in conformity with GAAP consistently applied (except as
otherwise indicated in such statements or as required by bank regulators) during
such periods, and can be legitimately reconciled with the financial statements
and the financial records maintained and the accounting methods applied by CB&T
and the Bank for federal income tax purposes. The financial statements included
in the Bank Financial Statements include all adjustments, which consist of only
normal recurring accruals, necessary for such fair presentations. The statements
of income included in the Bank Financial Statements do not contain any items of
special or nonrecurring income except as expressly specified therein, and except
as required by GAAP the balance sheets included in the Bank Financial Statements
do not reflect any write-up or revaluation increasing the book value of any
assets. The books and accounts of CB&T and the Bank are complete and
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correct in all material respects and fairly reflect all of the transactions,
items of income and expense and all assets and liabilities of the businesses of
CB&T and the Bank consistent with prior practices.
Section 3.6 Absence of Undisclosed Liabilities.
Neither CB&T nor the Bank has any liability of any nature whatsoever
(whether known or unknown, due or to become due, accrued, absolute, contingent
or otherwise), including, without limitation, any unfunded obligation under
employee benefit plans or arrangements as described in Section 3.17 and 3.18
hereof or liabilities for Taxes (as defined in Section 3.8 hereof), except for
(i) liabilities reflected or reserved against in the Bank Financial Statements,
(ii) current liabilities incurred in the ordinary course of business and
consistent with past practice after the date of the Bank Balance Sheet which,
individually and in the aggregate, do not have, and cannot reasonably be
expected to have, a Material Adverse Effect, and (iii) liabilities disclosed on
Schedule 3.6 hereto. Neither CB&T nor the Bank is party to any Agreement, or
subject to any charter or by-law provision, any other corporate limitation or
any Legal Requirement, which has, or can reasonably be expected to have, a
Material Adverse Effect.
Section 3.7 Absence of Material Adverse Effect; Conduct of Business.
(a) Since December 31, 2001, CB&T and the Bank has operated in the ordinary
course of business consistent with past practice, except as set forth on
Schedule 3.7 hereto, and there has not been:
(i) any material adverse change in the assets, properties, business,
operations, prospects, net income or financial condition of CB&T or the
Bank, and no factor, event, condition, circumstance or prospective
development exists which threatens or may threaten to have a Material
Adverse Effect;
(ii) any material loss, damage, destruction or other casualty to the
property or other assets of CB&T or the Bank, whether or not covered by
insurance;
(iii) any material change in any method of accounting or accounting
practice of CB&T or the Bank, except as required by GAAP; or
(iv) any material loss of the employment, services or benefits of any
key employee of CB&T or the Bank.
(b) Since December 31, 2001, except as set forth in Schedule 3.7 hereto,
CB&T and the Bank have not:
(i) incurred any material obligation or liability (whether absolute,
accrued, contingent or otherwise), except in the ordinary course of
business consistent with past practice;
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(ii) failed to discharge or satisfy any lien or pay or satisfy any
obligation or liability (whether absolute, accrued, contingent or
otherwise), other than liabilities being contested in good faith and for
which adequate reserves have been provided in the Bank Financial
Statements;
(iii) mortgaged, pledged or subjected to any lien any of its property
or other assets, except for mechanics liens and liens for taxes not yet due
and payable, except in the ordinary course of business consistent with past
practice, and for which adequate reserves have been provided in the Bank
Financial Statements;
(iv) sold or transferred any assets or canceled any debts or claims or
waived any rights, except in the ordinary course of business consistent
with past practice;
(v) defaulted on any material obligation;
(vi) entered into any material transaction, except in the ordinary
course of business consistent with past practice;
(vii) written down the value of any inventory or written off as
uncollectible any loans or any portion thereof not reflected in the Bank
Financial Statements;
(viii) granted any increase in the compensation or benefits of
employees other than increases in accordance with past practice not
exceeding 5% or entered into any employment or severance agreement or
arrangement with any of them;
(ix) made any individual capital expenditure in excess of $25,000, or
aggregate capital expenditures in excess of $100,000, or additions to
property, plant and equipment other than ordinary repairs and maintenance;
(x) discontinued any franchise or the sale of any products or product
line or program;
(xi) incurred any obligation or liability for the payment of severance
benefits; or
(xii) entered into any agreement or made any commitment to do any of
the foregoing.
Section 3.8 Taxes.
Except as set forth in Schedule 3.8, neither CB&T nor the Bank, in the past
10 years, has acquired assets from another entity in a transaction in which
CB&T's or the Bank's tax basis for the acquired assets was determined, in whole
or in part, by reference to the tax basis of the acquired assets (or any other
property) in the hands of the transferor. CB&T and the Bank have filed timely
all federal, state, local and foreign tax returns, reports and declarations
required to be filed (or have obtained or timely applied for an extension with
respect to such filing) correctly reflecting the Taxes (as defined below) and
all other information required to be reported thereon and have paid, or made
adequate provision for the payment of, all Taxes which are due by CB&T or the
Bank. As used herein, "Taxes" shall mean all taxes, fees, levies or other
assessments, including but not limited to
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income, excise, property, sales, franchise, withholding, social security and
unemployment taxes imposed by the United States, any state, county, local or
foreign government, or any subdivision or agency thereof or taxing authority
therein, and any interest, penalties or additions to tax relating to such taxes,
charges, fees, levies or other assessments. Copies of all tax returns for the
fiscal years ended since December 31, 1996 as filed have been furnished or made
available to Citizens or its representatives and such copies are accurate and
complete as of the date hereof. CB&T and the Bank have also furnished to
Citizens correct and complete copies of all notices and correspondence sent or
received since December 31, 1996 by CB&T or the Bank to or from any federal,
state or local tax authorities. CB&T and the Bank have adequately reserved in
the Bank Financial Statements for the payment of all Taxes with respect to
periods ended on or prior to the Effective Date for which tax returns have not
yet been filed. In the ordinary course, CB&T and the Bank make adequate
provision on their respective books for the payment of all Taxes (including for
the current fiscal period) owed by CB&T or the Bank. Except to the extent
reserves therefor are reflected on the Bank Balance Sheet, neither CB&T nor the
Bank is liable, or will become liable, for any Taxes for any period ending on or
prior to the Effective Date. Except as set forth on Schedule 3.8 hereto, neither
CB&T nor the Bank has been subject to a federal or state tax audit of any kind
since December 31, 1995, nor has it received notice of a proposed tax audit of
any kind, and no adjustment has been proposed by the Internal Revenue Service
("IRS") with respect to any return for any prior or subsequent year. With
respect to the audits referred to on Schedule 3.8 hereto and except as indicated
thereon, no such audit has resulted in an adjustment in excess of $10,000.
Neither CB&T nor the Bank is aware of any basis for an assertion of a deficiency
for Taxes against CB&T or the Bank.
Section 3.9 Legal Matters.
(a) Except as set forth on Schedule 3.9(a) hereto, (i) there is no claim,
action, suit, litigation, investigation, inquiry, audit, review or proceeding
(collectively, "Claims") pending against, or, to the knowledge of CB&T or the
Bank, threatened against or affecting, CB&T or the Bank, any ERISA Plan (as
defined in Section 3.17(a) hereof) or any of CB&T or the Bank's respective
properties or rights before or by any court, arbitrator, panel, agency or other
governmental, administrative or judicial entity, domestic or foreign, nor is any
basis known to CB&T or the Bank for any such Claims, and (ii) neither CB&T nor
the Bank is subject to any judgment, decree, writ, injunction, ruling or order
(collectively, "Judgments") of any governmental, administrative or judicial
authority, domestic or foreign. Schedule 3.9(a) hereto identifies each Claim and
Judgment disclosed thereon which is fully covered by an insurance policy.
(b) The business of CB&T and the Bank is being conducted in compliance with
all laws, ordinances, codes, rules, regulations, standards, judgments and other
requirements of all governmental, administrative or judicial entities
(collectively, "Legal Requirements") applicable to CB&T and the Bank or any of
their business or properties, except where the failure to be in such compliance
could not reasonably be expected to have a Material Adverse Effect. CB&T and the
Bank hold, and are in compliance with, all franchises, licenses, permits,
registrations, certificates, consents, approvals or authorizations
(collectively, "Permits") required by all applicable Legal Requirements except
where the failure to hold or be in compliance with such Permits could not
reasonably be expected to have Material Adverse Effect. A list of all such
permits is set forth on Schedule 3.9(b) hereof.
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(c) CB&T and the Bank own or hold all Permits necessary to the conduct of
their respective business. No event has occurred and is continuing which
permits, or after notice or lapse of time or both would permit, any modification
or termination of any Permit.
Section 3.10 Property.
(a) The properties and assets owned by or leased to CB&T and the Bank are
adequate for the conduct of the business of CB&T and the Bank as presently
conducted. Set forth on Schedule 3.10, hereto is a list of all interests in real
property owned by or leased to CB&T or the Bank (including all real property
owned or leased by CB&T or Bank stockholders (directly or indirectly) and used
in the business of CB&T or the Bank) and of all options or other contracts to
acquire any such interest (collectively, the "Real Property"). All improvements
to the Real Property ("Improvements") and all machinery, equipment and other
tangible property owned or used by or leased to CB&T or the Bank are to the best
of their knowledge in good operating condition and in good repair and are fit
for the particular purposes for which they are used by CB&T or the Bank, subject
only to ordinary wear and tear. Such tangible properties and all Improvements
owned or leased by CB&T or the Bank conform in all material respects with all
applicable laws, ordinances, rules and regulations and other Legal Requirements
and such Improvements do not encroach in any respect on property of others. To
the best of CB&T's and Bank's knowledge there are no latent defects with respect
to the Improvements. The Real Property is currently zoned to permit the conduct
of the business of CB&T and/or the Bank as presently conducted. To the best of
CB&T's and Bank's knowledge all utilities servicing the Real Property and the
Improvements are provided by publicly-dedicated utility lines and are located
within public rights-of-way and do not cross or encumber any private land. No
notice of any pending, threatened or contemplated action by any governmental
authority or agency having the power of eminent domain has been given to CB&T or
the Bank with respect to the Real Property.
Section 3.11 Environmental Matters.
(a) Except as set forth on Schedule 3.11 hereto, (i) CB&T and the Bank, the
Real Property, the Improvements and any property formerly owned, occupied or
leased by CB&T and the Bank are, to the best of their knowledge, in full
compliance with all Environmental Laws (as defined below), (ii) CB&T and the
Bank have obtained all Environmental Permits (as defined below), (iii) such
Environmental Permits are in full force and effect, and (iv) CB&T and the Bank
are in full compliance with all terms and conditions of such Environmental
Permits. As used herein, "Environmental Laws" shall mean all applicable
requirements of environmental, public or employee health and safety, public or
community right-to-know, ecological or natural resource laws or regulations or
controls, including all applicable requirements imposed by any law (including
without limitation common law), rule, order, or regulations of any federal,
state, or local executive, legislative, judicial, regulatory, or administrative
agency, board, or authority, or any applicable private agreement (such as
covenants, conditions and restrictions), which relate to, (i) noise, (ii)
pollution or protection of the air, surface water, groundwater, or soil, (iii)
solid, gaseous, or liquid waste generation, treatment, storage, disposal or
transportation, (iv) exposure to Hazardous Materials (as defined below), or (v)
regulation of the manufacture, processing, distribution in commerce, use, or
storage of Hazardous Materials. As used herein, "Environmental Permits" shall
mean all permits,
10
licenses, approvals, authorizations, consents or registrations required to CB&T
and the Bank's knowledge under applicable Environmental Law in connection with
the ownership, use and/or operation of CB&T and the Bank's business or the Real
Property or Improvements.
As used in this Section 3.11, "Hazardous Materials" shall mean,
collectively, (i) those substances included within the definitions of or
identified as "hazardous chemicals," "hazardous waste," "hazardous substances,"
"hazardous materials," "toxic substances" or similar terms in or pursuant to,
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980 (42 U.S.C. 9601 et seq.) ("CERCLA"), as amended by
Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499, 100 State,
1613), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. (S)6901 et
seq.) ("RCRA"), the Occupational Safety and Health Act of 1970 (29 U.S.C. (S)651
et seq.) ("OSHA"), and the Hazardous Materials Transportation Act, 49 U.S.C.
(S)1801 et seq. ("HMTA"), and in the regulations promulgated pursuant to such
laws, all as amended, (ii) those substances listed in the United States
Department of Transportation Table (49 CFR 172.101 and amendments thereto) or by
the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR part 302 and amendments thereto), (iii) any material, waste
or substance which is or contains (A) petroleum, including crude oil or any
fraction thereof, natural gas, or synthetic gas usable for fuel or any mixture
thereof, (B) asbestos, (C) polychlorinated biphenyls, (D) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Xxxxx Xxx, 00 X.X.X.
(X)0000 et seq. (33 U.S.C. (S)1321) or listed pursuant to Section 307 of the
Clean Water Act (33 U.S.C. (S)1317), (E) flammable explosives, (F) radioactive
materials, and (iv) such other substances, materials and wastes which are or
become regulated or classified as hazardous, toxic or as "special wastes" under
any Environmental Laws.
(b) Neither CB&T nor the Bank have violated, done or suffered any act which
could give rise to liability under, and is not otherwise exposed to liability
under, any Environmental Law. No event has occurred with respect to the Real
Property, the Improvements or any property formerly owned, occupied or leased by
CB&T or the Bank, which, with the passage of time or the giving of notice, or
both, would constitute a violation of or non-compliance with any applicable
Environmental Law. Neither CB&T nor the Bank have any contingent liability under
any Environmental Law. There are no liens under any Environmental Law on the
Real Property.
(c) Except as set forth on Schedule 3.11 hereto, (i) neither CB&T nor the
Bank, the Real Property or any portion thereof, the Improvements or any property
formerly owned, occupied or leased by CB&T or the Bank, nor, to the knowledge of
CB&T or the Bank or their respective Boards of Directors any property adjacent
to the Real Property is being used or has been used for the treatment,
generation, transportation, processing, handling, production or disposal of any
Hazardous Materials or as a landfill or other waste disposal site, (ii) none of
the Real Property or any portion thereof, the Improvements or any property
formerly owned, occupied or leased by CB&T or the Bank has been subject to
investigation by any governmental authority evaluating the need to investigate
or undertake Remedial Action (as defined below) at such property, and (iii) none
of the Real Property, the Improvements or any property formerly owned, occupied
or leased by CB&T or the Bank, or, to the knowledge of CB&T or the Bank, any
site or location where CB&T or the Bank sent waste of any kind, is identified on
the current or proposed (A) National Priorities List under 00 X.X.X. 000
00
Xxxxxxxx X, (X) Comprehensive Environmental Response Compensation and Liability
Inventory System list, or (C) any list arising from any statute analogous to
CERCLA. As used herein, "Remedial Action" shall mean any action required to (i)
clean up, remove or treat Hazardous Materials, (ii) prevent a release or threat
of release of any Hazardous Material, (iii) perform preremedial studies,
investigations or post-remedial monitoring and care, (iv) cure a violation of
Environmental Law or (v) take corrective action under sections 3004(u), 3004(v)
or 3008(h) of RCRA or analogous state law.
(d) Except as set forth on Schedule 3.11 hereto, there have been and are no
(i) aboveground or underground storage tanks, subsurface disposal systems, or
wastes, drums or containers disposed of or buried on, in or under the ground or
any surface waters, (ii) asbestos or asbestos containing materials or radon gas,
(iii) polychlorinated biphenyls ("PCB") or PCB containing equipment, including
transformers, or (iv) wetlands (as defined under any Environmental Law) located
within any portion of the Real Property, nor have any liens been placed upon any
portion of the Real Property, the Improvements or any property formerly owned,
occupied or leased by CB&T or the Bank in connection with any actual or alleged
liability under any Environmental Law.
(e) Except as set forth on Schedule 3.11 hereto, (i) there is no pending or
threatened claim, litigation, or administrative proceeding, or known prior
claim, litigation or administrative proceeding, arising under any Environmental
Law involving any of CB&T or the Bank, the Real Property, the Improvements, any
property formerly owned, leased or occupied by CB&T or the Bank, any offsite
contamination affecting the business of CB&T or the Bank or any operations
conducted at the Real Property, (ii) there are no ongoing negotiations with or
agreements with any governmental authority relating to any Remedial Action or
other environmentally related claim, (iii) CB&T or the Bank has not submitted
notice pursuant to Section 103 of CERCLA or analogous statute or notice under
any other applicable Environmental Law reporting a release of a Hazardous
Material into the environment, and (iv) neither CB&T nor the Bank has received
any notice, claim, demand, suit or request for information from any governmental
or private entity with respect to any liability or alleged liability under any
Environmental Law, nor to knowledge of CB&T or the Bank, has any other entity
whose liability therefor, in whole or in part, may be attributed to CB&T or the
Bank, received such notice, claim, demand, suit or request for information.
(f) CB&T and the Bank have provided to Citizens all environmental studies
and reports obtained by it or known to it pertaining to the Real Property, the
Improvements, CB&T or the Bank and any property formerly owned, occupied or
leased by CB&T or the Bank, and have permitted (or will have permitted as of the
Closing Date), the testing of the soil, groundwater, building components, tanks,
containers and equipment on the Real Property, the Improvements, and any
property formerly owned, occupied or leased by CB&T or the Bank, by Citizens or
Citizens's agents or experts as they have or shall have deemed necessary or
appropriate to confirm the condition of such properties.
Section 3.12 Reports.
CB&T and the Bank have each timely filed all reports required to be filed
with banking authorities (all such reports are collectively referred to herein
as the "Bank Reports"). As of their
12
respective dates, CB&T and the Bank Reports filed prior to the date hereof
complied with all the statutes, rules and regulations enforced or promulgated by
banking authorities with which they were filed and did not contain any untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances which they were made, not misleading.
Section 3.13 Loan Files.
All loans by the Bank were made for good, valuable and adequate
consideration in the normal and ordinary course of business. Each loan reflected
as an asset of the Bank in the Bank Financial Statements as of December 31,
2001, or acquired since that date, is the legal, valid and binding obligation of
the obligor named therein, enforceable in accordance with its terms, and no loan
is subject to any asserted defense, offset or counterclaim known to CB&T or the
Bank, except as set forth on Schedule 3.13. The Bank has possession of all loan
document files and credit files for all loans made by the Bank and such files
contain, promissory notes and other relevant evidences of indebtedness with
original signatures of their borrowers and guarantors.
Section 3.14 Insurance.
All properties and assets of CB&T and the Bank which are of an insurable
character are insured against loss or damage by fire and other risks to the
extent and in the manner reasonable in light of the risks attendant to the
businesses and activities in which CB&T and the Bank are engaged and customary
for companies engaged in similar businesses or owning similar assets. Set forth
on Schedule 3.14. hereto is a list and brief description (including the name of
the insurer, policy number, the type of coverage provided, the amount of the
annual premium for the current policy period, the amount of remaining coverage
and deductibles and the coverage period) of all policies for such insurance, and
CB&T and the Bank have made or will make available to Citizens true and complete
copies of all such policies. All such policies are in full force and effect
sufficient for all applicable requirements of law. No notice of cancellation or
non-renewal with respect to, or disallowance of any claim under, any such policy
has been received by CB&T or the Bank.
Section 3.15 Contracts; etc.
As used in this Agreement, the term "Bank Agreements" shall mean all
mortgages, letters of credit, loan commitments, indenture notes, agreements,
contracts, leases, licenses, franchises, obligations, instruments or other
commitments, arrangements or understandings of any kind, whether written or
oral, binding or non-binding, (including all leases and other agreements
referred to on Schedule 3.10 hereto) to which CB&T or the Bank is a party or by
which CB&T or the Bank or any of their assets or properties (including the Real
Property and the Improvements) may be bound or affected, including all
amendments, modifications, extensions or renewals of any of the foregoing. Set
forth on Schedule 3.15 hereto is a complete and accurate list of each Bank
Agreement having a value in excess of $25,000. True and complete copies of all
written Bank Agreements referred to on Schedule 3.15, and Schedule 3.10 hereto,
have been delivered or made available to Citizens, and CB&T and the Bank has
provided Citizens with accurate and complete written summaries of all such Bank
Agreements which are unwritten. Except as set forth on Schedule 3.15, neither
CB&T nor the Bank are, nor, to the knowledge of CB&T or the Bank is, any other
party thereto, in breach of or
13
default under any Bank Agreement, and no event has occurred which (after notice
or lapse of time or both) would become a breach or default under, or would
permit modification, cancellation, acceleration or termination of, any Bank
Agreement or result in the creation of any Lien upon, or any Person obtaining
any right to acquire, any properties, assets or rights of CB&T or the Bank.
There are no material unresolved disputes involving CB&T or the Bank under any
Bank Agreement.
Section 3.16 Labor Relations.
(a) Each of CB&T and the Bank has paid or made provision for the payment of
all salaries and accrued wages and has complied in all material respects with
all applicable laws, rules and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining and the payment
and withholding of taxes, and has withheld and paid to the appropriate
governmental authority, or is holding for payment not yet due to such authority,
all amounts required by law or agreement to be withheld from the wages or
salaries of its employees.
(b) Except as described in Section 3.18(a) and as set forth on Schedule
3.16(b) hereto, neither CB&T nor the Bank is a party to any (i) outstanding
employment agreements or contracts with officers or employees that are not
terminable at will, or that provide for payment of any bonus or commission, (ii)
agreement, policy or practice that requires it to pay termination or severance
pay to salaried, non-exempt or hourly employees (other than as required by law),
(iii) collective bargaining agreement or other labor union contract applicable
to persons employed by CB&T or the Bank, nor does CB&T or the Bank know of any
activities or proceedings of any labor union to organize any such employees.
CB&T and the Bank have furnished or made available to Citizens complete and
correct copies of all such agreements ("Employment and Labor Agreements").
Neither CB&T nor the Bank has breached or otherwise failed to comply with any
provisions of any Employment or Labor Agreement.
(c) Except as set forth in Schedule 3.16(c) hereto, (i) there is no unfair
labor practice charge or complaint pending before the National Labor Relations
Board ("NLRB"), (ii) there is no labor strike, material slowdown or material
work stoppage or lockout actually pending or, to CB&T's or the Bank's knowledge,
threatened, against or affecting CB&T or the Bank, and neither CB&T nor the Bank
have experienced any strike, material slow down or material work stoppage,
lockout or other collective labor action by or with respect to employees of CB&T
or the Bank, (iii) there is no representation claim or petition pending before
the NLRB or any similar foreign agency and no question concerning representation
exists relating to the employees of CB&T or the Bank, (iv) there are no charges
with respect to or relating to CB&T or the Bank pending before the Equal
Employment Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment-practices, (v) neither
CB&T nor the Bank have received formal notice from any federal, state, local or
foreign agency responsible for the enforcement of labor or employment laws of an
intention to conduct an investigation of CB&T or the Bank and, to the knowledge
of CB&T and the Bank, no such investigation is in progress and (vi) the consents
of the unions that are parties to any Employment and Labor Agreements are not
required to complete the transactions contemplated by this Plan of Share
Exchange and the Documents.
14
Section 3.17 Employee Benefit Plans.
(a) Set forth on Schedule 3.17 hereto is a true and complete list of:
(i) each employee pension benefit plan, as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974 as amended and the
regulations promulgated hereunder (collectively, "ERISA"), maintained by
CB&T or the Bank or to which CB&T or the Bank is required to make
contributions ("Pension Benefit Plan"); and
(ii) each employee welfare benefit plan, as defined in Section 3(i) of
ERISA, maintained by CB&T or the Bank or to which CB&T or the Bank is
required to make contributions ("Welfare Benefit Plan").
True and complete copies of all Pension Benefit Plans and Welfare Benefit
Plans (collectively, "ERISA Plans") have been delivered to or made available to
Citizens together with, as applicable with respect to each such ERISA Plan,
trust agreements, summary plan descriptions, insurance policies or arrangements,
forms of ((the Consolidated Omnibus Budget Reconciliation Act of 1985, and the
regulations promulgated thereunder (collectively, "COBRA") and the Health
Insurance Portability and Accountability Act of 1996, as amended, and the
regulations promulgated thereunder (collectively, "HIPAA")) notices and
confirmation that such notices have been properly delivered to Qualified
Beneficiaries upon a qualifying event, all IRS determination letters or
applications therefor with respect to any Pension Benefit Plan intended to be
qualified pursuant to Section 401 (a) of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (collectively, the "Code"),
and valuation or actuarial reports, accountant's opinions, financial statements,
IRS Form 5500s (or 5500-C or 5500-R), IRS and Department of Labor ("DOL")
notices, letters and submissions and summary annual reports for the last three
years.
(b) With respect to the ERISA Plans, except as set forth on Schedule 3.17:
(i) there is no ERISA Plan which is a "multi-employer" plan as that
term is defined in Section 3(37) of ERISA ("Multiemployer Plan");
(ii) no event has occurred or (to the knowledge of CB&T or the Bank)
is threatened or about to occur which would constitute a prohibited
transaction under Section 406 of ERISA or under Section 4975 of the Code;
(iii) each ERISA Plan has operated since its inception in accordance
with the reporting and disclosure requirements imposed by the ERISA and the
Code and has timely filed Form 5500 (or 5500-C or 5500-R) and predecessors
thereof; and
(iv) no ERISA Plan is liable for any federal, state, local or foreign
Taxes.
(c) Each Pension Benefit Plan intended to be qualified under Section 401(a)
of the Code:
15
(i) has been qualified, from its inception, under Section 401(a) of
the Code, and the trust established thereunder has been exempt from
taxation under Section 501(a) of the Code and is currently in compliance
with applicable federal laws;
(ii) has been operated, since its inception, in accordance with its
terms and there exists no fact which would adversely affect its qualified
status; and
(iii) is not currently under investigation, audit or review by the DOL
or IRS or (to the knowledge of CB&T or the Bank) no such action is
contemplated or under consideration and the IRS has not asserted that any
Pension Benefit Plan is not qualified under Section 401(a) of the Code or
that any trust established under a Pension Benefit Plan is not exempt under
Section 501(a) of the Code.
(d) With respect to each Pension Benefit Plan which is a defined benefit
plan under Section 414(j) and, for the purpose solely of Section 2.17(d)(iv)
hereof, each defined contribution plan under Section 414(i) of the Code:
(i) no liability to the Pension Benefit Guaranty Corporation ("PBGC")
under Sections 4062-4064 of ERISA has been incurred by CB&T or the Bank
since the effective date of ERISA and all premiums due and owing to the
PBGC have been timely paid;
(ii) the PBGC has not notified CB&T or the Bank or any Pension Benefit
Plan of the commencement of proceedings under Section 4042 of ERISA to
terminate any such plan;
(iii) no event has occurred since the inception of any Pension Benefit
Plan or (to the knowledge of CB&T or the Bank) is threatened or about to
occur which would constitute a reportable event within the meaning of
Section 4043(b) of ERISA;
(iv) no Pension Benefit Plan ever has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and Section 412 of
the Code); and
(v) if any of such Pension Benefit Plans were to be terminated on the
Closing Date (A) no liability under Title IV of ERISA would be incurred by
CB&T or the Bank and (B) all benefits accrued to the day prior to the
Closing Date (whether or not vested) would be fully funded in accordance
with the actuarial assumptions and method utilized by such plan for
valuation purposes.
(e) With respect to each Pension Benefit Plan, Schedule 3.17 contains a
list of all Pension Benefit Plans to which ERISA has applied which have been or
are being terminated, or for which a termination is contemplated, and a
description of the actions taken by the PBGC and the IRS with respect thereto.
(f) The approximate aggregate of the amounts of contributions by CB&T and
the Bank to be paid or accrued under ERISA Plans for the current fiscal year is
set forth on Schedule 3.17 (the "Aggregate ERISA Contributions"), and the
Aggregate ERISA Contributions are not expected to
16
exceed the total amount set forth on Schedule 3.17. To the extent required in
accordance with GAAP, the Bank Balance Sheet reflects in the aggregate an
accrual of all amounts of employer contributions accrued but unpaid by CB&T and
the Bank under the ERISA Plans as of the date of the Bank Balance Sheet.
(g) With respect to any Multiemployer Plan (1) neither CB&T nor the Bank
has, since its formation, made or suffered a "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (2) there is no withdrawal liability of CB&T or the Bank under any
Multiemployer Plan, computed as if a "complete withdrawal" by CB&T or the Bank
had occurred under each such Plan as of December 31, 1996; and (3) neither CB&T
nor the Bank have received notice to the effect that any Multiemployer Plan is
either in reorganization (as defined in Section 4241 of ERISA) or insolvent (as
defined in Section 4245 of ERISA).
(h) With respect to the Welfare Benefit Plans:
(i) there are no liabilities of CB&T or the Bank under Welfare Benefit
Plans with respect to any condition which relates to a claim filed on or
before the Closing Date;
(ii) no claims for benefits are in dispute or litigation;
(iii) each Welfare Benefit Plan has been operated in compliance with
HIPAA, COBRA and other applicable laws; and
(iv) on Schedule 3.17, CB&T and Bank will provide a list of all COBRA
beneficiaries to Citizens.
Section 3.18 Other Benefit and Compensation Plans or Arrangements.
(a) Set forth on Schedule 3.18(a) hereto is a true and complete list of:
(i) each employee stock purchase, employee stock option, employee
stock ownership, deferred compensation, performance, bonus, incentive,
vacation pay, holiday pay, insurance, severance, retirement, excess
benefit, fringe benefit or other plan, trust, policy or arrangement which
is not an ERISA Plan whether written or oral, which CB&T or the Bank
maintains or is required to make contributions to;
(ii) each other agreement, arrangement, commitment and understanding
of any kind, whether written or oral, with any current or former officer,
director or consultant of CB&T or the Bank pursuant to which payments may
be required to be made at any time following the date hereof (including,
without limitation, any employment, deferred compensation, severance,
supplemental pension, termination or consulting agreement or arrangement);
and
(iii) each employee of CB&T or the Bank whose aggregate compensation
for the fiscal year ended December 31, 2000 exceeded, and whose aggregate
compensation for the fiscal year
17
ended December 31, 2001 is likely to exceed, $15,000. True and complete
copies of all of the written plans, arrangements and agreements referred to
on Schedule 3.18(a) ("Compensation Commitments") have been provided to
Citizens together with, where prepared by or for CB&T or the Bank, any
valuation, actuarial or accountant's opinion or other financial reports
with respect to each Compensation Commitment for the last three years. An
accurate and complete written summary has been provided to Citizens with
respect to any Compensation Commitment which is unwritten.
(b) Each Compensation Commitment:
(i) since its inception, has been operated in all material respects in
accordance with its terms;
(ii) is not currently under investigation, audit or review by the IRS
or any other federal or state agency and (to the knowledge of CB&T and the
Bank) no such action is contemplated or under consideration;
(iii) has no liability for any federal, state, local or foreign Taxes;
(iv) has no claims subject to dispute or litigation;
(v) has met all applicable requirements, if any, of the Code and other
applicable laws; and
(vi) has operated since its inception in material compliance with the
reporting and disclosure requirements imposed by the ERISA and the Code.
Section 3.19 Transactions with Insiders.
Set forth on Schedule 3.19 hereto is a complete and accurate description of
all transactions between CB&T or the Bank or any ERISA Plan, on the one hand,
and any Insider, on the other hand, that have occurred since January 1, 2001.
For purposes of this Agreement:
(i) the term "Insider" shall mean a 10% stockholder, any director or
officer of CB&T or the Bank, and any Affiliate, Associate or Relative of
any of the foregoing persons;
(ii) the term "Associate" used to indicate a relationship with any
person means (A) any corporation, partnership, joint venture or other
entity of which such person is an officer or partner or is, directly or
indirectly, through one or more intermediaries, the beneficial owner of 10%
or more of (1) any class or type of equity securities or other profits
interest or (2) the combined voting power of interests ordinarily entitled
to vote for management or otherwise, and (B) any trust or other estate in
which such person has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary capacity; and
(iii) a "Relative" of a person shall mean such person's spouse, such
person's parents, sisters, brothers, children and the spouses of the
foregoing, and any member of the immediate household of such person.
18
Section 3.20 Propriety of Past Payments.
No funds or assets of CB&T or the Bank have been used for illegal purposes;
no funds or assets of CB&T or the Bank not recorded in the Bank Financial
Statements have been established for any purpose; no accumulation or use of CB&T
or the Bank's corporate funds or assets has been made without being properly
accounted for in the respective books and records of CB&T or the Bank; all
payments by or on behalf of CB&T and the Bank have been duly and properly
recorded and accounted for in their respective books and records; no false or
artificial entry has been made in the books and records of CB&T or the Bank for
any reason; no payment has been made by or on behalf of CB&T or the Bank with
the understanding that any part of such payment is to be used for any purpose
other than that described in the documents supporting such payment; and neither
CB&T nor the Bank has made, directly or indirectly, any illegal contributions to
any political party or candidate, either domestic or foreign. Neither the IRS
nor any other federal, state, local or foreign government agency or entity has
initiated or threatened any investigation of any payment made by CB&T or the
Bank of, or alleged to be of, the type described in this Section 3.20.
Section 3.21 Brokers.
Neither CB&T or the Bank, nor any director, officer or employee thereof,
nor its Board of Directors or any representative of its Board of Directors, has
employed any broker or finder or has incurred or will incur any broker's,
finder's or similar fees, commissions or expenses, in each case in connection
with the transactions contemplated by this Agreement.
Section 3.22 Allowance for Loan Losses.
Except as provided in Schedule 3.22 (which shall be updated as of Closing
based on a final review of the Bank loans by Citizens using the same method of
calculating loan losses as previously disclosed by Citizens to Bank), allowances
for possible loan losses shown on the Bank Financial Statements as of December
31, 2001 are adequate and shall be adequate as of the Closing Date and in
determining CB&T's Stockholders' Equity in all material respects under the
requirements of GAAP to provide for possible losses, net of recoveries relating
to loans previously charged off, on loans outstanding (including accrued
interest receivable), and each such allowance has been established in accordance
with GAAP.
Section 3.23 Minutes.
Prior to the date hereof, CB&T has made available to Citizens the minutes
of meetings of CB&T's and the Bank's Board of Directors and all committees
thereof held during the period beginning January 1, 1999 and prior to the date
hereof, which minutes are complete and correct in all material respects and
fairly present the actions of such Boards and committees and accurately reflect
in all material respects the business condition and operations of CB&T and the
Bank as of the dates and for the periods indicated therein.
19
Section 3.24 Disclosure.
Neither CB&T or the Bank nor its Board of Directors have made any material
misrepresentation to Citizens relating to CB&T or the Bank or the Shares and
neither CB&T or the Bank nor its Board of Directors have omitted to state to
Citizens any material fact relating to CB&T or the Bank or the Shares which is
necessary in order to make the information given by or on behalf of CB&T and the
Bank or its Board of Directors to Citizens not misleading or which if disclosed
would reasonably affect the decision of a person considering an acquisition of
the Shares. No fact, event, condition or contingency exists or has occurred
which has, or in the future can reasonably be expected to have, a Material
Adverse Effect, which has not been disclosed in the Bank Financial Statements or
the schedules to this Agreement. No representation or warranty contained in this
Plan of Share Exchange or in the Schedules to this Plan of Share Exchange or in
any updates or revisions to the schedules to this Plan of Share Exchange (i)
contains or at the Closing will contain any untrue statement of a material fact
or (ii) omits or at the Closing will omit to state a material fact necessary to
make the statements herein or therein, as the case may be, in light of the
circumstances under which such statements were or will be made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CITIZENS
Citizens hereby represents and warrants to CB&T as follows:
Section 4.1 Incorporation of Citizens.
Citizens is a banking corporation duly organized, validly existing and in
good standing under the laws of the state of Mississippi and is qualified to do
business in all states where the nature of its business requires it to be so
qualified.
Section 4.2 Power; Authorization; Consents.
Citizens has the corporate power and authority to enter into this Plan of
Share Exchange and to perform its obligations hereunder. The execution, delivery
and performance of this Plan of Share Exchange and the consummation of the
transactions contemplated hereby have been duly authorized and approved by the
Board of Directors of Citizens, and no other corporate proceedings on the part
of Citizens are necessary to authorize and approve this Plan of Share Exchange
and the transactions contemplated hereby. This Plan of Share Exchange has been
duly executed and delivered by, and, subject to receipt of all required
regulatory approvals, constitutes the valid and binding obligation of Citizens,
enforceable against Citizens in accordance with its terms. Except as set forth
on Schedule 4.2, the execution, delivery and performance by Citizens of this
Plan of Share Exchange and the Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby do not and will
not:
(i) contravene any provisions of the Certificate of Incorporation or
By-Laws (including any comparable governing instrument with a different
name) of Citizens;
20
(ii) (after notice or lapse of time or both) conflict with, result in
a breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination
or acceleration in respect of, any Bank Agreement (as defined in Section
3.15 hereof, except regarding Citizens) or, except as set forth on Schedule
4.2 hereto, require any consent or waiver of any party to any Bank
Agreement;
(iii) result in the creation of any Security Interest upon, or any
person obtaining any right to acquire, any properties, assets or rights of
Citizens (other than the rights of Citizens to acquire the Shares pursuant
to this Agreement);
(iv) violate or conflict with any Legal Requirements (as defined in
Section 3.9. hereof) applicable to Citizens or any of its business or
properties; or
(v) require any authorization, consent, order, permit or approval of,
or notice to, or filing, registration or qualification with, any
governmental, administrative or judicial authority, except in connection
with approval by bank regulatory agencies.
Except as set forth or referred to above, no authorization, consent, order,
permit or approval of, or notice to, or filing, registration or qualification
with, any governmental administrative or judicial authority is necessary to be
obtained or made by Citizens to enable Citizens to continue to conduct its
business and operations and use its properties after the Closing in a manner
which is in all material respects consistent with that in which it is presently
conducted.
Section 4.3 Brokers.
Neither Citizens, nor any director, officer or employee of Citizens, has
employed any broker or finder or has incurred or will incur any broker's,
finder's or similar fees, commissions or expenses, in each case in connection
with the transactions contemplated by this Agreement.
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Section 4.4 Financial Statements.
Except as otherwise indicated in Schedule 4.4, Citizens has delivered to
the Bank true and complete copies of the financial balance sheet of Citizens as
of December 31, 2001 (the "Citizens Balance Sheet"), and the related
consolidated statements of income, stockholders' equity and cash flow for the
fiscal year ended December 31, 2001, together with the notes thereto (all the
foregoing financial statements, including the notes thereto, being referred to
herein collectively as the "Citizens Financial Statements"). The Citizens
Financial Statements are in accordance with the books and records of Citizens,
fairly present the consolidated financial position, results of operations,
stockholders' equity and changes in financial position of Citizens as of the
dates and for the periods indicated in conformity with GAAP consistently applied
(except as otherwise indicated in such statements or as required by bank
regulators) during such periods, and can be legitimately reconciled with the
financial statements and the financial records maintained and the accounting
methods applied by Citizens for federal income tax purposes, and the unaudited
financial statements included in Citizens Financial Statements indicate all
adjustments, which consist of only normal recurring accruals, necessary for such
fair presentations. The statements of income included in the Citizens Financial
Statements do not contain any items of special or nonrecurring income except as
expressly specified therein, and the balance sheets included in the Citizens
Financial Statements do not reflect any write-up or revaluation increasing the
book value of any assets. The books and accounts of Citizens are complete and
correct in all material respects and fairly reflect all of the transactions,
items of income and expense and all assets and liabilities of the businesses of
Citizens consistent with prior practices of Citizens.
ARTICLE 5
COVENANTS AND ADDITIONAL AGREEMENTS
Section 5.1 Access; Confidentiality.
Between the date hereof and the Closing Date, CB&T and the Bank will (i)
provide to the officers and other authorized representatives of Citizens full
access, during normal business hours, to any and all premises, properties,
files, books, records, documents, and other information of CB&T and the Bank and
will cause their officers to furnish to Citizens and their authorized
representatives any and all financial, technical and operating data and other
information pertaining to the businesses and properties of CB&T and the Bank,
and (ii) make available for inspection and copying by Citizens true and complete
copies of any documents relating to the foregoing. Citizens will hold in
confidence (unless and to the extent compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other requirements
of law) all Confidential Information (as defined below) and will not disclose
the same to any third party except in connection with obtaining financing and
otherwise as may reasonably be necessary to carry out this Plan of Share
Exchange and the transactions contemplated hereby, including any due diligence
review by or on behalf of Citizens. If this Plan of Share Exchange is
terminated, Citizens will promptly return to CB&T and the Bank, upon the
reasonable request of CB&T and the Bank, all Confidential Information furnished
by CB&T and the Bank and held by Citizens, including all copies and summaries
thereof. As used herein, "Confidential Information" shall mean all information
concerning CB&T and the Bank
22
obtained by Citizens from CB&T and the Bank in connection with the transactions
contemplated by this Agreement, except information (x) ascertainable or obtained
from public information, (y) received from a third party not employed by or
otherwise affiliated with CB&T and the Bank or (z) which is or becomes known to
the public, other than through a breach by Citizens of this Agreement.
Section 5.2 Furnishing Information; Announcements.
CB&T and the Bank, on the one hand, and Citizens on the other hand, will,
as soon as practicable after reasonable request therefor, furnish to the other
all the information concerning CB&T and the Bank or Citizens, respectively,
required for inclusion in any statement or application made by Citizens or CB&T
or the Bank to any governmental or regulatory body or in connection with
obtaining any third party consent in connection with the transactions
contemplated by this Agreement. Neither CB&T and the Bank, on the one hand, nor
Citizens, on the other hand, or any representative thereof, shall issue any
press releases or otherwise make any public statement with respect to the
transactions contemplated hereby without the prior consent of the other, except
as may be required by law.
Section 5.3 Government and Third-Party Approval.
The parties shall use their best efforts to obtain all governmental and
other third-party approvals, authorizations and consents that may be necessary
or reasonably required of them in order to effect the transactions contemplated
of this Agreement. Citizens shall be responsible for obtaining bank regulatory
approval for the acquisition of the Shares.
Section 5.4 Certain Changes and Conduct of Business.
(a) From and after the date of this Plan of Share Exchange and until the
Closing Date, CB&T and the Bank shall, and their respective Boards of Directors
shall cause CB&T and the Bank to, conduct their business solely in the ordinary
course consistent with past practices, and, without the prior written consent of
Citizens, neither CB&T and the Bank nor their respective Boards of Directors
will, except as required or permitted pursuant to the terms hereof, permit CB&T
or the Bank to:
(i) make any material change in the conduct of its business and
operations or enter into any transaction other than in the ordinary course
of business consistent with past practices;
(ii) make any change in its Certificate of Incorporation or By-laws,
issue any additional shares of capital stock or equity securities or grant
any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable for its
capital stock or alter any material term of any of its outstanding
securities or make any change in its outstanding shares of capital stock or
other ownership interests or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, stock dividend or otherwise;
23
(iii) (A) incur, assume or guarantee any indebtedness for borrowed
money, issue any notes, bonds, debentures or other corporate securities or
grant any option, warrant or right to purchase any thereof, except pursuant
to transactions in the ordinary course of business consistent with past
practices, (B) issue any securities convertible or exchangeable for debt
securities of CB&T or the Bank, or (C) issue any options or other rights to
acquire from CB&T or the Bank, directly or indirectly, debt securities of
CB&T or the Bank or any security convertible into or exchangeable for such
debt securities;
(iv) make any sale, assignment, transfer, abandonment or other
conveyance of any of its assets or any part thereof, except transactions
pursuant to this Plan of Share Exchange or existing contracts set forth in
Schedule 3.16, hereto and dispositions of inventory or of worn out or
obsolete equipment for fair or reasonable value and the continuation of
loan participations in the ordinary course of business consistent with past
practices;
(v) subject any of its assets, or any part thereof, to any lien or
suffer such to be imposed other than such liens as may arise in the
ordinary course of business consistent with past practices by operation of
law which will not have, or cannot reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(vi) declare, set aside or pay any dividends or other distribution
(whether in cash, stock, property or any combination thereof) in respect of
any shares of its capital stock;
(vii) acquire any assets, raw materials or properties, or enter into
any other transaction, other than in the ordinary course of business
consistent with past practices;
(viii) enter into any new (or amend any existing) employee benefit
plan, program or arrangement or any new (or amend any existing) employment,
severance or consulting agreement, grant any general increase in the
compensation of officers or employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment) or grant
any increase in the compensation payable or to become payable to any
employee, except in accordance with pre-existing contractual provisions or
consistent with past practices;
(ix) except transactions made to comply with this Agreement, make or
commit to make any individual material capital expenditure in excess of
$25,000, or aggregate capital expenditures in excess of $100,000;
(x) pay, loan or advance any amount to, or sell, transfer or lease any
properties or assets to, or enter into any agreement or arrangement with,
any of its Affiliates;
(xi) guarantee any indebtedness for borrowed money or any other
obligation of any other person, other than in the ordinary course of
business consistent with past practices;
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(xii) fail to keep in full force and effect insurance comparable in
amount and scope to coverage maintained by CB&T or the Bank (or on behalf
of CB&T or the Bank) on the date hereof;
(xiii) make any advance or capital contribution to or investment in
any person;
(xiv) make any change in any method of accounting or accounting
principle, method, estimate or practice except for any such change required
by reason of a concurrent change in GAAP or write-down the value of any
inventory or write-off as uncollectible any accounts receivable except in
the ordinary course of business consistent with past practices;
(xv) settle, release or forgive any material claim or litigation or
waive any material right;
(xvi) make, enter into, modify, amend in any material respect or
terminate any material commitment, bid or expenditure, other than in the
ordinary course of business consistent with past practices;
(xvii) take any other action that would cause any of the
representations and warranties made by CB&T or the Bank in this Plan of
Share Exchange not to remain true and correct; or
(xviii) commit itself to do any of the foregoing.
(b) From and after the date hereof and until the Closing Date, CB&T and the
Bank will, and their respective Boards of Directors will cause CB&T and the Bank
to, use its best efforts to:
(i) continue to maintain, in all material respects, its properties in
accordance with present practices in a condition suitable for their current
use;
(ii) comply with all applicable Environmental Laws, and, in the event
CB&T or the Bank shall receive notice that there exists a violation of any
Environmental Law with respect to its operations or any Real Property,
promptly (and in any event within the time period permitted by the
applicable governmental authority) remove or remedy such violation in
accordance with all applicable Environmental Laws;
(iii) file, when due or required, federal, state, foreign and other
tax returns and other reports required to be filed and pay when due all
taxes, assessments, fees and other charges lawfully levied or assessed
against CB&T or the Bank unless the validity thereof is contested in good
faith and by appropriate proceedings diligently conducted;
(iv) keep its books of account, records and files in the ordinary
course and in accordance with existing practices;
(v) preserve its business organization intact and continue to maintain
existing business relationships with suppliers, customers and others with
whom business relationships exist other than relationships that are, at the
same time, not economically beneficial to it; and
25
(vi) continue to conduct their business in the ordinary course
consistent with past practices.
Section 5.5 No InterBank Payables or Receivables.
Except as disclosed on Schedule 5.5, at the Closing there will be no
interbank payables or interbank receivables due and/or owing between the Bank or
CB&T stockholders and their Affiliates (other than CB&T and the Bank) on the one
hand, and CB&T or the Bank, on the other hand.
Section 5.6 Negotiations.
Until the termination of this Plan of Share Exchange pursuant to clause
(ii) of Section 8.1 hereof, neither CB&T or the Bank, nor its officers,
directors, employees, advisors, agents, representatives, Affiliates or anyone
acting on behalf of CB&T or the Bank or such persons, shall, directly or
indirectly, encourage, solicit, initiate or engage in discussions or
negotiations with, or provide any information to, any person (other than
Citizens or its representatives) concerning any merger, sale of assets (other
than in the ordinary course of business), consolidations, share exchange,
business combination, purchase or sale of shares of capital stock or similar
transaction involving CB&T or the Bank, except as contemplated by this
Agreement. CB&T or the Bank shall promptly communicate to Citizens any inquiries
or communications concerning any such transaction (including the identity of any
person making such inquiry or communication) which CB&T or the Bank may receive
or of which CB&T or the Bank may become aware.
Section 5.7 Consents; Cooperation.
Subject to the terms and conditions hereof, CB&T and the Bank and Citizens
will use their respective best efforts at their own expense:
(i) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all waivers, permits, licenses, approvals,
authorizations, qualifications, orders and consents of shareholders, as
applicable, and all third parties and governmental authorities, and make
all filings and registrations with governmental authorities which are
required on their respective parts for (A) the consummation of the
transactions contemplated by this Agreement, (B) the ownership or leasing
and operating after the Closing by CB&T and the Bank of all their material
properties and (C) the conduct after the Closing by CB&T and the Bank of
its business as conducted by them on the date hereof;
(ii) to defend, consistent with applicable principles and requirements
of law, any lawsuit or other legal proceedings, whether judicial or
administrative, whether brought derivatively or on behalf of third persons
(including governmental authorities) challenging this Plan of Share
Exchange or the transactions contemplated hereby and thereby; and
(iii) to furnish each other such information and assistance as may
reasonably be requested in connection with the foregoing.
26
Section 5.8 Additional Agreements.
Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use its best efforts at its own expense to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. In case at any time
after the Closing any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers of Citizens, CB&T and the Bank
shall take all such necessary action.
Section 5.9 Interim Financial Statements.
Within five (5) days after the end of each calendar month after the date of
this Agreement, CB&T and the Bank will deliver to Citizens unaudited
consolidated balance sheets of the delivering entity as at the end of such
calendar month and at the end of the corresponding calendar month of the
preceding fiscal year, together with the related unaudited consolidated
statements of income for the fiscal months then ended. All such financial
statements shall fairly present the financial position, results of operations
and cash flow of CB&T and the Bank as at the date or for the periods indicated.
All unaudited financial statements delivered pursuant to this Section 5.9 shall
be prepared on a basis consistent with the Bank Financial Statements.
Section 5.10 Notification of Certain Matters.
Between the date hereof and the Closing, each party to this Plan of Share
Exchange will give prompt notice in writing to the other party hereto of: (i)
any information that indicates that any representation and warranty of such
party contained herein was not true and correct as of the date hereof or will
not be true and correct as of the Closing, (ii) the occurrence of any event
which could result in the failure to satisfy a condition specified in Article 6
or Article 7 hereof, as applicable, (iii) any notice or other communication from
any third person alleging that the consent of such third person is or may be
required in connection with the transactions contemplated by this Agreement, and
(iv) in the case of CB&T and the Bank, any notice of, or other communication
relating to, any default or event which, with notice or lapse of time or both,
would become a default under any Bank agreement. Each party hereto will promptly
advise the other party hereto of any event that has, or could in the future
have, a Material Adverse Effect on the financial condition of such party. Bank
and Citizens will confer on a regular and frequent basis with one or more
designated representatives of the other party to report operational matters and
to report the general status of ongoing operations, and notify the other party
of any emergency or other change in the normal course of business or in the
operation of the properties of such party and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) or ad judicatory proceedings involving any property of such party
and will keep the other party fully informed of such events and permit the other
party's representatives access to all materials prepared in connection
therewith.
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Section 5.11 Employee Benefit Plans.
(a) As soon as practical after execution of this Agreement, CB&T and Bank
shall make all filings, provide all notices, take all actions and receive all
approvals necessary and appropriate to allow termination of all ERISA Plans and
Compensation Commitments effective immediately preceding the Closing. As each of
those procedures are accomplished, CB&T and Bank shall provide copies of all
documents to Citizens. If, as of the effective Date, all assets from the
terminated ERISA Plans have not yet been distributed, the Retirement Committee,
as defined in the Citizens Bank & Trust Company Employee Stock Ownership Plan
and Trust Agreement ("CB&T ESOP") shall complete the liquidation process for the
Citizens ESOP and the Citizens Bank & Trust Company Employees Retirement Plan
("CB&T Pension Plan"). Prior to and effective as of the Effective Date, CB&T and
Bank shall appoint the Retirement Committee as the Plan Administrator of the
CB&T ESOP and the CB&T Pension Plan and shall authorize the Retirement Committee
to execute all documents necessary to complete the liquidation process,
including execution of the annual returns. The Retirement Committee shall
provide copies of all documentation and filings to Citizen's counsel.
(b) As of the Closing, CB&T and Bank shall have paid all liabilities
reflected on their financial statements, and such liabilities that cannot be
paid prior to Closing with respect to all ERISA Plans and Compensation
Commitments and shall through retainers or otherwise pay in advance the costs
associated with completing the liquidation and termination of all ERISA Plans
and Compensation Commitments.
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS
OF CITIZENS TO EFFECT THE CLOSING
The obligations of Citizens required to be performed by it at the Closing
shall be subject to the satisfaction, at or prior to the Closing, of each of the
following conditions, each of which may be waived by Citizens as provided herein
except as otherwise required by applicable law:
Section 6.1 Representations and Warranties; Agreements; Covenants.
Each of the representations and warranties of CB&T and the Bank contained
in this Plan of Share Exchange shall be true and correct as of the date hereof
and (having been deemed to have been made again at and as of the Closing) shall
be true and correct as of the Closing. Each of the obligations of CB&T and the
Bank required by this Plan of Share Exchange to be performed by them at or prior
to the Closing shall have been duly performed and complied with in all respects
as of the Closing. At the Closing, Citizens shall have received a certificate,
dated the Closing Date and duly executed by an authorized officer of CB&T and
the Bank to the effect that the conditions set forth in the two preceding
sentences have been satisfied.
28
Section 6.2 Authorization; Consents.
(a) All corporate action necessary to authorize the execution, delivery and
performance of this Plan of Share Exchange and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by CB&T and the Bank. All applicable waiting periods with respect to all
filings required to be made by Citizens with bank regulatory agencies in
connection with the transactions contemplated hereby including any extensions
thereof, shall have expired or been terminated.
(b) All notices to, and declarations, filings and registrations with, and
consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons required to consummate the transactions
contemplated hereby and all consents or waivers shall have been made or obtained
by Citizens.
Section 6.3 Absence of Litigation.
No order, stay, injunction or decree of any court of competent jurisdiction
in the Untied States shall be in effect (i) that prevents or delays the
consummation of any of the transactions contemplated hereby or (ii) would impose
any limitation on the ability of Citizens effectively to exercise full rights of
ownership of the Shares. No action, suit or proceeding before any court or any
governmental or regulatory entity shall be pending (or threatened by any
governmental or regulatory entity), and no investigation by any governmental or
regulatory entity shall have been commenced (and be pending), seeking to
restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by this Plan of Share Exchange or
seeking damages in connection therewith which Citizens, in good faith and with
the advice of counsel, believes makes it undesirable to proceed with the
consummation of the transactions contemplated hereby.
Section 6.4 No Material Adverse Effect.
During the period from December 31, 2001 to the Effective Date, there shall
not have been any change in the assets, properties, business, operations,
prospects, net income or financial condition of CB&T or the Bank which would
have a Material Adverse Effect.
Section 6.5 Completion of Due Diligence.
Citizens shall have completed its due diligence examination of CB&T and the
Bank, its review of the Schedules including any updates or revisions to the
Schedules, the Real Property and the Improvements and the results of such
examination, shall be satisfactory to Citizens in its sole discretion.
29
Section 6.6 Certificates.
CB&T and the Bank shall have furnished Citizens with a certificate, dated
as of the Closing Date, executed by an authorized officer certifying to the
fulfillment of the conditions set forth in this Article 6 hereof and shall have
furnished Citizens with any other certificates of its officers and others as
Citizens may reasonably request to evidence compliance with the conditions set
forth in this Article 6.
Section 6.7 Opinion of CB&T Counsel.
Citizens shall have received an opinion, dated the Closing Date, of counsel
for CB&T, in form and substance satisfactory to Citizens, as to such matters as
Citizens may reasonably request with respect to the transactions contemplated
hereby.
Section 6.8 Legal Matters.
All certificates, instruments, opinions and other documents required to be
executed or delivered by or on behalf of CB&T or the Bank under the provisions
of this Agreement, and all other actions and proceedings required to be taken by
or on behalf of CB&T or the Bank in furtherance of the transactions contemplated
hereby, shall be reasonably satisfactory in form and substance to counsel for
Citizens.
Section 6.9 Schedules.
CB&T and the Bank shall have delivered to Citizens, all Schedules referred
to in Articles 3 and 5 and such Schedules shall be acceptable in form and
substance to Citizens in its sole discretion.
Section 6.10 Termination of Employment Agreements and Indemnification.
CB&T and Bank shall, prior to the Closing, terminate any and all employment
agreements and obtain from such terminated employees releases of CB&T and/or
Bank, as applicable, their successors and assigns, satisfactory to Citizens,
from any and all claims relating to their respective employment with CB&T or
Bank. CB&T and Bank shall fulfill prior to Closing (i) all obligations pursuant
to any severance agreement entered into with respect to the termination of any
employment agreements, and (ii) any other obligations arising under law. Any
obligations required to be satisfied under this Section 6.10 shall be deducted
in determining CB&T's Stockholders' Equity on the financial statements of CB&T
and Bank. The employment agreements shall include, but not be limited to, those
employment agreements listed on Schedules 3.16(b) and 3.18(a) hereto, that
certain Agreement by and between CB&T and X.X. Xxxxxxx, Xx., dated November 13,
2001, and that certain Agreement by and between CB&T and Xxxx X. Xxxx, dated
November 13, 2001.
Section 6.11 Merger.
The Board of Directors of CB&T and the Bank and the shareholder of the Bank
shall approve the merger of Bank into Citizens as provided in Section 10.17.
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Section 6.12 Real Property - Deliver Certificates of Title.
On or before March 15, 2002, CB&T and Bank shall deliver to Citizens a
Certificate of Title on each parcel of Real Property listed on Schedule 3.10 and
which is owned by CB&T and Bank, evidencing that CB&T and/or Bank have title to
such Real Property, free and clear of all liens and encumbrances other than
licenses and easements for public utilities servicing the property, liens for ad
valorem taxes not yet due and payable and zoning ordinances of governing
municipalities affecting the Real Property, and title shall be insurable as such
through a title insurance company acceptable to Citizens at standard rates with
standard exceptions and the stated exceptions above, only, appearing therein.
Section 6.13 Environmental Phase I Report.
On or before March 15, 2002, CB&T and Bank shall deliver to Citizens a
Phase I Environmental Study ("Study"), satisfactory to Citizens with respect to
the Real Property located at the Ford dealership location, Louisville, MS ("Ford
Dealership Property") and CB&T and Bank shall take such action required to
complete on or before Closing or establish reserves to complete remediation and
cleanup of such property consistent with the recommendations of the Study in a
manner reasonably satisfactory to Citizens.
Section 6.14 Dissenters' Rights.
The holders of no more than one percent (1%) of the issued and outstanding
CB&T Common Stock shall have dissented pursuant to Miss Code Xxx. 79-4-01
through 79-4-13.26 and properly objected to the share exchange and properly
demanded payment on their stock in accordance with the above provisions of the
Mississippi Code and CB&T shall have made provision for the payment to the
dissenting stockholders in computing CB&T's Stockholder's Equity in a manner
satisfactory to Citizens.
Section 6. 15 Adequate Loan Loss Reserve.
Citizens shall be satisfied that the loan loss reserve utilized by CB&T and
Bank to determine CB&T's Stockholders' Equity, is adequate.
Section 6.16 Interim Financial Statements - Calculation of CB&T's Stockholders'
Equity.
At least five (5) business days prior to Closing, CB&T and Bank shall
deliver to Citizens in a form satisfactory to Citizens unaudited financial
statements of CB&T and Bank clearly reflecting CB&T's Stockholders' Equity as
provided in Section 1.1 of this Agreement and reflecting all adjustments
required under this Plan of Share Exchange and as required by the Share Exchange
Agreement.
31
Section 6.17 Appraisal.
On or before Closing, CB&T and Bank shall deliver to Citizens a current
appraisal of the Ford Dealership Property indicating a fair market value of not
less than $201,000.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF
CB&T AND THE BANK TO EFFECT THE CLOSING
The obligations of CB&T and the Bank required to be performed at the
Closing shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, each of which may be waived by CB&T as
provided herein except as otherwise required by applicable law:
Section 7.1 Representations and Warranties; Agreements.
Each of the representations and warranties of Citizens contained in this
Plan of Share Exchange shall be true and correct on the date hereof and (having
been deemed to have been made again and as of the Closing) shall be true and
correct as of the Closing. Each of the obligations of Citizens required by this
Plan of Share Exchange to be performed by it at or prior to the Closing shall
have been duly performed and complied with in all respects as of the Closing. At
the Closing, CB&T shall have received a certificate, dated the Closing Date and
duly executed by the an authorized officer of Citizens to the effect that the
conditions set forth in the preceding two sentences have been satisfied.
Section 7.2 Authorization of the Agreement, Consents.
(a) All corporate action necessary to authorize the execution, delivery and
performance of this Plan of Share Exchange and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by
Citizens. All filings required to be made with bank regulatory agencies in
connection with the transactions contemplated hereby shall have been made and
all applicable waiting periods with respect to each such filing, including
extensions thereof, shall have expired or been terminated.
(b) All notices to, and declarations, filings and registrations with, and
consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons required to consummate the transactions
contemplated hereby and all consents or waivers shall have been made or
obtained.
Section 7.3 Absence of Litigation.
No order, stay, judgment or decree shall have been issued by any court and
be in effect restraining or prohibiting the consummation of the transactions
contemplated hereby.
32
Section 7.4 Certificates.
Citizens shall have furnished CB&T with such certificates of its officers
and others to evidence compliance with the conditions set forth in this Article
7 as may be reasonably requested by CB&T.
Section 7.5 Legal Matters.
All certificates, instruments, opinions and other documents required to be
executed or delivered by or on behalf of Citizens under the provisions of this
Agreement, and all other actions and proceedings required to be taken by or on
behalf of Citizens in furtherance of the transactions contemplated hereby, shall
be reasonably satisfactory in form and substance to counsel for CB&T.
ARTICLE 8
TERMINATION
Section 8.1 Termination.
This Plan of Share Exchange may be terminated at any time prior to Closing:
(i) by mutual consent of the parties;
(ii) by either Citizens or CB&T if the Closing shall not have taken
place on or prior to July 31, 2002, or such later date as shall have been
approved by Citizens and CB&T (provided that the terminating party is not
otherwise in material breach of its representations, warranties, covenants
or agreements under this Agreement);
(iii) by Citizens or CB&T if any court of competent jurisdiction in
the United States or other United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become
final and non-appealable;
(iv) by Citizens if any of the conditions specified in Article 6
hereof have not been met or waived by Citizens at such time as such
condition is no longer capable of satisfaction (provided Citizens is not
otherwise in material breach of its representations, warranties, covenants
or agreements under this Agreement);
(v) by CB&T if any of the conditions specified in Article 7 hereof
have not been met or waived by CB&T at such time as such condition is no
longer capable of satisfaction (provided that CB&T is otherwise in material
breach of his or its representations, warranties covenants or agreements
under this Agreement);
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(vi) by either Citizens or CB&T if there has been a material breach on
the part of the other of any representation, warranty, covenant or
agreement set forth in this Agreement, which breach has not been cured
within ten (10) Business Days following receipt by the breaching party of
written notice of such breach;
(vii) by either Citizens or CB&T in the event that as of the last
permissible date for Closing of the Share Exchange (a) the Merger Agreement
between Citizens and Bank referred to in Section 10.17, below shall not
have been approved in accord with applicable law by each of their
respective Boards of Directors and shareholders or (b) the merger
transaction contemplated by and described in the said Merger Agreement
shall not have received any approval of any state or federal bank
regulatory agency from whom such approval is necessary prior to
consummation thereof; or
(viii) by Citizens in its sole discretion, after receipt of Schedules
pursuant to Section 6.9 or updates or revisions to Schedules pursuant to
Section 5.10 or otherwise pursuant to this Plan of Share Exchange if
Citizens reasonably believes that matters set forth in the updates and
revisions have a Material Adverse Effect on the Bank or CB&T.
If Citizens or CB&T shall terminate this Plan of Share Exchange pursuant to
the provisions hereof, such termination shall be effected by notice to the other
party specifying the effective date of such termination and the provision hereof
pursuant to which such termination is made.
Section 8.2 Effect of Termination.
Except (i) for any breach of this Plan of Share Exchange prior to its
termination, and (ii) for the obligations contained in Sections 5.1 and 10.2
hereof, upon the termination of this Plan of Share Exchange pursuant to Section
8.1, hereof, this Plan of Share Exchange shall forthwith become null and void
and none of the parties hereto or any of their respective officers, directors,
employees, agents, Affiliates, consultants, or principals shall have any
liability or obligation hereunder or with respect hereto.
ARTICLE 9
INDEMNIFICATION
Section 9.1 Directors' and Officers' Liability Insurance Coverage.
On or before Closing, CB&T and Bank shall obtain and maintain in force for
4 years from the date of Closing, at the expense of CB&T and Bank, tail coverage
for directors' and officers' liability covering existing directors and officers
of CB&T and Bank for claims, actions, suits, proceedings or investigations,
whether civil, criminal, administrative or investigative, arising out of matters
existing on or occurring at or prior to the Effective Date, whether asserted or
claimed prior to, at or after the Effective Date.
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ARTICLE 10
MISCELLANEOUS
Section 10.1 Survival of Provisions.
The respective representations, warranties, covenants, rights of
indemnification and agreements of each of the parties to this Agreement, except
for the obligations contained in Sections 5.1, 9.1, 10.2 and 3.24 hereof, shall
terminate on the Closing Date.
Section 10.2 Fees and Expenses.
Except as otherwise expressly provided in this Agreement, all legal and
other fees, costs and expenses incurred in connection with this Plan of Share
Exchange and the transactions contemplated hereby through the Closing Date shall
be paid by the party incurring such fees, costs or expenses; provided, however,
that if (i) the Closing does not occur and Section 5.6 hereof is breached, (ii)
CB&T fails to call a shareholders meeting and recommend the approval of this
Plan of Share Exchange and the consummation of the transactions contemplated
hereby or (iii) Citizens terminates this Plan of Share Exchange pursuant to
Section 8.1 (viii), then CB&T shall pay to Citizens, within five (5) Business
Days after receipt of a request therefor, an amount equal to all of the legal
and other fees, costs and expenses incurred by Citizens in connection with this
Plan of Share Exchange and the transactions contemplated hereby.
Section 10.3 Headings.
The section headings herein are for convenience of reference only, do not
constitute part of this Plan of Share Exchange and shall not be deemed to limit
or otherwise affect any of the provisions hereof.
Section 10.4 Notices.
All notices or other communications required or permitted hereunder shall
be given in writing and shall be deemed sufficient if delivered by hand,
recognized overnight delivery service or facsimile transmission as follows:
If to Citizens:
Xxxxx Xxxx, President
000 Xxxx Xxxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
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Cc: Xxxxxx Xxxxxx LLP
Attn: Xxxxx X. Xxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
If to CB&T:
Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Cc: Xxxxxxx Xxxxxx Winter & Stennis, P.A.
Attn: Xxxxx Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
as of the date so delivered or three (3) days after the date so mailed;
provided, however, that any notice or communication changing any of the
addresses set forth above shall be effective and deemed given only upon its
receipt.
Section 10.5 Assignment.
This Plan of Share Exchange and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and the provisions of Article 9 hereof shall
inure to the benefit of the Indemnified Parties referred to therein; provided,
however, that neither this Plan of Share Exchange nor any of the rights,
interests, or obligations hereunder may be assigned by any of the parties hereto
without the prior written consent of the other parties. Notwithstanding the
foregoing, Citizens shall have the unrestricted right to assign this Plan of
Share Exchange and to delegate all or any part of its obligations hereunder to
any Affiliate of Citizens, but in such event Citizens shall remain fully liable
for the performance of all of its obligations in the manner prescribed in this
Agreement.
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Section 10.6 Entire Agreement.
This Plan of Share Exchange (including the Schedules and Attachments
hereto) embodies the entire agreement and understanding of the parties with
respect to the transactions contemplated hereby and supersedes all prior written
or oral commitments, arrangements or understandings between the parties with
respect thereto and all prior drafts of this Agreement. There are no
restrictions, agreements, promises, warranties, covenants or undertakings with
respect to the transactions contemplated hereby other than those expressly set
forth herein. Prior drafts of this Plan of Share Exchange shall not be used as a
basis for interpreting this Agreement.
Section 10.7 Waiver and Amendments.
CB&T as one Party, and Citizens as the other Party may by written notice to
the other parties (i) extend the time for the performance of any of the
obligations or other actions of the other parties, (ii) waive any inaccuracies
in the representations or warranties of the other parties contained in this
Agreement, (iii) waive compliance with any of the covenants of the other parties
contained in this Agreement, (iv) waive performance of any of the obligations of
the other parties created under this Agreement, or (v) waive fulfillment of any
of the conditions to its own obligations under this Agreement. The waiver by any
party hereto of a breach of any provision of this Plan of Share Exchange shall
not operate or be construed as a waiver of any subsequent breach, whether or not
similar. This Plan of Share Exchange may be amended, modified or supplemented
only by a written instrument executed by the parties hereto.
Section 10.8 Counterparts.
This Plan of Share Exchange may be executed by facsimile signature(s) and
in any number of counterparts, all of which shall be considered one and the same
agreement and each of which shall be deemed an original.
Section 10.9 Accounting Terms.
All accounting terms used herein which are not expressly defined or
modified in this Plan of Share Exchange shall have the respective meanings given
to them in accordance with GAAP.
Section 10.10 Certain Definitions.
For purposes of this Agreement:
(a) "Affiliate" of a specified Person shall mean a Person that
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified, and
in the case of a specified Person who is a natural person, his spouse, his
issue, his parents, his estate and any trust entirely for the benefit of
his spouse and/or issue.
(b) "Best efforts" shall be deemed to not include any obligation on
the part of any Person to undertake any liabilities, expend any funds or
perform acts (except liabilities, expenditures or
37
performance, other than any best efforts obligations, expressly required to
be undertaken by the terms of this Agreement) which are materially
burdensome to such Person; provided, however, that notwithstanding the
foregoing, the term "best efforts" shall include an obligation to take such
actions which are normally incident to or reasonably foreseeable in
connection with such obligation or the transactions contemplated hereby.
(c) "Business Day" shall mean any day excluding Saturday, Sunday and
any day which is a legal holiday under Federal law.
(d) "Closing." The closing (the "Closing") of the transactions
contemplated herein will take place at the offices of Bank in Louisville,
Mississippi, on (i) a date specified by one party to the other party
("Closing Date") that is within fifteen (15) days following the later of
the date of receipt of all applicable regulatory approvals relating to the
transactions contemplated herein, the expiration of all applicable
statutory and regulatory waiting periods relative thereto, or (ii) such
later date as may be agreed to by the parties. On or before the Closing the
parties shall each deliver to the other such evidence of the satisfaction
of the conditions to the Share Exchange (as defined in Section 1.1 hereof)
as may reasonably be required (including material required to be delivered
under this Agreement).
(e) "Documents" shall mean the Plan of Share Exchange, the Share
Exchange Agreement and the Bank Merger Agreement, and any other documents,
exhibits and schedules attached to such Agreements.
(e) "Effective Date." Immediately upon consummation of the Closing, or
on such other later date as the parties hereto may agree, the Plan of Share
Exchange shall be certified, executed, acknowledged and Articles of Share
Exchange shall be delivered to the Mississippi Department of Banking and
Consumer Finance for filing pursuant to and in accordance with the
provisions of Miss. Code Xxx. 79-4-11.03 and 81-5-2. The Share Exchange
shall become effective as of the date and time specified in the Articles of
Share Exchange or other written record issued by the Department of Banking
and Consumer Finance.
(f) "GAAP" shall mean United States generally accepted accounting
principles consistently applied.
(g) "Liens" shall mean any mortgages, pledges, title defects or
objections, liens, claims, security interests, conditional and installment
sale agreements, encumbrances or charges of any kind.
(h) "Material Adverse Effect" shall mean any change in, or effect on,
the Person specified (including the businesses thereof) which is, or might
be, materially adverse to the business, operations, assets, condition
(financial or otherwise) or prospects of such Person.
(i) "Person" shall mean and include an individual, corporation,
limited partnership, limited liability company, partnership, joint venture,
association, trust, any other unincorporated organization or entity and a
governmental entity or any department or agency thereto.
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(j) "CB&T's Stockholders' Equity" shall mean the sum of the common
stock account, surplus account, undivided profit account and current period
income account of Bank and CB&T calculated in accordance with GAAP and
without regard to gains and losses in investment securities reported as
"other comprehensive income" as such balances would be reflected in lines
23, 24, 25 and 26a of Schedule RC of the Bank's Report of Condition filed
with the Federal Department Insurance Corporation or lines of similar
import and subject to other adjustments set forth in the Share Exchange
Agreement.
Section 10.11 Schedules.
Disclosure of any matter in any Schedule hereto or in the financial
statements shall not be considered as disclosure pursuant to any other
provision, subprovision, section or subsection of this Plan of Share Exchange or
Schedule to this Agreement.
Section 10.12 Severability.
If any one or more of the provisions of this Plan of Share Exchange shall
be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Plan of Share Exchange shall
not be affected thereby. To the extent permitted by applicable law, each party
waives any provision of law which renders any provision of this Plan of Share
Exchange invalid, illegal or unenforceable in any respect.
Section 10.13 Remedies.
None of the remedies provided for in this Agreement, including termination
of this Plan of Share Exchange as set forth in Article 8, indemnification as set
forth in Article 9, the payment of certain fees, costs and expenses as set forth
in Section 10.2 or specific performance as set forth in this Section 10.13,
shall be the exclusive remedy of either party for a breach of this Agreement.
The parties hereto shall have the right to seek any other remedy in law or
equity in lieu of or in addition to any remedies provided in this Agreement,
including an action for damages for breach of contract.
Section 10.14 Governing Law.
This Plan of Share Exchange shall be governed and construed in accordance
with the laws of the state of Mississippi.
Section 10.15 Time of the Essence.
Time is of the essence with respect to this Agreement.
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Section 10.16 Merger Agreement between Citizens and Bank
On or before the Closing, the respective Boards of Directors of Citizens
and Bank and the shareholders of Bank shall consider and adopt a Merger
Agreement in substantially the form as set forth in Exhibit "C" hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Plan of Share
Exchange to be duly executed as of the day and year first above written.
THE CITIZENS BANK OF PHILADELPHIA
By: /s/ Xxxxx Xxxx
Its: Chairman and CEO
CB&T CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
Its: President
CITIZENS BANK & TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
Its: President
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[SCHEDULES AND EXHIBITS OMITTED]
