AGREEMENT AND PLAN OF REORGANIZATION
Exhibit
2.1
AGREEMENT
AND PLAN OF REORGANIZATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION (the
“Agreement”)
is
made and entered into as of this 5th
day of
February, 2007, by and between GWINNETT
COMMERCIAL GROUP, INC.,
a
Georgia business corporation (“GCG”
and,
unless the context otherwise requires, the term “GCG” shall include GCG and its
wholly-owned subsidiary bank, FIRST
BANK OF THE SOUTH,
a
Georgia bank with its main office in Lawrenceville, Georgia (the “Bank”)),
and
UNITED
COMMUNITY BANKS, INC.,
a
Georgia business corporation (“United”).
WHEREAS,
the
respective boards of directors of GCG and United deem it advisable and in the
best interests of each such entity and their respective shareholders that GCG
merge with United (the “Merger”),
with
United being the surviving corporation, in a transaction valued at $216.6
million based on the thirty (30) day average closing price for United’s common
stock, $1.00 par value per share, (“United
Stock”)
of
$32.35 as of February 2, 2007, consisting of a combination of United Stock
and
cash. The Merger is conditioned upon the terms and conditions hereinafter set
forth (including, without limitation, the purchase price adjustment provision
of
Article
XI)
and as
set forth in the Agreement and Plan of Merger attached hereto as Exhibit
A
and
incorporated herein by reference (the “Merger
Agreement”);
and
WHEREAS,
the
respective boards of directors of GCG and United deem it advisable and in the
best interests of each such entity and their respective shareholders that the
Bank merge with United’s Georgia banking subsidiary, United Community Bank
(“UCB
Georgia”),
with
UCB Georgia being the surviving bank (the “Bank
Merger”),
all
upon the terms hereinafter set forth and as set forth in the Agreement and
Plan
of Merger attached hereto as Exhibit
B
and
incorporated herein by reference (the “Bank
Merger Agreement”);
and
WHEREAS,
the
boards of directors of the respective entities believe that the merger of GCG
and United and their subsidiary banks and the operating effectiveness and
synergies produced thereby will enhance and strengthen the franchises and future
prospects of both companies and each of the banks;
NOW,
THEREFORE,
for and
in consideration of the premises and the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which as legally sufficient consideration are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE
I
CLOSING
The
transactions contemplated herein shall be consummated (the “Closing”)
at the
offices of Xxxxxxxxxx Xxxxxxxx LLP, Suite 2800, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx, xx the first business day following receipt of all approvals from
any
governmental authorities having jurisdiction over the transactions contemplated
by this Agreement, the Merger Agreement and the Bank Merger Agreement, and
the
expiration of any waiting or similar period required by applicable law (the
“Closing
Date”),
or at
such other time and place as may be mutually satisfactory to the parties
hereto.
ARTICLE
II
MERGER
2.1 The
Merger.
Pursuant to the terms and conditions provided herein or otherwise in the Merger
Agreement, on the Closing Date GCG shall be merged with and into United. The
surviving corporation following the Merger will operate under the articles
of
incorporation of United. The Bank shall be merged with and into UCB Georgia
in
accordance with and in the manner set forth in the Bank Merger
Agreement.
2.2 Payment
of Purchase Price. Pursuant
to the terms and conditions provided herein or otherwise in the Merger
Agreement, United shall make available on or before the Closing Date for
delivery to the holders of issued and outstanding shares of voting common stock,
no par value per share, of GCG (“GCG
Stock”),
outstanding options to acquire GCG Stock (the “GCG
Stock Options”)
and
outstanding GCG stock appreciation rights (the “GCG
SARs”):
(a) a
sufficient number of shares of United Stock to be issued upon conversion of
the
shares of GCG Stock for stock elections in the Merger, and (b) sufficient funds
to make cash election payments in the Merger (such cash election payments and
the stock election payments described in (a) above, the “Merger
Consideration”),
cash
payments for outstanding GCG Stock Options and GCG SARs and payments in lieu
of
the issuance of fractional shares, as provided in the Merger Agreement;
provided,
however,
that no
more than 306,137 shares of GCG Stock may be exchanged for cash (the
“Maximum
Cash Election”)
and no
more than 2,524,764 shares of GCG Stock may be exchanged for United Stock (the
“Maximum
Stock Election”).
If
any GCG Stock certificate, option or right shall have been lost, stolen or
destroyed, United may, in its reasonable discretion and as a condition precedent
to the issuance of any United Stock or cash payment, require the owner of such
lost, stolen or destroyed GCG Stock certificate to provide a bond and an
appropriate affidavit and indemnity agreement (reasonably satisfactory to
United) as indemnification against any claim that may be made against United
with respect to such GCG Stock certificate, option or right.
ARTICLE
III
OTHER
AGREEMENTS
3.1 Registration
and Listing of United Stock.
(a)
United agrees to file with the Securities and Exchange Commission (the
“SEC”)
as
soon as reasonably practicable a registration statement (the “United
Registration Statement”)
under
the Securities Act of 1933, as amended (the “1933
Act”),
on
Form S-4 or some other appropriate form covering the issuance of the shares
of
United Stock to the shareholders of GCG pursuant to this Agreement and the
Merger Agreement and to use its reasonable best efforts to cause the United
Registration Statement to become effective and to remain effective through
the
Closing Date. United agrees to take any action required to be taken under the
applicable state securities laws in connection
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with
the
issuance of shares of United Stock upon consummation of the Merger. GCG agrees
to provide United reasonable assistance as necessary in the preparation of
the
United Registration Statement, including, without limitation, providing United
with all material facts regarding the operations, business, assets, liabilities
and personnel of GCG, together with the audited financial statements of GCG,
all
as and to the extent required by the 1933 Act and the rules, regulations and
practices of the SEC, for inclusion in the United Registration Statement. The
United Registration Statement shall not cover resales of United Stock by any
of
the shareholders of GCG, and United shall have no obligation to cause the United
Registration Statement to continue to be effective after the Closing or to
prepare or file any post-effective amendments to the United Registration
Statement after the Closing.
(b) United
agrees to list on the Nasdaq Global Select Market, by the Closing Date, the
shares of United Stock to be issued to the shareholders of GCG pursuant to
this
Agreement and the Merger Agreement.
3.2 Meeting
of GCG Shareholders.
GCG
shall call a special meeting of its shareholders (the “Special
Meeting”)
to be
held not more than thirty (30) days after the United Registration Statement
becomes effective under the 1933 Act for the purpose of submitting the Merger
Agreement to such shareholders for their approval. In connection with the
Special Meeting, United and GCG shall prepare and submit to the GCG shareholders
a notice of meeting, proxy statement and proxy (the “GCG
Proxy Materials”),
which
shall include the final prospectus from the United Registration Statement in
the
form filed with the SEC.
3.3 Access
to Properties, Books, Etc.
GCG
shall allow the United and its authorized representatives full access during
normal business hours from and after the date hereof and prior to the Closing
Date to all of GCG’s properties, books, contracts, commitments and records and
those of its subsidiaries and shall furnish the United and its authorized
representatives such information concerning its affairs and the affairs of
its
subsidiaries as United may reasonably request provided that such request shall
be reasonably related to the transactions contemplated by this Agreement and
shall not interfere unreasonably with normal operations. GCG shall cause its
and
its subsidiaries’ personnel, employees and other representatives to assist
United in making any such investigation. During such investigation, United
and
its authorized representatives shall have the right to make copies of such
records, files, tax returns and other materials as it may deem advisable and
shall advise GCG of those items of which copies are made. No investigation
made
heretofore or hereafter by either party and its authorized representatives
shall
affect the representations and warranties of either such party hereunder.
3.4 Confidentiality.
Prior
to consummation of the Merger, the parties to this Agreement will provide one
another with information which may be deemed by the party providing the
information to be confidential. Each party agrees that it will hold confidential
and protect all information provided to it by the other party to this Agreement
or such party’s affiliates, except that the obligations contained in this
Section
3.4
shall
not in any way restrict the rights of any party or person to use information
that: (a) was known to such party prior to the disclosure by the other party;
(b) is or becomes generally available to the public other than by breach of
this
Agreement; (c) is provided by one party for disclosure concerning such party
in
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the
United Registration Statement; or (d) otherwise becomes lawfully available
to a
party to this Agreement on a non-confidential basis from a third party who
is
not under an obligation of confidence to the other party to this Agreement.
If
this Agreement is terminated prior to the Closing, upon request each party
hereto agrees to return all documents, statements and other written materials,
whether or not confidential, and all copies thereof, provided to it by or on
behalf of the other party to this Agreement. The provisions of this Section
3.4
shall
survive termination, for any reason whatsoever, of this Agreement, and, without
limiting the remedies of the parties hereto in the event of any breach of this
Section
3.4,
the
parties hereto will be entitled to seek injunctive relief against the other
party in the event of a breach or threatened breach of this Section
3.4.
3.5 Full
Cooperation.
The
parties shall cooperate fully with each other in connection with any acts or
actions required to be taken as part of their respective obligations under
this
Agreement.
3.6 Expenses.
All of
the expenses incurred by United in connection with the authorization,
preparation, execution and performance of this Agreement and the Merger
Agreement including, without limitation, all fees and expenses of its agents,
representatives, counsel and accountants and the fees and expenses related
to
filing the United Registration Statement and all regulatory applications with
state and federal authorities in connection with the transactions contemplated
hereby and thereby, (the “United
Expenses”)
shall
be paid by United. All expenses incurred by GCG in connection with the
authorization, preparation, execution and performance of this Agreement, the
Merger Agreement and the Bank Merger Agreement, including, without limitation,
all fees and expenses of its agents, representatives, counsel and accountants
(the “GCG
Expenses”),
shall
be paid by GCG. The cost of reproducing and mailing the GCG Proxy Materials
shall be shared by the parties, with each party paying 50 percent
(50%).
3.7 Preservation
of Goodwill.
Each
party hereto shall use its best efforts to preserve its business organization
and the business organization of its subsidiaries, to keep available the
services of its present employees and of the present employees of its
subsidiaries, and to preserve the goodwill of customers and others having
business relations with such party or its subsidiaries.
3.8 Approvals
and Consents.
Each
party hereto represents and warrants to and covenants with the other that it
will use its best efforts, and will cause its officers, directors, employees
and
agents and its subsidiaries and any subsidiary’s officers, directors, employees
and agents to use their best efforts, to obtain as soon as is reasonably
practicable all approvals and consents of state and federal departments or
agencies required or deemed necessary for consummation of the transactions
contemplated by this Agreement and the Merger Agreement.
3.9 Agreements
by GCG Executive Officers, Directors and Shareholders.
(a) Each
of
the directors and executive officers of GCG will, contemporaneously with the
execution of this Agreement, execute and deliver to United an agreement, the
form of which is attached hereto as Exhibit
C,
pursuant to which each of them agrees: (a) to recommend, subject to any
applicable fiduciary duty, to GCG shareholders approval of the Merger; (b)
to
vote the
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capital
stock of GCG owned or controlled by them in favor of the Merger; (c) to transfer
or assign shares of United Stock received by them in connection with the Merger
only in compliance with the 1933 Act, applicable state securities laws and
the
rules and regulations promulgated under either; and (d) with respect to
directors only, to not compete with United for a period of two (2) years after
the Closing Date. GCG agrees that it will use its reasonable best efforts to
obtain an agreement in the form attached hereto as Exhibit
C
from any
beneficial owner of 5% or more of the issued and outstanding shares of GCG
Stock
who is not an officer or director.
3.10 Press
Releases.
Prior
to the Closing Date, United and GCG shall each approve the form and substance
of
any press release or other public disclosure materially related to this
Agreement or any other transaction contemplated hereby; provided,
however,
that
nothing in this Section
3.10
shall be
deemed to prohibit any party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such party’s disclosure obligations
imposed by law.
3.11 Employee
Benefits.
(a)
Following the Closing Date, United shall provide generally to employees of
GCG
who continue employment with United (“GCG
Employees”)
medical, dental and long-term disability benefits, medical and dependent care
flexible spending accounts and life insurance (collectively, “Employee
Benefits”),
on
terms and conditions which, when taken as a whole, are substantially similar
to
those then currently provided by United to its other similarly situated
employees. No GCG Employee shall be provided vacation benefits at a level less
than he or she had attained with GCG immediately prior to the Closing Date.
For
purposes of eligibility to participate and any vesting determinations (but
not
benefit accruals) in connection with the provision of any such Employee Benefits
by United to the GCG Employees, service with GCG prior to the Closing Date
shall
be counted. The GCG Employees’ prior service with GCG shall also be credited for
purposes of all waiting periods for participation in any of such Employee
Benefits; provided,
however,
that
United shall not impose a waiting period greater in duration than that in effect
immediately prior to the Closing Date under GCG’s applicable Employee Benefit
plans with respect to those GCG Employees whose waiting periods had commenced
under any such plans prior to the Closing Date. United shall also waive all
restrictions and limitations for preexisting conditions under United’s Employee
Benefit plans, to the extent such restrictions or limitations would not apply
to
the GCG Employees under GCG’s existing Employee Benefit plans.
(b) From
the
Closing Date through December 31, 2007, United shall provide Employee Benefits
to GCG Employees by maintaining GCG’s existing Employee Benefit plans, subject
to United’s right to amend such plans as may be required by law and except as
provided in Section
3.12
below.
Thereafter, the GCG Employees shall be permitted to enroll in United’s Employee
Benefit plans.
3.12 401(k)
Plan.
Subject
to applicable legal requirements, United and GCG shall take such other actions
prior to the Closing Date as may be reasonably necessary to enable the employees
of GCG as soon as reasonably practicable after the Closing Date to transfer
the
amount credited to their accounts under the Gwinnett Commercial Group, Inc.
401(k) and
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Employee
Stock Ownership Plan (“GCG
401(k) Plan”)
through a rollover contribution into either the United Community Banks, Inc.
Profit Sharing Plan (the “United
401(k) Plan”)
or a
separate third party individual retirement account, or to take a cash
distribution from the GCG 401(k) Plan, provided,
that
GCG’s
Board of Directors shall adopt resolutions to terminate the GCG 401(k) Plan
prior to the Closing Date. For purposes of any vesting determinations (but
not
benefit accruals) in connection with the United 401(k) Plan, service with GCG
prior to the Closing Date shall be counted. For purposes of eligibility to
participate in any “Profit Sharing Contribution” or receive any “Matching
Contribution” (each as defined in the United 401(k) Plan) under the United
401(k) Plan, the one (1) year waiting period in the United 401(k) Plan shall
be
applied to all GCG Employees and only compensation earned for periods after
the
Closing Date shall be counted; provided,
that the
GCG
Employees’ prior service with GCG shall also be credited for purposes of such
waiting periods under the United 401(k) Plan. For calendar year 2007, prior
to
the Closing Date GCG shall make any necessary employer contributions to the
GCG
401(k) Plan due such GCG Employees for compensation paid by GCG during calendar
year 2007.
3.13 Directors
and Officers Insurance Coverage. Prior
to
Closing, GCG shall purchase for, and on behalf of, its current and former
officers and directors, extended coverage under the current directors’ and
officers’ liability insurance policy maintained by GCG to provide for
continued coverage of such insurance for a period of three (3) years from the
Closing Date, unless United’s directors’ and officers’ liability insurance
policy provides for coverage for such former officers and directors for actions
taken prior to the Merger.
3.14 Governance
of United. Following
the Closing Date, United shall take all action necessary to (i) increase
the size of United’s Board of Directors from 11 members to 12 members, and
(ii) cause Xxxx X. Xxxxxxxx to be named as a director of
United.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF GCG
As
an
inducement to United to enter into this Agreement and to consummate the
transactions contemplated hereby, GCG represents, warrants, covenants and agrees
as follows:
4.1 Disclosure
Memorandum.
GCG has
delivered to United a memorandum (the “Disclosure
Memorandum”)
containing certain information regarding GCG as indicated at various places
in
this Agreement. All information set forth in the Disclosure Memorandum or in
documents incorporated by reference in the Disclosure Memorandum is true,
correct and complete, does not omit to state any fact necessary in order to
make
the statements therein not misleading, and shall be deemed for all purposes
of
this Agreement to constitute part of the representations and warranties of
GCG
under this Article
IV.
The
information contained in the Disclosure Memorandum shall be deemed to be part
of
and qualify all representations and warranties contained in this Article
IV
and the
covenants in Article
V
to the
extent applicable. All information in each of the documents and other writings
furnished to United pursuant to this Agreement or the Disclosure Memorandum
is
or will be true, correct and complete and does not and will not omit to state
any fact necessary in order to make the statements therein not misleading.
GCG
shall promptly provide United with written notification of any event, occurrence
or other information necessary to maintain the Disclosure Memorandum and all
other documents and writings furnished to United pursuant to this Agreement
as
true, correct and complete at all times prior to and including the Closing.
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4.2 Corporate
and Financial.
4.2.1 Corporate
Status. GCG
is a
corporation duly organized, validly existing and in good standing under the
laws
of the State of Georgia and has no direct or indirect subsidiaries other than
the Bank. The Bank is a bank duly organized, validly existing, and in good
standing under the laws of the State of Georgia. GCG and the Bank have all
of
the requisite corporate power and authority and are entitled to own or lease
their respective properties and assets and to carry on their businesses as
and
in the places where such properties or assets are now owned, leased or operated
and such businesses are now conducted.
4.2.2 Authority.
Except
as set forth in the Disclosure Memorandum and subject to the required regulatory
approvals, as stated in Section
4.6.1
and the
approval of GCG shareholders, the execution, delivery and performance of this
Agreement and the other transactions contemplated or required in connection
herewith will not, with or without the giving of notice or the passage of time,
or both:
(a) violate
any provision of federal or state law applicable to GCG, the violation of which
could be reasonably expected to have an adverse effect on the business,
operations, properties, assets, financial condition or prospects of GCG;
(b) violate
any provision of the articles of incorporation or bylaws of GCG;
(c) conflict
with or result in a breach of any provision of, or termination of, or constitute
a default under any instrument, license, agreement, or commitment to which
GCG
is a party, which, singly or in the aggregate, could reasonably be expected
to
have an adverse effect on the business, operations, properties, assets,
financial condition or prospects of GCG; or
(d) constitute
a violation of any order, judgment or decree to which GCG is a party, or by
which GCG or any of its assets or properties are bound.
Assuming
this Agreement constitutes the valid and binding obligation of United, this
Agreement constitutes the valid and binding obligation of GCG, and is
enforceable in accordance with its terms, except as limited by laws affecting
creditors’ rights generally and by the discretion of courts to compel specific
performance.
4.2.3 Capital
Structure.
(a) As
of the date of this Agreement, GCG has authorized capital stock consisting
solely of (i) 12,000,000 shares of GCG Stock, of which 2,830,901 shares are
issued and outstanding as of the date hereof, exclusive of 208,321 shares
reserved for issuance upon exercise of outstanding GCG Stock Options, and (ii)
2,000,000 shares
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of
nonvoting common stock, no par value, none of which is issued and outstanding.
The Bank has authorized capital stock consisting solely of 12,000,000 shares
of
common stock, $5.00 par value per share (“Bank
Stock”),
1,060,000 of which are issued and outstanding as of the date hereof. All of
the
issued and outstanding shares of GCG Stock and Bank Stock are duly and validly
issued, fully paid and non-assessable and were offered, issued and sold in
compliance with all applicable federal and state securities laws. No person
has
any right of rescission or claim for damages under federal or state securities
laws with respect to the issuance of any shares GCG Stock or Bank Stock
previously issued. None of the shares of GCG Stock or Bank Stock has been issued
in violation of any preemptive or other rights of its respective shareholders.
All of the issued and outstanding shares of the Bank Stock are owned by GCG.
(b) Except
for the GCG Stock Options and as otherwise described in the Disclosure
Memorandum, GCG does not have outstanding any securities which are either by
their terms or by contract convertible or exchangeable into capital stock of
GCG, or any other securities or debt of GCG, or any preemptive or similar rights
to subscribe for or to purchase, or any options or warrants or agreements or
understandings for the purchase or the issuance (contingent or otherwise) of,
or
any calls, commitments or claims of any character relating to, its capital
stock
or securities convertible into its capital stock. Except as otherwise described
in the Disclosure Memorandum, GCG is not subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire, or to register,
any
shares of its capital stock.
(c) Except
as
disclosed in the GCG Disclosure Memorandum and other than restrictions required
by applicable federal and state securities laws, there is no agreement,
arrangement or understanding to which GCG is a party restricting or otherwise
relating to the transfer of any shares of capital stock of GCG.
(d) All
shares of common stock or other capital stock, or any other securities or debt,
of GCG, which have been purchased or redeemed by GCG have been purchased or
redeemed in accordance with all applicable federal, state and local laws, rules,
and regulations, including, without limitation, all federal and state securities
laws and rules and regulations of any securities exchange or system on which
such stock, securities or debt are, or at such time were, traded, and no such
purchase or redemption has resulted or will, with the giving of notice or lapse
of time, or both, result in a default or acceleration of the maturity of, or
otherwise modify, any agreement, note, mortgage, bond, security agreement,
loan
agreement or other contract or commitment of GCG.
(e) Except
as
set forth on the Disclosure Memorandum, no person beneficially owns more than
5%
of the issued and outstanding shares of GCG Stock.
4.2.4 Corporate
Records.
The
stock records and minute books of GCG: (a) fully and accurately reflect all
issuances, transfers and redemptions of the Common Stock; (b) correctly show
the
record addresses and the number of shares of such stock issued and outstanding
on the date hereof held by the shareholders of GCG; (c) correctly show all
corporate action taken by the directors and shareholders of GCG (including
actions taken by consent without a meeting); and (d) contain true and correct
copies or originals of the respective articles of incorporation or association
and all amendments thereto, bylaws as amended and currently in
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force,
and the minutes of all meetings or consent actions of its directors and
shareholders. No resolutions, regulations or bylaws have been passed, enacted,
consented to or adopted by such directors or shareholders except those contained
in the minute books. All corporate records have been maintained in accordance
with all applicable statutory requirements and are complete and
accurate.
4.2.5 Tax
Returns; Taxes.
(a) GCG
has duly filed: (i) all required federal and state tax returns and reports;
and
(ii) all required returns and reports of other governmental units having
jurisdiction with respect to taxes imposed upon its income, properties,
revenues, business, franchises, operations or other assets or taxes imposed
which might create a material lien or encumbrance on any of such assets. Such
returns or reports were true, complete and correct, and GCG has paid, to the
extent such taxes or other governmental charges required to be have become
due,
all taxes and other governmental charges set forth in such returns or reports.
All unpaid federal, state and local taxes and other governmental charges payable
by GCG have been accrued or reserved on its books in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
(“GAAP”).
Adequate reserves for the payment of taxes have been established on the books
of
GCG for all periods through the date hereof, whether or not due and payable
and
whether or not disputed. Until the Closing Date, GCG shall continue to provide
adequate reserves for the payment of expected tax liabilities in accordance
with
GAAP. GCG has not received any notice of a tax deficiency or assessment of
additional taxes of any kind and, to the knowledge of GCG, there is no
threatened claim against GCG or any basis for any such claim, for payment of
any
additional federal, state, local or foreign taxes for any period prior to the
date of this Agreement in excess of the accruals or reserves with respect to
any
such claim shown in the GCG Financial Statements (as defined in Section
4.2.6)
or
disclosed in the notes thereto. There are no waivers or agreements by GCG for
the extension of time for the assessment of any taxes. No federal or state
income, employment or property tax return is currently the subject of an audit
or other governmental investigation or inquiry.
(b) Except
as
set forth in the Disclosure Memorandum, proper and accurate amounts have been
withheld by GCG from its employees for all periods in full and complete
compliance with the tax withholding provisions of applicable federal, state
and
local tax laws, and proper and accurate federal, state and local tax returns
have been filed by GCG for all periods for which returns were due with respect
to withholding, social security and unemployment taxes, and the amounts required
to be shown thereon to be due and payable have been paid in full.
4.2.6 Financial
Statements.
(a) GCG
has delivered to United true, correct and complete copies, including notes,
of
the financial statements of GCG for the years ended December 31, 2006, 2005,
2004 and 2003, including consolidated balance sheets, consolidated statements
of
earnings, consolidated statements of cash flows, consolidated statements of
comprehensive income and consolidated statements of changes in shareholders’
equity (the financial statements for the years ended December 31, 2006, 2005,
2004 and 2003 being herein referred to as the “GCG
Financial Statements”).
All
of such financial statements have been prepared in accordance with GAAP, and
present fairly the assets, liabilities and financial condition of GCG as of
the
dates indicated therein and the results of its operations for the respective
periods indicated therein and the results of operations for the respective
periods indicated therein.
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(b) GCG
has
maintained a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate action is taken
with
respect to any differences. No changes have been made to GCG’s internal control
over financial reporting, as defined in Rule 13a-15(f) and Rule 15d-15(f) of
the
Securities Exchange Act of 1934, as amended (the “1934
Act”),
since
December 31, 2006 that materially affected, or are reasonably likely to
materially affect, its internal control over financial reporting.
4.2.7 Regulatory
Reports.
GCG has
made available to United for review and inspection the year-end and quarterly
Reports of Condition and Income filed by the Bank with the Federal Deposit
Insurance Corporation (the “FDIC”)
and
the Forms F.R. Y-6 and F.R. Y-9C filed
by
GCG with the Board of Governors of the Federal Reserve System (the “Federal
Reserve”)
for
each of the three (3) years ended December 31, 2006, 2005 and 2004, together
with all such other reports filed by GCG and the Bank for the same three-year
period with the Georgia Department of the Banking and Finance (the “Georgia
Department”),
if
any, and
with
any other applicable regulatory or governmental agencies (collectively, the
“GCG
Reports”).
All
of the GCG Reports have been prepared in accordance with applicable rules and
regulations applied on a basis consistent with prior periods and contain all
information required to be presented therein in accordance with such rules
and
regulations.
4.2.8 Accounts.
The
Disclosure Memorandum contains a list of each and every bank and other
institution in which GCG maintains an account or safety deposit box, the account
numbers, and the names of all persons who are presently authorized to draw
thereon, have access thereto or give instructions regarding distribution of
funds or assets therein.
4.2.9 Notes
and Obligations.
(a)
Except as set forth in the Disclosure Memorandum or as provided for in the
loss
reserve described in subsection (b) below, all notes receivable or other
obligations owned by GCG or due to it shown in the GCG Financial Statements
and
any such notes receivable and obligations on the date hereof and on the Closing
Date are and will be genuine, legal, valid and collectible obligations of the
respective makers thereof and are not and will not be subject to any offset
or
counterclaim. Except as set forth in subsection (b) below, all such notes and
obligations are evidenced by written agreements, true and correct copies of
which will be made available to United for examination prior to the Closing
Date. All such notes and obligations were entered into by GCG in the ordinary
course of its business and in compliance with all applicable laws and
regulations.
(b) GCG
has
established a loss reserve in the GCG Financial Statements and as of the date
of
this Agreement and will establish a loss reserve as of the Closing Date which
is
adequate to cover losses reasonably anticipated to result from such items as
the
insolvency or default of borrowers or obligors on such loans or obligations,
defects in the notes
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or
evidences of obligation (including losses of original notes or instruments),
offsets or counterclaims properly chargeable to such reserve, or the
availability of legal or equitable defenses which might preclude or limit the
ability of GCG to enforce the note or obligation, and the representations set
forth in subsection (a) above are qualified in their entirety by the aggregate
of such loss reserve. At the Closing Date, the ratio of the loss reserve to
total loans outstanding at such time shall not exceed the ratio of the loan
loss
reserve to the total loans outstanding as reflected in the December 31, 2006
GCG
Financial Statements.
4.2.10 Liabilities.
GCG has
no debt, liability or obligation of any kind required to be shown pursuant
to
GAAP on the consolidated balance sheet of GCG, whether accrued, absolute, known
or unknown, contingent or otherwise, including, but not limited to: (a)
liability or obligation on account of any federal, state or local taxes or
penalty, interest or fines with respect to such taxes; (b) liability arising
from or by virtue of the distribution, delivery or other transfer or disposition
of goods, personal property or services of any type, kind or variety; (c)
unfunded liabilities with respect to the GCG 401(k) Plan or any other any
pension, profit sharing or employee stock ownership plan, whether operated
by
GCG or any other entity covering employees of GCG; or (d) environmental
liabilities, except: (i) those reflected in the GCG Financial Statements; and
(ii) as disclosed in the Disclosure Memorandum.
4.2.11 Absence
of Changes.
Except
as specifically provided for in this Agreement or specifically set forth in
the
Disclosure Memorandum, since December 31, 2006:
(a) there
has
been no change in the business, assets, liabilities, results of operations
or
financial condition of GCG, or in any of its relationships with customers,
employees, lessors or others, other than changes in the ordinary course of
business, none of which individually or in the aggregate has had, or which
could
reasonably be expected to have, an adverse effect on such businesses or
properties;
(b) there
has
been no damage, destruction or loss to the assets, properties or business of
GCG, whether or not covered by insurance, which has had, or which may reasonably
be expected to have, an adverse effect thereon;
(c) the
business of GCG has been operated in the ordinary course, and not
otherwise;
(d) the
properties and assets of GCG used in its business have been maintained in good
order, repair and condition, ordinary wear and tear excepted;
(e) the
books, accounts and records of GCG have been maintained in the usual, regular
and ordinary manner;
(f) there
has
been no declaration, setting aside or payment of any dividend or other
distribution on or in respect of the capital stock of GCG;
(g) there
has
been no increase in the compensation or in the rate of compensation or
commissions payable or to become payable by GCG to any director or
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executive
officer, or to any employee earning $50,000 or more per annum, or any general
increase in the compensation or in the rate of compensation payable or to become
payable to employees of GCG earning less than $50,000 per annum (“general
increase”
for
the
purpose hereof meaning any increase generally applicable to a class or group
of
employees, but not including increases granted to individual employees for
merit, length of service, change in position or responsibility or other reasons
applicable to specific employees and not generally to a class or group thereof),
or any increase in any payment of or commitment to pay any bonus, profit sharing
or other extraordinary compensation to any employee;
(h) there
has
been no change in the charter or bylaws of GCG or the Bank;
(i) there
has
been no labor dispute, unfair labor practice charge or employment discrimination
charge, nor, to the knowledge of GCG, any organizational effort by any union,
or
institution or threatened institution, of any effort, complaint or other
proceeding in connection therewith, involving GCG, or affecting its
operations;
(j) there
has
been no issuance, sale, repurchase, acquisition, or redemption by GCG of any
of
its capital stock except as set forth on the Disclosure Memorandum, bonds,
notes, debt or other securities, and there has been no modification or amendment
of the rights of the holders of any outstanding capital stock, bonds, notes,
debt or other securities thereof;
(k) there
has
been no mortgage, lien or other encumbrance or security interest (other than
liens for current taxes not yet due or purchase money security interests arising
in the ordinary course of business) created on or in (including without
limitation, any deposit for security) any asset or assets of GCG or assumed
by
it with respect to any asset or assets;
(l) there
has
been no indebtedness or other liability or obligation (whether absolute,
accrued, contingent or otherwise) incurred by GCG which would be required to
be
reflected on a balance sheet of GCG prepared as of the date hereof in accordance
with GAAP, except as incurred in the ordinary course of business;
(m) no
obligation or liability of GCG has been discharged or satisfied, other than
in
the ordinary course of business;
(n) there
have been no sales, transfers or other dispositions of any asset or assets
of
GCG, other than sales in the ordinary course of business; and
(o) there
has
been no amendment, termination or waiver of any right of GCG under any contract
or agreement or governmental license, permit or permission which has had, or
could reasonably be expected to have, an adverse effect on its business or
properties.
4.2.12
Litigation
and Proceedings.
Except
as set forth on the Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or
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governmental
actions or investigations, pending or, to the knowledge of GCG, threatened
against, by or affecting GCG, or any officer, director, employee or agent in
such person’s capacity as an officer, director, employee or agent of GCG or
relating to the business or affairs of GCG, in any court or before any
arbitrator or governmental agency, and no judgment, award, order or decree
of
any nature has been rendered against or with respect thereto by any agency,
arbitrator, court, commission or other authority, nor does GCG have, to the
knowledge of GCG, any unasserted contingent liabilities which are reasonably
likely to have an adverse effect on its assets or on the operation of its
businesses or which could reasonably be expected to prevent or impede the
consummation of the transactions contemplated by this Agreement.
4.2.13
Proxy
Materials. Neither
the GCG Proxy Materials nor other materials furnished by GCG to the GCG
shareholders in connection with the transactions contemplated by this Agreement
or the Merger Agreement, or in any amendments thereof or supplements thereto,
will, at the times such documents are distributed to the holders of shares
of
GCG Stock and through the acquisition of shares of GCG Stock by United pursuant
to the Merger, contain with respect to GCG any untrue statement of a material
fact or omit to state any information required to be stated therein or omit
to
state any material fact necessary in order to make the statements therein,
in
light of the circumstances under which they are made, not
misleading.
4.2.14
No
Adverse Change.
Since
December 31, 2005, there has not been any change in the condition of GCG, any
contracts entered into by GCG, or other changes in the operations of GCG which,
in any case, has had, or is reasonably likely to have, an adverse effect on
GCG
on a consolidated basis taken as a whole.
4.3 Business
Operations.
4.3.1 Customers.
To the
knowledge of GCG, there are no presently existing facts which could reasonably
be expected to result in the loss of any borrower or depositor or in GCG’s
inability to collect amounts due therefrom or to return funds deposited thereby,
except as set forth on the Disclosure Memorandum.
4.3.2 Permits;
Compliance with Law. (a)
GCG has
all permits, licenses, approvals, authorizations and registrations under all
federal, state, local and foreign laws required for GCG to carry on its business
as presently conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect, and no suspension
or cancellation of any of them is pending or, to the knowledge of GCG,
threatened.
(b) GCG
has
complied with all laws, regulations, ordinances, rules, and orders applicable
to
it or its business, except for any non-compliance which could not reasonably
be
expected to have a material adverse effect on GCG. The Disclosure Memorandum
contains a list of any known violations of such laws, regulations, ordinances,
rules or orders by any present officer, director, or employee of GCG, and which
resulted in any order, proceeding, judgment or decree which would be required
to
be disclosed pursuant to Item 401(f) of Regulation S-K promulgated by the SEC.
No past violation of any such law, regulation, ordinance, rule or order has
occurred which could impair the right or ability of GCG to conduct its
business.
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(c) Except
as
set forth in the Disclosure Memorandum, no notice, inquiry or warning from
any
governmental authority with respect to any failure or alleged or possible
failure of GCG to comply in any respect with any law, regulation, ordinance,
rule or order has been received, nor, to the knowledge of GCG, is any such
notice or warning proposed or threatened.
4.3.3 Environmental.
(a)
Except as set forth in the Disclosure Memorandum:
(i)
GCG
has
not caused or permitted the generation, manufacture, use, or handling or the
release or presence of, any Hazardous Material (as defined below) on, in, under
or from any properties or facilities currently owned or leased by GCG or
adjacent to any properties so owned or leased that requires notification,
investigation or remediation pursuant to any environmental law;
(ii)
to
the
knowledge of GCG, there are no non-compliance orders, warning letters or notices
of violations, actions, suits or other claims asserted or threatened against
GCG
or administrative or judicial investigations arising from or relating to the
environmental condition of any property currently owned or leased by GCG or
the
generation, manufacture, use, or handling or the release or presence of, any
Hazardous Material at any property currently owned or leased by
GCG;
(iii)
GCG
has
complied in all material respects with, and has kept all records and made all
filings or reports required by, and is otherwise in compliance with all
applicable federal, state and local laws, regulations, orders, permits and
licenses relating to the generation, treatment, manufacture, use, handling,
release or presence of any Hazardous Material on, in, under or from any
properties or facilities currently owned or leased by GCG; and
(iv)
to
the
knowledge of GCG, the improvements on the property are free from the presence
or
growth of mold, fungi, spores or bacteria that could be reasonably expected
to
cause property damage or personal injury, and the improvements on the property
are, and have been, reasonably free of conditions that could lead to the growth
or presence of mold, fungi, spores or bacteria, including, without limitation,
air conditioner malfunction, water intrusion, water leaks, sewage backflows
and
construction defects.
(v)
to
the
knowledge of GCG, there are not now nor have there ever been any underground
storage tanks for the storage of Hazardous Material on, in or under any
properties or facilities currently owned or leased by GCG.
(b) Neither
GCG nor, to the knowledge of GCG, any of its officers, directors, employees
or
agents, in the course of such individual’s employment by GCG, has given advice
with respect to, or participated in any respect in, the management or operation
of any entity or concern regarding the generation, storage, handling, disposal,
transfer, production, use or processing of Hazardous Material.
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(c) To
the
knowledge of GCG, except as set forth in the GCG Disclosure Memorandum, GCG
has
not foreclosed on any property on which there is a threatened release of any
Hazardous Material or on which there has been a release and remediation has
not
been completed to the extent required by environmental laws.
(d) Except
as
set forth in the Disclosure Memorandum, neither GCG nor any of its executive
officers or directors is aware of, has been told of, or has observed, the
presence of any Hazardous Material on, in, under, or around property on which
GCG holds a legal or security interest, in violation of, or creating a liability
under, federal, state, or local environmental statutes, regulations, or
ordinances.
(e) GCG
has
delivered to United true, correct and complete copies of all reports or tests
with respect to compliance of any of the properties or facilities currently
owned or operated by GCG with any environmental laws or the presence of
Hazardous Materials that were prepared for GCG or prepared for other persons
and
are in the possession, custody or control of GCG.
(f) The
term
“Hazardous
Material”
means
any substance whose nature, use, manufacture, or effect render it subject to
federal, state or local regulation governing that material’s investigation,
remediation or removal as a threat or potential threat to human health or the
environment and includes, without limitation, any substance within the meaning
of “hazardous
substances”
under
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. § 9601, “hazardous
wastes”
within
the meaning of the Resource Conservation and Recovery Act, 42 U.S.C. § 6921, any
petroleum product, including any fraction of petroleum, or any friable asbestos
containing materials. However, the term “Hazardous
Material”
shall
not include those substances which are normally and reasonably used or present
in connection with the development, occupancy or operation of office buildings
(such as cleaning fluids, and supplies normally used in the day to day operation
of business offices) in quantities reasonable in relation to such use and in
compliance with applicable law or such that may be naturally occurring in any
ambient air, surface water, ground water, land surface or subsurface
strata.
4.3.4 Insurance.
The
Disclosure Memorandum contains a complete list and description (including the
expiration date, premium amount and coverage thereunder) of all policies of
insurance and bonds presently maintained by, or providing coverage for, GCG
or
through GCG for any of its officers, directors and employees, all of which
are,
and will be maintained through the Closing Date, in full force and effect,
together with a complete list of all pending claims under any of such policies
or bonds. All material terms, obligations and provisions of each of such
policies and bonds have been complied with, all premiums due thereon have been
paid, and no notice of cancellation with respect thereto has been received.
Except as set forth in the Disclosure Memorandum, such policies and bonds
provide coverage to insure the properties and businesses of GCG and the
activities of its officers, directors and employees against such risks and
in
such amounts as are customary. GCG will not as of the Closing Date have any
liability for premiums or for retrospective premium adjustments for any period
prior to the Closing Date. GCG has heretofore made available to United a true,
correct and complete copy of each insurance policy and bond in effect since
January 1, 2003 with respect to the business and affairs of GCG.
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4.4 Properties
and Assets.
4.4.1 Contracts
and Commitments.
The
Disclosure Memorandum contains a list identifying and briefly describing all
written contracts, purchase orders, agreements, security deeds, guaranties
or
commitments (other than loans, loan commitments and deposits made by or with
GCG
in the ordinary course of business), to which GCG is a party or by which it
may
be bound involving the payment or receipt, actual or contingent, of more than
$25,000 or having a term or requiring performance over a period of more than
ninety (90) days. Each such contract, agreement, guaranty and commitment of
GCG
is in full force and effect and is valid and enforceable in accordance with
its
terms, and constitutes a legal and binding obligation of the respective parties
thereto and is not the subject of any notice of default, termination, partial
termination or of any ongoing, pending, completed or threatened investigation,
inquiry or other proceeding or action that may give rise to any notice of
default, termination or partial termination. GCG has complied with the
provisions of such contracts, agreements, guaranties and commitments. A true
and
complete copy of each such document has been or will be made available to United
for examination.
4.4.2 Licenses;
Intellectual Property.
GCG has
all patents, trademarks, trade names, service marks, copyrights, trade secrets
and know-how reasonably necessary to conduct its business as presently conducted
and, except as described in the Disclosure Memorandum, GCG is not a party,
either as licensor or licensee, to any agreement for any patent, process,
trademark, service xxxx, trade name, copyright, trade secret or other
confidential information and there are no rights of third parties with respect
to any trademark, service xxxx, trade secrets, confidential information, trade
name, patent, patent application, copyright, invention, device or process owned
or used by GCG or presently expected to be used by it in the future. All
patents, copyrights, trademarks, service marks, trade names, and applications
therefor or registrations thereof, owned or used by GCG, are listed in the
Disclosure Memorandum. GCG has complied with all applicable laws relating to
the
filing or registration of “fictitious
names”
or
trade names.
4.4.3 Personal
Property.
GCG has
good and marketable title to all of its personal property, tangible and
intangible, reflected in the most recent GCG Financial Statements (except as
since sold or otherwise disposed of by it in the ordinary course of business),
free and clear of all encumbrances, liens or charges of any kind or character,
except: (a) those referred to in the notes to the GCG Financial Statements
as
securing specified liabilities (with respect to which no default exists or,
to
the knowledge of GCG, is claimed to exist); (b) those described in the
Disclosure Memorandum; and (c) liens for taxes not due and payable.
4.4.4 GCG
Leases.
(a) All
leases (the “GCG
Leases”)
pursuant to which GCG is lessor or lessee of any real or personal property
(such
property, the “Leased
Property”)
are
valid and enforceable in accordance with their terms; there is not under any
of
the GCG Leases, to the knowledge of GCG, any default or any claimed default
by
GCG, or event of default or event which with notice or lapse of time, or both,
would constitute a default by GCG and in respect of which adequate steps have
not been taken to prevent a default on its part from occurring.
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(b) The
copies of the GCG Leases heretofore furnished or made available by GCG to United
are true, correct and complete, and the GCG Leases have not been modified in
any
respect other than pursuant to amendments, copies of which have been
concurrently delivered or made available to United, and are in full force and
effect in accordance with their terms.
(c) Except
as
set forth in the Disclosure Memorandum, there are no contractual obligations,
agreements in principle or present plans for GCG to enter into new leases of
real property or to renew or amend existing GCG Leases prior to the Closing
Date.
4.4.5 Real
Property.
(a) GCG
does not own any interest in any real property (other than as lessee) except
as
set forth in the Disclosure Memorandum (such properties being referred to herein
as “GCG
Realty”).
Except as disclosed in the Disclosure Memorandum, GCG has good title to the
GCG
Realty and the titles to the GCG Realty are covered by title insurance policies
providing coverage in the amount of the original purchase price, true, correct
and complete copies of which have been or will be furnished to United with
the
Disclosure Memorandum. GCG has not encumbered the GCG Realty since the effective
dates of the respective title insurance policies.
(b) Except
as
set forth in the Disclosure Memorandum, the interests of GCG in the GCG Realty
and in and under each of the GCG Leases are free and clear of any and all liens
and encumbrances and are subject to no present claim, contest, dispute, action
or, to the knowledge of GCG, threatened action at law or in equity.
(c) The
present and past use and operations of, and improvements upon, the GCG Realty
and all real properties included in the Leased Properties (the “GCG
Leased Real Properties”)
are in
compliance with all applicable building, fire, zoning and other applicable
laws,
ordinances and regulations and with all deed restrictions of record, no notice
of any violation or alleged violation thereof has been received, and there
are
no proposed changes therein that would affect the GCG Realty, the GCG Leased
Real Properties or their uses.
(d) Except
as
set forth in the Disclosure Memorandum, no rent has been paid in advance and
no
security deposit has been paid by, nor is any brokerage commission payable
by or
to, GCG with respect to any Lease pursuant to which it is lessor or
lessee.
(e) GCG
is
not aware of any proposed or pending change in the zoning of, or of any proposed
or pending condemnation proceeding with respect to, any of the GCG Realty or
the
GCG Leased Real Properties which may adversely affect the GCG Realty or the
GCG
Leased Real Properties or the current or currently contemplated use
thereof.
(f) The
buildings and structures owned, leased or used by GCG are, taken as a whole,
in
good operating order (except for ordinary wear and tear), usable in the ordinary
course of business, and are sufficient and adequate to carry on the business
and
affairs of GCG.
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4.5 Employees
and Benefits.
4.5.1 Directors
or Officers of Other Corporations.
Except
as set forth in the Disclosure Memorandum, no director, officer, or employee
of
GCG serves, or in the past five (5) years has served, as a director or officer
of any other corporation on behalf of or as a designee of GCG.
4.5.2 Employee
Benefits. (a) Except
as
set forth in the Disclosure Memorandum, (i) GCG does not provide and is not
obligated to provide, directly or indirectly, any benefits for employees,
including, without limitation, any pension, profit sharing, stock option,
retirement, bonus, hospitalization, medical, insurance, vacation or other
employee benefits under any practice, agreement or understanding, and (ii)
GCG
does not have any employment, severance, change in control or similar agreements
with any of its employees.
(b) The
Disclosure Memorandum lists separately any employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”),
sponsored, maintained or contributed to by GCG (collectively, “ERISA
Plans”).
True,
correct and complete copies of all ERISA Plans and, to the extent applicable,
all related trust agreements, insurance contracts, summary plan descriptions,
Internal Revenue Service determination letters and filings, the past three
(3)
years of actuarial reports and valuations, annual reports and Form 5500 filings
(including attachments), and any other related documents requested by United
or
its counsel have been, or prior to the Closing Date will be, made available
to
United.
(c) GCG
is
not currently and has never been in the past required to contribute to a
multiemployer plan as defined in Section 3(37)(A) of ERISA. GCG does not
maintain or contribute to, nor within the past six (6) years has it maintained
or contributed to, an employee pension benefit plan as defined in Section 3(2)
of ERISA that is or was subject to Title IV of ERISA.
(d) Each
ERISA Plan has been operated and administered in accordance with, and has been
amended to comply in all material respects with (unless such amendment is not
yet required), all applicable laws, rules and regulations, including, without
limitation, ERISA, the Internal Revenue Code (the “Code”),
and
the regulations issued under ERISA and the Code. With respect to each ERISA
Plan, other than routine claims for benefits submitted in the ordinary course
of
the benefits process, no litigation or administrative or other proceeding is
pending or, to the knowledge of GCG, threatened involving such ERISA Plan or
any
of its fiduciaries. With respect to each ERISA Plan, neither GCG nor any of
its
directors, officers, employees or agents, nor any “party
in interest”
or
“disqualified
person”
(as
such terms are defined in Section 3(14) of ERISA and Section 4975 of the Code)
has been engaged in or been a party to any transaction relating to the ERISA
Plan which would constitute a breach of fiduciary duty under ERISA or a
“prohibited
transaction”
(as
such term is defined in Section 406 of ERISA or Section 4975 of the Code),
unless such transaction is specifically permitted under
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Sections
407 or 408 of ERISA, Section 4975 of the Code or a class or administrative
exemption issued by the Department of Labor. Each ERISA Plan that is a group
health plan within the meaning of Section 607(l) of ERISA and Section 4980B
of
the Code is in material compliance with the continuation coverage requirements
of Section 501 of ERISA and Section 4980B of the Code.
(e) Of
the
ERISA Plans, only the GCG 401(k) Plan is an “employee
pension benefit plan”
within
the meaning of Section 3(2) of ERISA. With respect to the GCG 401(k) Plan,
except as set forth on the Disclosure Memorandum: (i) the GCG 401(k) Plan
constitutes a qualified plan within the meaning of Section 401(a) of the Code
and the trust is exempt from federal income tax under Section 501(a) of the
Code; (ii) the GCG 401(k) Plan has been maintained and operated in compliance
in
all material respects with all applicable provisions of Sections 409 and 4975
of
the Code and Sections 406 and 408 of ERISA and the regulations and rulings
thereunder; (iii) all contributions required by such plan have been made or
will
be made on a timely basis; and (iv) no termination, partial termination or
discontinuance of contributions has occurred without a determination by the
IRS
that such action does not affect the tax-qualified status of such
plan.
(f) As
of the
Closing Date, with respect to each ERISA Plan, GCG will have provided adequate
reserves, or insurance or qualified trust funds, to provide for all payments
and
contributions required, or reasonably expected to be required, to be made under
the provisions of such ERISA Plan or required to be made under applicable laws,
rules and regulations, with respect to any period prior to the Closing Date
to
the extent reserves are required under GAAP, based on an actuarial valuation
satisfactory to the actuaries of GCG representing a projection of claims
expected to be incurred under such ERISA Plan.
(g) Except
as
disclosed on the Disclosure Memorandum, GCG does not provide and has no
obligation to provide benefits, including, without limitation, death, health
or
medical benefits (whether or not insured) with respect to current or former
employees of GCG beyond their retirement or other termination of service with
GCG other than: (i) coverage mandated by applicable Law; (ii) benefits under
the
GCG 401(k) Plan; or (iii) benefits the full cost of which is borne by the
current or former employee or his beneficiary.
(h) Except
as
set forth in the Disclosure Memorandum, neither this Agreement nor any
transaction contemplated hereby will: (i) entitle any current or former
employee, officer or director of GCG to severance pay, unemployment compensation
or any similar or other payment, (ii) accelerate the time of payment or vesting
of, or increase the amount of compensation or benefits due any such employee,
officer or director, or (iii) cause the payment of any “excess parachute
payment” (as defined in Section 280G of the Code).
(i) Each
plan
or agreement listed pursuant to Section
4.5.2
that is
subject to Section 409A of the Code has been administered and operated in
compliance, in all material respects, with Section 409A and the regulations
and
rulings thereunder.
4.5.3
Employment
and Labor Matters.
Except
as described in the Disclosure Memorandum, GCG is not, and has not been, a
party
to any collective bargaining agreement or
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agreement
of any kind with any union or labor organization or to any agreement with any
of
its employees which is not terminable at will or upon ninety (90) days notice
at
the election of, and without cost or penalty to, GCG. GCG has not received
at
any time in the past five (5) years, any demand for recognition from any union,
and no attempt has been made, or will have been made as of the Closing Date,
to
organize any of its employees. GCG has complied in all material respects with
all obligations under the National Labor Relations Act, as amended, the Age
Discrimination in Employment Act, as amended, and all other federal, state
and
local labor laws and regulations applicable to employees. Except as described
in
the Disclosure Memorandum, (i) there are no unfair labor practice charges
pending or threatened against GCG, and (ii) there are, and in the past three
(3)
years there have been, no charges, complaints, claims or proceedings, pending,
threatened against, or involving, as the case may be, GCG with respect to any
alleged violation of any wage and hour laws, age discrimination act laws,
employment discrimination laws or any other claims arising out of any employment
relationship as to any of GCG’s employees or as to any person seeking employment
therefrom, and no such violations exist.
4.5.4
Related
Party Transactions.
Except
for: (a) loans and extensions of credit made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions by GCG with other persons who are not affiliated with
GCG, and which do not involve more than the normal risk of repayment or present
other unfavorable features; (b) deposits, all of which are on terms and
conditions identical to those made available to all customers of GCG at the
time
such deposits were entered into; and (c) transactions specifically described
in
the Disclosure Memorandum, there are no contracts with or commitments to present
or former five percent (5%) or greater shareholders, directors, officers, or
employees involving the expenditure of more than $60,000 as to any one
individual, including with respect to any business directly or indirectly
controlled by any such person, or $100,000 for all such contracts or commitments
in the aggregate for all such individuals (other than contracts or commitments
relating to services to be performed by any officer, director or employee as
a
currently-employed employee of GCG).
4.6 Other
Matters.
4.6.1
Approvals,
Consents and Filings.
Except
for the Federal Reserve, the FDIC and the Georgia Department, or as set forth
in
the Disclosure Memorandum, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby or thereby will:
(a) require any consent, approval, authorization or permit of, or filing with
or
notification to, any governmental or regulatory authority; or (b) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
GCG,
or any of GCG’s assets.
4.6.2
Default.
(a)
Except for those consents described in or set forth pursuant to Section
4.6.1
above
and as described in the Disclosure Memorandum, neither the execution of this
Agreement nor consummation of the transactions contemplated herein:
(i)
constitutes
a breach of or default under any contract or commitment to which GCG is a party
or by which any of GCG’s properties or assets are bound;
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(ii)
does
or
will result in the creation or imposition of any security interest, lien,
encumbrance, charge, equity or restriction of any nature whatsoever in favor
of
any third party upon any assets of GCG; or
(iii)
constitutes
an event permitting termination of any agreement or the acceleration of any
indebtedness of GCG.
(b) GCG
is
not in violation of its charter documents or bylaws or in default under any
term
or provision of any material security deed, mortgage, indenture or security
agreement, or of any other material contract or instrument to which GCG is
a
party or by which it or any of its material properties is bound.
4.6.3
Representations
and Warranties.
No
representation or warranty contained in this Article
IV
or in
any written statement delivered by or at the direction of GCG pursuant hereto
or
in connection with the transactions contemplated hereby contains or will contain
any untrue statement, nor will such representations and warranties taken as
a
whole omit any statement necessary in order to make any statement not
misleading. Copies of all documents that have been or will be furnished to
United in connection with this Agreement or pursuant hereto are or shall be
true, correct and complete.
4.6.4
Absence
of Brokers.
Except
for Xxxxx Capital Group, L.L.C. (“Xxxxx”),
which
has provided financial advisory services to GCG, no broker, finder or other
financial consultant has acted on GCG’s behalf in connection with this Agreement
or the transactions contemplated hereby.
4.6.5
Opinions.
Prior
to
the execution of this Agreement, GCG has received an opinion from Xxxxx to
the
effect that, as of the date of such opinion and based on and subject to the
matters set forth in such opinion, the Merger Consideration is fair to the
shareholders of GCG from a financial point of view. Such opinion has not been
amended or rescinded as of the date of this Agreement. GCG has provided United
with a true and complete copy of such opinion for informational
purposes.
ARTICLE
V
CONDUCT
OF BUSINESS OF GCG PENDING CLOSING
Except
as
expressly otherwise provided herein or in the Disclosure Memorandum, GCG
covenants and agrees that, without the prior written consent of United between
the date hereof and the Closing Date:
5.1 Conduct
of Business.
GCG
will conduct its business only in the ordinary course, without the creation
of
any indebtedness for borrowed money (other than deposit and similar accounts
and
customary credit arrangements between banks in the ordinary course of business).
5.2 Maintenance
of Properties.
GCG
will maintain its properties and assets in good operating condition, ordinary
wear and tear excepted.
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5.3 Insurance.
GCG
will maintain and keep in full force and effect all of the insurance referred
to
in Section
4.3.4
hereof
or other insurance equivalent thereto.
5.4 Capital
Structure.
No
change will be made in the authorized or issued capital stock or other
securities of GCG, and GCG will not issue or grant any right or option to
purchase or otherwise acquire any of the capital stock or other securities
of
GCG. This Section
5.4
prohibits, without limitation, the issuance or sale by GCG of any GCG Stock
to
the GCG 401(k) Plan.
5.5 Dividends.
No
dividend, distribution or payment will be declared or made in respect to the
GCG
Stock other than cash dividends payable prior to Closing not to exceed, in
the
aggregate, $3.80 per share of GCG Stock to record holders as of February 5,
2007, and GCG will not, directly or indirectly, redeem, purchase or otherwise
acquire any of its capital stock.
5.6 Amendment
of Articles of Incorporation or Bylaws; Corporate
Existence.
GCG
will not amend its articles of incorporation or bylaws, and GCG will maintain
its corporate existence and powers.
5.7 No
Acquisitions.
GCG
shall not, without the express written consent of United, acquire by merging
or
consolidating with, or by purchasing a substantial portion of the assets of,
or
by any other manner, any business or any corporation, partnership, association
or other entity or division thereof or otherwise acquire or agree to acquire
any
assets which are material, individually or in the aggregate, to
GCG.
5.8 No
Real Estate Acquisitions or Dispositions.
GCG
will not sell, mortgage, lease, buy or otherwise acquire, transfer or dispose
of
any real property or interest therein (except for sales in the ordinary course
of business) and GCG will not, except in the ordinary course of business, sell
or transfer, mortgage, pledge or subject to any lien, charge or other
encumbrance any other tangible or intangible asset.
5.9 Banking
Arrangements.
No
change will be made in the banking and safe deposit arrangements referred to
in
Section
4.2.8
hereof.
5.10
Contracts.
GCG
will not, without the express written consent of United, enter into any, renew
or cancel or terminate any contract of the kind described in Section
4.4.1
hereof.
5.11
Books
and Records.
The
books and records of GCG will be maintained in the usual, regular and ordinary
course.
5.12
Advice
of Changes.
GCG
shall promptly advise United orally and in writing of any change or event
having, or which could reasonably be expected to have, a material adverse effect
on the assets, liabilities, business, operations or financial condition of
GCG.
5.13
Reports.
GCG
shall file all reports required to be filed with any regulatory or governmental
agencies between the date of this Agreement and the Closing Date and shall
deliver to United copies of all such reports promptly after the same are
filed.
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5.14
Benefit
Plans and Programs; Severance or Termination Payments.
GCG
shall not adopt any new benefit plans or programs or amend any existing benefit
plans or programs, the effect of which is to increase benefits to employees
or
the liabilities of GCG or its successors. GCG shall not grant or institute
any
new severance pay, termination pay, retention pay or transaction or deal bonus
or arrangement.
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF UNITED
As
an
inducement to GCG to enter into this Agreement and to consummate the
transactions contemplated hereby, United represents, warrants, covenants and
agrees as follows:
6.1 Corporate
Status. United
is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Georgia. United is entitled to own or lease its properties
and to carry on its business in the places where such properties are now owned,
leased or operated and such business is now conducted.
6.2 Authority.
Subject
to the required regulatory approvals and notice filing, as stated in
Section
4.6.1,
and the
approval of GCG shareholders, the execution, delivery and performance of this
Agreement and the other transactions contemplated or required in connection
herewith will not, with or without the giving of notice or the passage of time,
or both:
(a) violate
any provision of federal or state law applicable to United, the violation of
which could be reasonably expected to have an adverse effect on the business,
operations, properties, assets, financial condition or prospects of
United;
(b) violate
any provision of the articles of incorporation or bylaws of United;
(c) conflict
with or result in a breach of any provision of, or termination of, or constitute
a default under any instrument, license, agreement, or commitment to which
United is a party, which, singly or in the aggregate, could reasonably be
expected to have an adverse effect on the business, operations, properties,
assets, financial condition or prospects of United; or
(d) constitute
a violation of any order, judgment or decree to which United is a party, or
by
which United or any of its assets or properties are bound.
Assuming
this Agreement constitutes the valid and binding obligation of GCG, this
Agreement constitutes the valid and binding obligation of United, and is
enforceable in accordance with its terms, except as limited by laws affecting
creditors’ rights generally and by the discretion of courts to compel specific
performance.
6.3 Capital
Structure.
(a) As
of the date of this Agreement, United has authorized capital stock consisting
solely of 100,000,000 shares of common stock, par value $1.00 per
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share,
of
which 42,990,645 shares are issued and outstanding as of the date hereof,
exclusive of 33,834 shares issuable to participants in United’s Deferred
Compensation Plan and 1,436,362 shares reserved for issuance upon the exercise
of outstanding options and vesting of restricted stock (the “United
Stock Options and Awards”)
and
10,000,000 shares of preferred stock, par value $1.00 per share (the
“Preferred
Stock”),
of
which 32,200 shares are issued and outstanding as of the date hereof. All of
the
issued and outstanding shares of United Stock are duly and validly issued,
fully
paid and nonassessable and were offered, issued and sold in compliance with
all
applicable federal or state securities laws. No person has any right of
rescission or claim for damages under federal or state securities laws with
respect to the issuance of shares of United Stock previously issued. None of
the
shares of United Stock have been issued in violation of the preemptive or other
rights of its shareholders.
(b) Except
for the United Stock Options and Awards, United does not have outstanding any
securities which are either by their terms or by contract convertible or
exchangeable into United Stock or Preferred Stock, or any other securities
or
debt, of United, or any preemptive or similar rights to subscribe for or to
purchase, or any options or warrants or agreements or understandings for the
purchase or the issuance (contingent or otherwise) of, or any calls, commitments
or claims of any character relating to, its capital stock or securities
convertible into its capital stock. United is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire, or
to
register, any shares of its capital stock.
(c) There
is
no material agreement, arrangement or understanding to which United is a party
restricting or otherwise relating to the transfer of any shares of United Stock
other than restrictions required by applicable federal and state securities
laws.
(d) All
shares of common stock or other capital stock, or any other securities or debt,
of United, which have been purchased or redeemed by United have been purchased
or redeemed in accordance with all applicable federal, state and local laws,
rules, and regulations, including, without limitation, all federal and state
securities laws and rules and regulations of any securities exchange or system
on which such stock, securities or debt are, or at such time were, traded,
and
no such purchase or redemption has resulted or will, with the giving of notice
or lapse of time, or both, result in a default or acceleration of the maturity
of, or otherwise modify, any agreement, note, mortgage, bond, security
agreement, loan agreement or other contract or commitment of
United.
6.4 Disclosure
Reports.
United
has a class of securities registered pursuant to Section 12(g) of the 1934
Act.
United’s (a) Annual Report on Form 10-K for its fiscal year ended December 31,
2005; (b) Proxy Statement for its 2006 Annual Meeting of Shareholders; (c)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006, June
30, 2006 and September 30, 2006; and (d) other reports filed by United pursuant
to Sections 13(a) or 15(d) of the Exchange Act since December 31, 2005
(collectively, the “United
SEC Reports”),
taken
together, correctly describe, among other things, the business, operations
and
principal properties of United in accordance with the requirements of the
applicable report forms of the SEC. As of the respective dates of filing (or,
if
amended or superseded by a filing prior to the date of this Agreement, then
on
the date of such amended or superceded filing), none of the United SEC Reports
contained any untrue statement of a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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6.5 No
Adverse Change.
Since
the date of its latest published financial statements included in the United
SEC
Reports, there has not been any change in the condition of United or other
changes in the operations of United which, in any case, have had, or are
reasonably likely to have, an adverse effect on United on a consolidated basis
taken as a whole.
6.6 Representations
and Warranties.
No
representation or warranty contained in this Article
VI
or in
any written statement delivered by or at the direction of United pursuant hereto
or in connection with the transactions contemplated hereby contains or will
contain any untrue statement, nor will such representations and warranties
taken
as a whole omit any statement necessary in order to make any statement not
misleading. Copies of all documents that have been or will be furnished to
GCG
in connection with this Agreement or pursuant hereto are or shall be true,
correct and complete.
6.7 Proxy
Materials.
Neither
the GCG Proxy Materials nor other materials furnished by United to the GCG
shareholders in connection with the transactions contemplated by this Agreement
or the Merger Agreement, or in any amendments thereof or supplements thereto,
will, at the times such documents are distributed to the holders of shares
of
GCG Stock and through the acquisition of shares of United Stock by GCG pursuant
to the Merger, contain with respect to United any untrue statement of a material
fact or omit to state any information required to be stated therein or omit
to
state any material fact necessary in order to make the statements therein,
in
light of the circumstances under which they are made, not
misleading.
ARTICLE
VII
CONDITIONS
TO OBLIGATIONS OF UNITED
All
of
the obligations of United under this Agreement are subject to the fulfillment
prior to or at the Closing Date of each of the following conditions, any one
or
more of which may be waived by United:
7.1 Veracity
of Representations and Warranties.
The
representations and warranties of GCG contained herein or in any certificate,
schedule or other document delivered pursuant to the provisions hereof, or
in
connection herewith, shall be true as of the date when made and shall be deemed
to be made again at and as of the Closing Date and shall be true at and as
of
such time, except as a result of changes or events expressly permitted or
contemplated herein or where the failure to be so, either individually or in
the
aggregate, is not reasonably likely to have a material adverse effect on the
business, operations or financial condition of GCG on a consolidated
basis.
7.2 Performance
of Agreements.
GCG
shall have performed and complied with all agreements and conditions required
by
this Agreement to be performed or complied with by it prior to or on the Closing
Date.
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7.3 Compliance
by GCG Executive Officers and Directors.
The
directors and executive officers of GCG shall have complied in full with the
requirements of Section
3.9
hereof.
7.4 Certificates,
Resolutions, Opinion.
GCG
shall have delivered to United:
(a) a
certificate executed by the Chief Executive Officer or President of GCG, dated
as of the Closing Date, and certifying in such detail as United may reasonably
request to the fulfillment of the conditions specified in Sections
7.1
and
7.2
hereof;
(b) a
certificate executed by the Secretary of GCG, dated as of the Closing Date,
certifying and attesting to the: (i) articles of incorporation of GCG; (ii)
bylaws of GCG; and (iii) duly adopted resolutions of the Board of Directors
and
shareholders of GCG (1) authorizing and approving the execution of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated herein and therein in accordance with their respective terms,
and
(2) authorizing all other necessary and proper corporate action to enable GCG
to
comply with the terms hereof and thereof;
(c) certificates
executed by the Secretary or equivalent officer of the Bank, dated as of the
Closing Date, certifying and attesting to the: (i) articles of incorporation
of
the Bank; (ii) bylaws of the Bank; and (iii) duly adopted resolutions of the
Board of Directors and sole shareholder of the Bank (1) authorizing and
approving the execution of the Bank Merger Agreement and the consummation of
the
transactions contemplated herein and therein, and (2) authorizing all other
necessary and proper corporate action to enable the bank to comply with the
terms hereof and thereof;
(d) a
certificate executed by the Chief Executive Officer or President of GCG, dated
as of the Closing Date, enabling Xxxxxxxxxx Xxxxxxxx LLP to provide the opinion
referred to in Section
8.3(d);
(e) certificates
of the valid existence of GCG and the Bank under the laws of the State of
Georgia, executed by the Secretary of State of Georgia, and dated not more
than
ten (10) business days prior to the Closing Date;
(f) certificates
from the appropriate public officials of the State of Georgia, dated not more
than ten (10) business days prior to the Closing Date, certifying that GCG
has
filed all corporate tax returns required by the laws of such state and has
paid
all taxes shown thereon to be due; and
(g) an
opinion of Xxxxxx Xxxxxxxxx LLP, counsel for GCG, dated the Closing Date, in
the
form attached hereto as Exhibit
D.
7.5 Accountants’
Letter.
United
shall have received a letter from Xxxxxxx & Xxxxxxx, LLC, dated the Closing
Date, to the effect that: At the request of GCG they have carried out procedures
to a specified date not more than five (5) business days prior to the Closing
Date, which procedures did not constitute an examination in accordance with
generally accepted auditing standards, of the financial statements of GCG,
as
follows:
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(a) read
the
unaudited consolidated balance sheets, consolidated statements of earnings,
consolidated statements of cash flows, consolidated statements of comprehensive
income and consolidated statements of changes in shareholders’ equity, of GCG
from December 31, 2005 through the date of the most recent monthly financial
statements available in the ordinary course of business;
(b) read
the
minutes of the meetings of shareholders and Board of Directors of GCG from
December 31, 2005 to said date not more than five (5) business days prior
to the Closing Date; and
(c) consulted
with certain officers and employees of GCG responsible for financial and
accounting matters and, based on such procedures, nothing has come to their
attention which would cause them to believe that:
(i)
such
unaudited financial statements are not fairly presented in conformity with
GAAP;
(ii)
as
of
said date not more than five (5) business days prior to the Closing Date, the
shareholders’ equity, long-term debt, reserve for possible loan losses and total
assets of GCG, in each case as compared with the amounts shown in the December
31, 2005 GCG Financial Statements, are not different except as set forth in
such
letter, or
(iii)
for
the
period from December 31, 2005 to said date not more than five (5) business
days
prior to the Closing Date, the net interest income, total and per-share amounts
of consolidated income and net income of GCG, as compared with the corresponding
portion of the preceding twelve (12) month period, are not different except
as
set forth in such letter.
ARTICLE
VIII
CONDITIONS
TO OBLIGATIONS OF GCG
All
of
the obligations of GCG under this Agreement are subject to the fulfillment
prior
to or at the Closing Date of each of the following conditions, any one or more
of which may be waived by it:
8.1 Veracity
of Representations and Warranties.
The
representations and warranties of United contained herein or in any certificate,
schedule or other document delivered pursuant to the provisions hereof, or
in
connection herewith, shall be true as of the date when made and shall be deemed
to be made again at and as of the Closing Date and shall be true at and as
of
such time, except as a result of changes or events expressly permitted or
contemplated herein or where the failure to be so, either individually or in
the
aggregate, is not reasonably likely to have a material adverse effect on the
business, operations or financial condition of United on a consolidated
basis.
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8.2 Performance
of Agreements.
United
shall have performed and complied with all agreements and conditions required
by
this Agreement to be performed or complied with by it prior to or at the Closing
Date.
8.3 Certificates,
Resolutions, Opinion.
United
shall have delivered to GCG:
(a) a
certificate executed by the President or an Executive Vice President of United,
dated the Closing Date, certifying in such detail as GCG may reasonably request
to the fulfillment of the conditions specified in Sections
8.1
and
8.2
hereof;
(b) a
certificate executed by the Secretary or an Assistant Secretary of United,
dated
as of the Closing Date, certifying and attesting to the: (i) articles of
incorporation of United; (ii) bylaws of United; and (iii) duly adopted
resolutions of the board of directors of United (1) authorizing and approving
the execution of this Agreement and the Merger Agreement on behalf of United,
and the consummation of the transactions contemplated herein and therein in
accordance with their respective terms, and (2) authorizing all other necessary
and proper corporate actions to enable United to comply with the terms hereof
and thereof;
(c) a
certificate of the valid existence of United, under the laws of the State of
Georgia executed by the Secretary of State of the State of Georgia, dated not
more than five (5) business days prior to the Closing Date;
(d) an
opinion of Xxxxxxxxxx Xxxxxxxx LLP, counsel for United, dated the Closing Date,
in the form attached hereto as Exhibit
E;
(e) a
certificate executed by the President or an Executive Vice President of United,
dated as of the Closing Date, enabling Xxxxxxxxxx Xxxxxxxx LLP to provide the
opinion referred to in Section
8.3(d);
and
(f) certificates
from the appropriate public officials of the State of Georgia, dated not more
than five (5) business days prior to the Closing Date, certifying that United
has filed all corporate tax returns required by the laws of such state and
has
paid all taxes shown thereon to be due.
8.4 Tax
Opinion.
GCG
shall have received from Xxxxxxxxxx Xxxxxxxx LLP its opinion, in form and
substance reasonably satisfactory to GCG, to the effect that:
(a) The
Merger and the issuance of shares of United Stock in connection therewith,
as
described herein and in the Merger Agreement, will constitute a tax-free
reorganization under Section 368(a)(1)(A) of the Code;
(b) No
gain
or loss will be recognized by GCG as a result of the Merger;
(c) No
gain
or loss will be recognized by holders of GCG Stock upon the exchange of such
stock for United Stock as a result of the Merger;
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(d) Gain
or
loss will be recognized by holders of GCG Stock upon their receipt of cash,
including cash (i) as a result of a cash election, (ii) in lieu of fractional
shares of United Stock, and (iii) upon their exercise of dissenters’
rights;
(e) The
aggregate tax basis of United Stock received by shareholders of GCG pursuant
to
the Merger will be the same as the tax basis of the shares of GCG Stock
exchanged (i) decreased by any portion of such tax basis allocated to fractional
shares of United Stock that are treated as redeemed by United, (ii) decreased
by
the amount of cash received by a GCG shareholder in the Merger (other than
cash
received with respect to fractional shares), and (iii) increased by the amount
of gain recognized by a GCG shareholder in the Merger (other than gain
recognized with respect to fractional shares);
(f) The
holding period of the shares of United Stock received by the shareholders of
GCG
will include the holding period of the shares of GCG Stock exchanged, provided
that the stock of GCG is held as a capital asset on the date of the consummation
of the Merger; and
(g) No
gain
or loss will be recognized by GCG or the Bank in connection with the Bank
Merger.
ARTICLE
IX
CONDITIONS
TO OBLIGATIONS OF BOTH PARTIES
9.1 Shareholder
Approval.
The
Merger Agreement shall have been approved by the vote of the holders of at
least
a majority of the issued and outstanding shares of GCG Stock.
9.2 Regulatory
Approvals.
Any and
all governmental authorities, bodies or agencies having jurisdiction over the
transactions contemplated by this Agreement, the Merger Agreement and the Bank
Merger Agreement, including, but not limited to the Federal Reserve, the FDIC
and the Georgia Department shall have granted such consents, authorizations
and
approvals as are necessary for the consummation hereof and thereof, and all
applicable waiting or similar periods required by law shall have
expired.
9.3 Effective
Registration Statement.
The
United Registration Statement shall have been declared effective by the SEC
and
no stop order shall have been entered with respect thereto.
9.4 Certificate
of Merger.
The
Secretary of State of the State of Georgia shall have issued a certificate
of
merger, with respect to the Merger, in accordance with the provisions of the
Georgia Business Corporation Code, and with respect to the Bank Merger, in
accordance with the Financial Institution Code of Georgia.
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ARTICLE
X
WARRANTIES,
NOTICES, ETC.
10.1
Warranties.
All
statements contained in any certificate or other instrument delivered by or
on
behalf of GCG or United pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed representations and warranties hereunder
by
them. Unless the context otherwise requires, the representations and warranties
required of GCG shall be required to be made, and shall be considered made,
on
behalf of GCG and the Bank.
10.2
Survival
of Provisions.
All
representations, warranties, covenants, and agreements made by either party
hereto in or pursuant to this Agreement or in any instrument, exhibit, or
certificate delivered pursuant hereto shall be deemed to have been material
and
to have been relied upon by the party to which made, but, except as set forth
hereafter or specifically stated in this Agreement, such representations,
warranties, covenants, and agreements shall expire and be of no further force
and effect upon the consummation of the Merger; provided,
however,
that the
following shall survive consummation of the Merger and the transactions
contemplated hereby:
(a) the
opinions of counsel referred to in Sections
7.4(g)
and
8.3(d)
of this
Agreement;
(b) any
intentional misrepresentation of any material fact made by either party hereto
in or pursuant to this Agreement or in any instrument, document or certificate
delivered pursuant hereto; and
(c) the
covenant with respect to the confidentiality of certain information contained
in
Section
3.4
hereof.
10.3
Notices.
All
notices or other communications required or permitted to be given or made
hereunder shall be in writing and delivered personally or sent by pre-paid,
first class certified or registered mail, return receipt requested, or by
facsimile transmission, to the intended recipient thereof at its address or
facsimile number set out below. Any such notice or communication shall be deemed
to have been duly given immediately (if given or made in person or by facsimile
confirmed by mailing a copy thereof to the recipient in accordance with this
Section
10.3
on the
date of such facsimile), or five (5) days after mailing (if given or made by
mail), and in proving same it shall be sufficient to show that the envelope
containing the same was delivered to the delivery service and duly addressed,
or
that receipt of a facsimile was confirmed by the recipient. Either party may
change the address to which notices or other communications to such party shall
be delivered or mailed by giving notice thereof to the other party hereto in
the
manner provided herein.
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|
To
GCG:
|
Gwinnett
Commercial Group, Inc.
0000
Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxxx,
Xxxxxxx 00000
Attention: Xxxxx
X. Xxxxx
Facsimile:
(000) 000-0000
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|
|
With
copies to:
|
Xxxxxx
Xxxxxxxxx LLP
One
Atlantic Center - Fourteenth Floor
0000
Xxxx Xxxxxxxxx Xxxxxx, XX
Xxxxxxx,
Xxxxxxx 00000
Attention: Xxxxxxx
Xxxxxxx
Facsimile:
(000) 000-0000
|
|
|
To
United:
|
United
Community Banks, Inc.
X.X.
Xxx 000
Xxxxxxxxxxx,
Xxxxxxx 00000
Attention: Xxxxx
X. Xxxxxxx
Facsimile:
(000) 000-0000
|
|
|
With
copies to:
|
Xxxxxxxxxx
Xxxxxxxx LLP
Suite
2800
0000
Xxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 000000-0000
Attention:
Xxxxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
|
10.4
Entire
Agreement.
This
Agreement and the Merger Agreement supersede all prior discussions and
agreements between GCG and United with respect to the Merger and the other
matters contained herein and therein, and this Agreement and the Merger
Agreement contain the sole and entire agreement between GCG and United with
respect to the transactions contemplated herein and therein.
10.5
Waiver;
Amendment.
Prior
to or on the Closing Date, United shall have the right to waive any default
in
the performance of any term of this Agreement by GCG, to waive or extend the
time for the fulfillment by GCG of any or all of GCG’s obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of United under this Agreement, except any condition which, if
not
satisfied, would result in the violation of any law or applicable governmental
regulation. Prior to or on the Closing Date, GCG shall have the right to waive
any default in the performance of any term of this Agreement by United, to
waive
or extend the time for the fulfillment by United of any or all of United’s
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of GCG under this Agreement, except any condition
which, if not satisfied, would result in the violation of any law or applicable
governmental regulation. This Agreement may be amended by a subsequent writing
signed by the parties hereto, provided,
however,
that the
provisions of Section
9.2
requiring regulatory approval shall not be amended by the parties hereto without
regulatory approval.
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ARTICLE
XI
TERMINATION
AND PRICE ADJUSTMENT
11.1
Material
Adverse Change.
(a) This
Agreement may be terminated at any time prior to or on the Closing Date by
United upon written notice to GCG, if, after the date hereof, a material adverse
change in the financial condition or business of GCG shall have occurred, or
if
GCG shall have suffered a material loss or damage to any of its properties
or
assets, which change, loss or damage materially affects or impairs its ability
to conduct its business.
(b) This
Agreement may be terminated at any time prior to or on the Closing Date by
GCG
upon written notice to United, if, after the date hereof, a material adverse
change in the financial condition or business of United shall have occurred
which change would reasonably be expected to have a material adverse effect
on
the market price of United Stock, or if United shall have suffered a material
loss or damage to any its properties or assets, which change, loss or damage
materially affects or impairs its ability to conduct its business.
11.2
Noncompliance.
(a) This
Agreement may be terminated at any time prior to or on the Closing Date by
United upon written notice to GCG, (i) if the terms, covenants or conditions
of
this Agreement to be complied with or performed by GCG before the Closing shall
not have been substantially complied with or substantially performed at or
before the Closing Date and such noncompliance or nonperformance shall not
have
been waived by United; or (ii) in the event of a material breach by GCG of
any
covenant, agreement, or obligation contained in this Agreement which breach
has
not been cured within twenty (20) days after the giving of written notice to
United of such breach or, if such breach is not capable of being cured within
twenty (20) days, GCG has not begun to cure such breach within twenty (20)
days
after such written notice; provided,
however,
that in
no event shall the cure periods provided in this Section
11.2
extend
past the time period in Section
11.5
or
otherwise limit United’s rights thereunder.
(b) This
Agreement may be terminated at any time prior to or on the Closing Date by
GCG
upon written notice to United, (i) if the terms, covenants or conditions of
this
Agreement to be complied with or performed by United before the Closing shall
not have been substantially complied with or substantially performed at or
before the Closing Date and such noncompliance or nonperformance shall not
have
been waived by GCG; or (ii) in the event of a material breach by United of
any
covenant, agreement, or obligation contained in this Agreement which breach
has
not been cured within twenty (20) days after the giving of written notice to
GCG
of such breach or, if such breach is not capable of being cured within twenty
(20) days, United has not begun to cure such breach within twenty (20) days
after such written notice; provided,
however,
that in
no event shall the cure periods provided in this Section
11.2
extend
past the time period in Section
11.5
or
otherwise limit GCG’s rights thereunder.
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11.3
Failure
to Disclose.
(a) This
Agreement may be terminated at any time prior to or on the Closing Date by
United upon written notice to GCG, if it learns of any fact or condition not
disclosed in this Agreement, the Disclosure Memorandum, or the GCG Financial
Statements, which was required to be disclosed by GCG pursuant to the provisions
of this Agreement with respect to the business, properties, assets or earnings
of GCG which materially and adversely affects such business, properties, assets
or earnings or the ownership, value or continuance thereof.
(b) This
Agreement may be terminated at any time prior to or on the Closing Date by
GCG
upon written notice to United,
if it
learns of any fact or condition not disclosed in this Agreement or the United
SEC Reports, which was required to be disclosed by United pursuant to the
provisions of this Agreement with respect to the business, properties, assets
or
earnings of United which materially and adversely affects such business,
properties, assets or earnings or the ownership, value or continuance
thereof.
11.4
Adverse
Proceedings.
This
Agreement may be terminated at any time prior to or on the Closing Date by
either party upon written notice to the other party, if any action, suit or
proceeding shall have been instituted or threatened against either party to
this
Agreement to restrain or prohibit, or to obtain substantial damages in respect
of, this Agreement or the consummation of the transactions contemplated herein,
which, in the good faith opinion of the terminating party makes consummation
of
the transactions herein contemplated inadvisable.
11.5
Termination
Date.
This
Agreement may be terminated at any time prior to or on the Closing Date by
either party upon written notice to the other party, if the Closing Date shall
not have occurred on or before July 31, 2007.
11.6
Dissenters.
This
Agreement may be terminated at any time prior to or on the Closing Date by
United upon written notice to GCG, if the holders of more than five percent
(5%)
of the shares of the outstanding GCG Stock elect to exercise their statutory
right to dissent from the Merger and demand payment in cash for the
“fair
value”
of
their shares.
11.7
Shareholders
Vote.
This
Agreement may be terminated at any time prior to or on the Closing Date by
either party upon written notice to the other party, if the Merger Agreement
is
not approved by the vote of the holders of GCG Stock as required by applicable
law.
11.8
Change
in Price of United Stock.
(a) If
the
Average Closing Price of United is less than $32.33, this Agreement may be
terminated prior to the Closing Date by GCG if 2.00 minus the United Change
(the
“United
Decrease”)
is
greater than 1.10 and the United Decrease is greater than 2.00 minus the Peer
Change (the “Peer
11.8(a) Variation”),
subject to the following provisions of this Section
11.8(a).
If GCG
elects to exercise its termination right pursuant to the immediately preceding
sentence, it shall give prompt written notice of such election to United. During
the Decision Period, United may elect to adjust the Merger Consideration by
paying additional shares of
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United
Stock and/or cash, as determined by United in its sole discretion, by increasing
the Stock Exchange Ratio (as defined in the Merger Agreement) and/or the Cash
Exchange Rate (as defined in the Merger Agreement) as necessary to cause the
Merger Consideration to be increased by the result determined by subtracting
the
Stock Consideration from the product of the Stock Consideration multiplied
by
the factor equal to 1.00 plus the lesser of (i) the United Decrease minus 1.10
or (ii) the United Decrease minus the Peer 11.8(a) Variation. Such adjustment,
if any, shall be reflected in the payment of the adjusted Merger Consideration
as provided in accordance with the Merger Agreement. If United decides to make
such adjustment within the Decision Period, it shall give prompt written notice
to GCG of such adjustment, whereupon GCG shall have no right to terminate the
Agreement pursuant to this Section
11.8(a)
and this
Agreement shall remain in full force and effect in accordance with its terms.
(b) If
the
Average Closing Price of United is greater than $32.33, during the Election
Period United may elect to adjust the Merger Consideration if the United Change
minus 1.00 (the “United
Increase”)
is
greater than 0.10 and the United Increase is greater than the Peer Change minus
1.00 (the “Peer
11.8(b) Variation”),
subject to the following provisions of this Section
11.8(b).
If
United elects to adjust the Merger Consideration pursuant to the immediately
preceding sentence, United shall give prompt written notice of such election
to
GCG, and this Agreement may be terminated prior to the Closing Date by GCG.
If
United makes an election under this Section
11.8(b),
United
may adjust the Merger Consideration by paying less shares of United Stock and/or
cash, as determined by United in its sole discretion, by decreasing the Stock
Exchange Ratio (as defined in the Merger Agreement) and/or the Cash Exchange
Rate (as defined in the Merger Agreement) as necessary to cause the Merger
Consideration to be decreased by the result determined by subtracting from
the
Stock Consideration the product of the Stock Consideration multiplied by the
factor equal to 1.00 minus the lesser of (i) the United Increase minus 0.10
or
(ii) the United Increase minus the Peer 11(b) Variation. Such adjustment, if
any, shall be reflected in the payment of the adjusted Merger Consideration
as
provided in accordance with the Merger Agreement. If United does not decide
to
make such adjustment within the Election Period, GCG shall have no right to
terminate the Agreement pursuant to this Section
11.8(b)
and this
Agreement shall remain in full force and effect in accordance with its terms.
(c) For
purposes of this Section
11.8,
the
following terms shall have the following meanings:
(i)
“Average
Closing Price”
means
the average closing price of United Stock, as reported on the NASDAQ Stock
Market (as reported by the Wall Street Journal or, if not reported thereby,
another authoritative source), and the common stock of the companies comprising
the Peer Group, as reported on the consolidated transaction reporting system
for
the market or exchange on which common stock is listed (as reported by the
Wall
Street Journal or, if not reported thereby, another authoritative source),
for
the thirty (30) consecutive Trading Days prior to the Determination Date.
(ii) “Decision
Period”
means
the three (3) day period commencing with United’s receipt of such a termination
notice from GCG pursuant to Section
11.8(a).
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(iii)
“Determination
Date”
means
the day which is six (6) Trading Days prior to the Closing Date.
(iv
“Election
Period”
means the
three
(3) day period commencing on the Determination Date.
(v)
“Peer
Change”
means
the average change of all companies comprising the Peer Group as of the
Determination Date whereas the change in stock price for a company is calculated
by dividing the Average Closing Price by the average closing price for the
thirty (30) consecutive trading days as of January 9, 2007.
(vi) “Peer
Group”
means
the group set forth in the Disclosure Memorandum, the common stock of all of
which shall be publicly traded and as to which there shall have not been a
publicly announced proposal for the acquisition of 20% or more of any such
company’s outstanding shares or as to which any such company shall have
made a proposal to acquire another company in which 20% or more of its
outstanding shares would be issued, in each case at any time during the period
beginning on the date of this Agreement and ending on the Determination Date.
In
the event that, at any time during the period beginning on the date of this
Agreement and ending on the Determination Date, the common stock of any such
company ceases to be publicly traded, a proposal to acquire 20% or more of
any
such company ‘s common stock is announced, or such company announces an
acquisition proposal in which 20% or more of such company’s outstanding shares
are to be issued, such company will be removed from the Peer Group.
(vii) “Stock
Consideration”
means
the aggregate value of $184,025,000.
(viii)
“Trading
Day”
means
any day on which the NASDAQ Stock Market is open for trading.
(ix)
“United
Change”
means
the Average Closing Price of United divided by $32.33.
11.9
Termination
Fee.
(1)
If,
while a Competing Offer (as defined in (b) below) is outstanding or after such
an offer has been accepted, (i) either party terminates this Agreement pursuant
to Section
11.7,
(ii)
GCG terminates this Agreement other than pursuant to Section
11.1(b),
11.2(b)
or
11.3(b),
or
(iii) United terminates this agreement pursuant to Section 11.2(a),
11.3(a)
or
11.4,
then
GCG shall pay, or cause to be paid to United, at the time of the termination
of
this Agreement, an amount equal to $7.5 million (the “Termination
Fee”),
which
shall be the sole and exclusive remedy of United for all claims under this
Agreement.
(b) “Competing
Offer”
means
any inquiry, proposal or offer, whether in writing or otherwise, from anyone
other than United to acquire beneficial ownership (as
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determined
under Rule 13d-3 of the 0000 Xxx) of all or a material portion of the assets
of
GCG or the Bank or 15% or more of any class of equity securities of GCG or
the
Bank pursuant to a merger, consolidation or other business combination, sale
of
shares of capital stock, sale of assets, tender offer, exchange offer or similar
transaction with respect to either GCG or the Bank, including any single or
multi-step transaction or series of related transactions, which is structured
to
permit such party to acquire beneficial ownership of any material portion of
the
assets of, or 15% or more of the equity interest in either GCG or the
Bank.
11.10
Effect
of Termination.
Except
as set forth in Section
11.10,
in the
event of the termination of this Agreement pursuant to this Article
XI,
this
Agreement shall become void and have no effect, and neither party shall have
any
liability of any nature whatsoever under this Agreement or in connection with
the transactions contemplated by this Agreement except that (i) the provisions
of this Article
XI
and
Section
3.4
shall
survive any such termination and (ii) such termination shall not relieve any
party from liability arising from any willful breach of any provision of this
Agreement
ARTICLE
XII
COUNTERPARTS,
HEADINGS, ETC.
This
Agreement may be executed simultaneously in any number of counterparts, each
of
which shall be deemed an original, but all of which shall constitute one and
the
same instrument. The headings herein set out are for convenience of reference
only and shall not be deemed a part of this Agreement. A pronoun in one gender
includes and applies to the other genders as well.
ARTICLE
XIII
NO
THIRD PARTY BENEFICIARY
No
provision of this Agreement shall be deemed to create any third party
beneficiary rights in any anyone, including any employee or former employee
of
GCG (including any beneficiary or dependent thereof).
ARTICLE
XIV
BINDING
EFFECT
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided,
however,
that
this Agreement may not be assigned by either party without the prior written
consent of the other.
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ARTICLE
XV
GOVERNING
LAW
The
validity and effect of this Agreement and the Merger Agreement and the rights
and obligations of the parties hereto and thereto shall be governed by and
construed and enforced in accordance with the laws of the State of
Georgia.
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IN
WITNESS WHEREOF,
GCG and
United have caused this Agreement to be executed by their respective duly
authorized corporate officers and their respective corporate seals to be affixed
hereto as of the day and year first above written.
|
(CORPORATE
SEAL)
ATTEST:
/s/ Xxxxxx X.
Xxxxxxxxx
Secretary
|
GWINNETT
COMMERCIAL GROUP, INC.
By:
/s/
Xxxxx X.
Xxxxx
Name: Xxxxx
X. Xxxxx
Title: Chief
Executive Officer
|
|
(CORPORATE
SEAL)
ATTEST:
/s/ Xxxx
XxXxx
Assistant
Secretary
|
UNITED
COMMUNITY BANKS, INC.
By:
/s/
Xxxxx X
.Xxxxxxx
Name: Xxxxx
X .Xxxxxxx
Title:
President & Chief Executive Officer
|
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