Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and between
BANKATLANTIC BANCORP, INC.,
CSB MERGER SUB, INC.
and
COMMUNITY SAVINGS BANKSHARES, INC.
TABLE OF CONTENTS
ARTICLE I
THE MERGER.................................................. 1
1.1 Merger.............................................. 1
1.2 Consummation of the Merger; Effective Time.......... 2
1.3 Effect of the Merger................................ 2
1.4 Certificate of Incorporation and By-laws............ 2
1.5 Board of Directors.................................. 2
1.6 Officers............................................ 2
1.7 The Bank Merger..................................... 2
1.8 Prior Approvals..................................... 3
ARTICLE II
CONVERSION OF SHARES; PURCHASE PRICE........................ 3
2.1 Purchase Price...................................... 3
2.3 Effect of Conversion of Shares and Options.......... 3
2.4 Procedures for Exchange of Community Bankshares
Common Stock and Options............................ 4
2.5 Dissenters' Rights.................................. 6
2.6 Conversion of Merger Sub Common Stock............... 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BBC....................... 6
3.1 Organization and Good Standing...................... 6
3.2 Authorization and No Violation...................... 6
3.3 Governmental Consents............................... 7
3.4 BBC SEC Reports..................................... 7
3.5 BBC Financial Statements............................ 7
3.6 Information in Proxy Statement...................... 8
3.7 Merger Sub.......................................... 8
3.8 Ability to Pay Merger Consideration................. 8
3.9 Absence of Certain Changes or Events................ 8
3.10 Legal Proceedings................................... 8
3.11 Full Disclosure..................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMMUNITY BANKSHARES...... 9
4.1 Organization, Good Standing......................... 9
4.2 Capital Stock....................................... 9
4.3 Authorization; No Violation.........................10
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4.4 Subsidiaries........................................11
4.5 Broker's and Finder's Fees..........................12
4.6 Governmental Consents...............................12
4.7 Reports.............................................12
4.8 Taxes...............................................13
4.9 Material Contracts..................................15
4.10 Real Properties.....................................16
4.11 Real Property Leases................................16
4.12 Personal Property...................................17
4.13 Investigations, Litigation..........................17
4.14 Insurance...........................................18
4.15 Compliance with Laws, Regulations...................18
4.16 Employee Benefit Plans..............................19
4.17 Labor Matters.......................................21
4.18 Environmental Liability.............................22
4.19 Deposit Accounts....................................23
4.20 Loans...............................................25
4.21 Derivatives Contracts...............................26
4.22 Absence of Certain Changes..........................27
4.23 Investment Portfolio................................27
4.24 Related Party Transactions..........................27
4.25 Fiduciary Activities................................27
4.26 Intangible Property.................................27
4.27 Absence of Regulatory Actions.......................28
4.28 Customer Lists and Information......................28
4.29 FDIC Status; Liquidation Account....................28
4.30 Community Reinvestment Act Compliance...............29
4.31 Information in Proxy Statement......................29
4.32 State Takeover Laws; Certificate of Incorporation...29
4.33 Opinion of Financial Advisor........................29
4.34 Full Disclosure.....................................30
ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME.............30
5.1 Ordinary Course, Insurance, Preservation of Business30
5.2 Prohibited Action Without Approval..................31
5.3 Notice..............................................34
5.4 Liabilities.........................................34
5.5 Goodwill............................................34
5.6 Operating Expenses..................................34
5.7 Transaction Costs...................................34
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ARTICLE VI
ADDITIONAL COVENANTS OF COMMUNITY BANKSHARES................35
6.1 Access to Information...............................35
6.2 Confidential Treatment of Information...............35
6.3 Management Reports and Risk Management..............35
6.4 Fiserv and Other Vendor Agreements..................36
6.5 Loan Loss Allowance.................................36
6.6 Acquisition Proposals...............................36
6.7 Approval by Community Bankshares? Shareholders;
Proxy Statement.....................................38
6.8 Consents and Approvals by Third Parties.............39
ARTICLE VII
ADDITIONAL COVENANTS OF BBC AND COMMUNITY BANKSHARES........39
7.1 Regulatory Approvals................................39
7.2 SEC Filings and Offering Materials..................39
7.3 Publicity and Reports...............................39
7.4 Employees and Employee Benefit Plans................40
7.5 Indemnification.....................................43
7.6 Further Assurances..................................44
7.7 Tax Treatment.......................................45
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BBC..................45
8.1 Status as of Effective Time.........................45
8.2 Required Action.....................................46
8.3 Consents, Waivers...................................46
8.4 Regulatory Approval.................................46
8.5 No Action to Prevent Consummation...................46
8.6 No Action to Prevent or Restrict Merger.............46
8.7 Dissenters' Rights..................................47
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMMUNITY BANKSHARES 47
9.1 Representations, Warranties and Covenants...........47
9.2 Consents, Waivers...................................47
9.3 No Material Adverse Effect..........................47
9.4 Regulatory Approval.................................48
9.5 No Action to Prevent Consummation...................48
9.6 No Action to Prevent or Restrict Merger.............48
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER...........................48
10.1 Termination of Agreement............................48
10.2 Effect of Termination...............................50
10.3 Amendment and Waiver................................50
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ARTICLE XI
SURVIVAL....................................................50
11.1 Survival of the Representations and Warranties......50
ARTICLE XII
MISCELLANEOUS...............................................50
12.1 Payment of Expenses.................................50
12.2 Binding Effect......................................53
12.3 Law Governing.......................................53
12.4 Counterparts........................................53
12.5 Notices.............................................53
12.6 Entire Agreement....................................54
12.7 Headings............................................54
12.8 Knowledge of the Parties............................55
12.9 Attorneys' Fees.....................................55
12.10No Third Party Beneficiary..........................55
12.11Injunctive Relief...................................55
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is
entered into as of the 9th day of September, 2001, by and among
BANKATLANTIC BANCORP, INC., a Florida corporation ("BBC"), CSB
MERGER SUB, INC., a Delaware corporation and a wholly-owned
subsidiary of BBC ("Merger Sub"), and COMMUNITY SAVINGS
BANKSHARES, INC., a Delaware corporation ("Community
Bankshares").
W I T N E S S E T H:
WHEREAS, the parties desire that Community Bankshares be
acquired by BBC through the merger of Merger Sub with and into
Community Bankshares (the "Merger") upon the terms and conditions
contained herein and in accordance with applicable law;
WHEREAS, the Boards of Directors of BBC and Community
Bankshares have each determined that it is in the best interests
of their respective shareholders for BBC to acquire Community
Bankshares in the Merger, and have each adopted a resolution
approving this Agreement and the transactions contemplated
hereby; and
WHEREAS, concurrently with the execution of this Agreement
and as an inducement to BBC to enter into this Agreement, the
directors, executive officers and certain shareholders of
Community Bankshares have entered into a voting agreement (the
"Voting Agreement") pursuant to which such shareholders, among
other things, have agreed to vote the outstanding shares of
Community Bankshares' common stock, par value $1.00 per share
(the "Community Bankshares Common Stock"), owned or controlled by
them in favor of the approval of this Agreement and the Merger
contemplated hereby, upon the terms and subject to the conditions
set forth therein.
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements, representations, warranties and covenants
herein contained and for the purpose of prescribing the terms and
conditions of the Merger, the parties, intending to be legally
bound, hereby agree as follows:
ARTICLE I
THE MERGER
1.1 Merger. At the Effective Time (as defined in Section
1.2), Merger Sub shall be merged with and into Community
Bankshares and Community Bankshares will be the surviving
corporation of the Merger (the "Surviving Corporation"), in
accordance with the terms, conditions and provisions of this
Agreement and the Certificate of Merger (as defined in Section
1.2).
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1.2 Consummation of the Merger; Effective Time. The
consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxxx Xxxxxxxx & Xxxxxxxxx, P.A., 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxx, Xxxxxxx 00000, at such time as shall be fixed by
mutual agreement of BBC and Community Bankshares as promptly as
practicable after the satisfaction or waiver of all of the
conditions set forth in this Agreement. Subject to the
satisfaction or waiver of all conditions precedent to the
consummation of the transactions contemplated by this Agreement,
the parties shall cause the Merger to become effective on the
date of the Closing by executing, acknowledging and filing in
accordance with all applicable regulations, a Certificate of
Merger with respect to the Merger (the "Certificate of Merger")
with the Secretary of State of the State of Delaware which shall
provide that the Merger shall be effective as of the date of
Closing (the date and time of such effectiveness being referred
to herein as the "Effective Time"). The Closing shall be deemed
to occur simultaneously with the Effective Time.
1.3 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions
of the General Corporation Law of the State of Delaware (the
"DGCL"). Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all of the property,
rights, privileges, powers and franchises of Community Bankshares
and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Community Bankshares and Merger
Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 Certificate of Incorporation and By-laws. The
Certificate of Incorporation of Community Bankshares as in effect
immediately prior to the Merger shall be the Certificate of
Incorporation of the Surviving Corporation. The by-laws of
Community Bankshares as in effect immediately prior to the Merger
shall be the by-laws of the Surviving Corporation until
thereafter altered, amended or repealed in accordance with
applicable law.
1.5 Board of Directors. As of the Effective Time, the
Board of Directors of the Surviving Corporation will consist of
the directors of Merger Sub immediately prior to the Effective
Time.
1.6 Officers. As of the Effective Time, the officers of
Merger Sub immediately prior to the Effective Time shall
constitute the officers of the Surviving Corporation until such
time as their respective successors have been elected and
qualified.
1.7 The Bank Merger. Community Bankshares and BBC
acknowledge and agree that immediately following the Merger, BBC
shall cause the merger (the "Bank Merger") of Community Savings,
F. A., a federally chartered stock form savings association and a
wholly-owned subsidiary of Community Bankshares ("Community
Savings"), with and into BankAtlantic, a Federal Savings Bank, a
federally chartered stock form savings bank and a wholly-owned
subsidiary of BBC ("BankAtlantic"), with BankAtlantic as the
surviving bank of the Bank Merger
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and a wholly owned subsidiary of the Surviving Corporation. The
Bank Merger will be effective immediately following the Effective Time
on the same calendar day as the Closing.
1.8 Prior Approvals. The parties hereto acknowledge that
requisite approvals or waivers must be received from or notices
must be given to certain federal and state regulatory agencies.
Such regulatory agencies may include the Office of Thrift
Supervision (the "OTS"), the Federal Deposit Insurance
Corporation (the "FDIC"); and any other governmental agency or
regulatory authorities having jurisdiction over BBC, Community
Bankshares, BankAtlantic or Community Savings, as the case may be
(collectively, the "Applicable Governmental Authorities"). The
transactions contemplated hereby are subject to and conditioned
upon the receipt of all requisite regulatory approvals or
waivers, the filing of all required notices and the expiration of
any required waiting periods and, to the extent received or
accepted, such approvals, waivers or notices shall not contain or
be subject to any terms or conditions (other than those generally
imposed in similar transactions) which BBC reasonably deems to be
burdensome.
ARTICLE II
CONVERSION OF SHARES; PURCHASE PRICE
2.1 Purchase Price. The purchase price to be paid in
exchange for each issued and outstanding share of Community
Bankshares Common Stock shall be an amount equal to $19.00 per
share of Community Bankshares Common Stock (the "Per Share
Amount").
2.2 Conversion of Community Bankshares Common Stock and
Options.
(a) At the Effective Time, each share of Community
Bankshares Common Stock issued and outstanding immediately prior
to the Effective Time (other than Dissenting Shares as such term
is defined in Section 2.5 hereof) and other than shares of
Community Bankshares Common Stock then owned by Community
Bankshares (including shares held in treasury), any Subsidiary
(as such term is defined in Section 4.4 hereof) of Community
Bankshares, BBC, or any Subsidiary of BBC (in each case other
than in a fiduciary capacity or as a result of debts previously
contracted) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into and
exchangeable for the right to receive the Per Share Amount.
(b) At the Effective Time, each option to purchase a
share of Community Bankshares Common Stock (each an "Option" and,
collectively, the "Options") outstanding immediately prior to the
Effective Time, shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and
exchangeable for the right to receive in cash an amount equal to
the Per Share Amount minus the price per share of Community
Bankshares Common Stock at which such Option is exercisable (the
"Per Option Amount").
2.3 Effect of Conversion of Shares and Options. After the
Effective Time, and until surrendered for payment, each
outstanding certificate which, prior to the Effective Time,
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represented shares of Community Bankshares Common Stock (each, a
"Certificate"), shall be deemed for all purposes to represent
only the right to receive the Per Share Amount multiplied by the
number of shares of Community Bankshares Common Stock formerly
represented by such Certificate. After the Effective Time, each
Option shall be deemed for all purposes to be canceled and
converted into and represent only the right to receive an amount
of cash equal to the product of the Per Option Amount applicable
to such Option multiplied by the number of shares of Community
Bankshares Common Stock for which such Option is exercisable
immediately prior to the Effective Time. In any matters relating
to such Certificates or Options, BBC may rely conclusively upon
the record of security holders maintained by the registrar and
transfer agent for the Community Bankshares Common Stock or by
Community Bankshares containing the names and addresses of the
holders of record of Community Bankshares Common Stock or Options
at the Effective Time. The aggregate consideration to be paid
for the Community Bankshares Common Stock and Options is referred
to herein as the "Merger Consideration."
2.4 Procedures for Exchange of Community Bankshares Common
Stock and Options.
(a) BBC shall take all steps reasonably necessary on
and as of the Effective Time to deliver to an exchange agent
designated by BBC and reasonably acceptable to Community
Bankshares (the "Exchange Agent"), for the benefit of the holders
of Certificates and the holders of Options, for exchange in
accordance with this Section 2.4, an amount of cash equal to the
aggregate Merger Consideration to be paid in exchange for
outstanding Community Bankshares Common Stock and Options in
accordance with this Agreement (the "Exchange Fund"). The
Exchange Agent shall act as agent on behalf of BBC and record
holders (each a "Record Holder") of Community Bankshares Common
Stock and Options at the Effective Time, other than Community
Bankshares, any Subsidiary of Community Bankshares, BBC, or any
Subsidiary of BBC (in each case other than in a fiduciary
capacity or as a result of debts previously contracted), or any
holder of Dissenting Shares.
(b) As soon as practicable after the Effective Time
but in no event more than five business days after the Effective
Time, the Exchange Agent shall mail to each Record Holder of a
Certificate or an Option a form letter of transmittal which,
among other matters, shall specify how such Record Holder shall
receive payment of the Merger Consideration that such Record
Holder is eligible to receive. After surrender to the Exchange
Agent of a properly executed letter of transmittal and, in the
case of Record Holders of shares of Community Bankshares Common
Stock, the Certificate or Certificates representing such shares
of Community Bankshares Common Stock, the Exchange Agent shall
deliver to the person in whose name such Community Bankshares
Common Stock or Options shall have been registered, the Merger
Consideration to which such Record Holder shall have become
entitled pursuant to the provisions of this Article II. There
shall be no obligation to deliver the Merger Consideration in
respect of any shares of Community Bankshares Common Stock until
(and then only to the extent that) the holder thereof surrenders
its Certificate or Certificates for exchange as provided in this
Section 2.4, or, in lieu thereof, delivers to the Exchange Agent
an appropriate affidavit of loss and an indemnity agreement
and/or a bond as may be required in any such case by the Exchange
Agent. If any payment for shares
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of Community Bankshares Common Stock or Options is to be made in a
name other than that in which the Certificate surrendered for exchange
or the Option, as the case may be, is registered, it shall be a condition
to the payment that, in the case of holders of shares of Community
Bankshares Common Stock, the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and,
in the case of holders of Options, the special instructions in
the letter of transmittal shall have been complied with, and in
each case that the person requesting the payment shall either:
(i) pay to the Exchange Agent any transfer or other taxes
required by reason of the payment to a person other than the
registered holder of the Certificate surrendered or the Option or
(ii) establish to the satisfaction of the Exchange Agent that
such taxes have been paid or are not payable.
(c) From and after the Effective Time, there shall be
no transfers on the stock transfer books of Community Bankshares
of the Community Bankshares Common Stock nor shall there be any
further exercises of Options which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any
Certificates formerly representing such shares or any Options are
presented for transfer or exercise, respectively, to the Exchange
Agent, they shall be exchanged for the Merger Consideration and
canceled as provided in this Article II.
(d) At any time following the six-month period after
the Effective Time, BBC shall be entitled to require the Exchange
Agent to deliver to it any portions of the Exchange Fund which
had been made available to the Exchange Agent and which have not
been disbursed to holders of Certificates or Options (including,
without limitation, all interest and other income received by the
Exchange Agent in respect of all funds made available to it), and
thereafter such holders shall be entitled to look to BBC (subject
to abandoned property, escheat and other similar laws) only as
general creditors thereof with respect to any Merger
Consideration that may be payable with respect to the
Certificates or Options held by them; provided, however, that the
Exchange Agent shall not deliver to BBC any portion of the
Exchange Fund payable to the holders of Certificates who have
theretofore surrendered their Certificates and a duly executed
and completed letter of transmittal to the Exchange Agent.
Notwithstanding the foregoing, neither BBC nor the Exchange Agent
shall be liable to any holder of a Certificate or an Option for
any Merger Consideration delivered in respect of such Certificate
or Option, respectively, to a public official pursuant to any
abandoned property, escheat or other similar law.
(e) The Exchange Agent or BBC shall be entitled to
deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of Certificates
or Options such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended and the rules and regulations
thereunder (the "Code"), or any provision of state, local or
foreign Law (as defined below). To the extent that amounts are
so withheld by the Exchange Agent or BBC, such withheld amounts
shall be treated for all purposes of this Agreement as having
been paid to the holder of the Certificates or Options in respect
of which such deduction and withholding was made.
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2.5 Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary and unless otherwise provided by
applicable law, each share of Community Bankshares Common Stock
which is issued and outstanding immediately prior to the
Effective Time and which is owned by a shareholder who, pursuant
to Section 262 of the DGCL duly exercises his or her right to
dissent with respect to his or her shares (the "Dissenting
Shares"), shall not be converted into the right to receive, or be
exchangeable for, the Merger Consideration, but, instead, the
holders thereof shall be entitled to payment from the Surviving
Corporation of the appraised value of such Dissenting Shares in
accordance with the provisions of Section 262 of the DGCL. If
any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right of appraisal, each share
of Community Bankshares Common Stock of such holder shall
thereupon no longer be deemed a Dissenting Share and shall
automatically be converted into and shall thereafter be
exchangeable only for the right to receive the Per Share Amount
as provided in this Agreement.
2.6 Conversion of Merger Sub Common Stock. At the
Effective Time, each share of the Common Stock, par value $.01
per share, of Merger Sub ("Merger Sub Common Stock") that is
issued and outstanding at the Effective Time shall thereafter
represent one validly issued, fully paid and non-assessable share
of Common Stock of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BBC
BBC represents and warrants to Community Bankshares as
follows:
3.1 Organization and Good Standing. BBC is a corporation
duly organized and validly existing under the laws of the State
of Florida whose status is active. Merger Sub is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of BBC and Merger Sub has all
necessary corporate power to execute and deliver this Agreement,
to own its respective properties and assets and to carry on its
respective business as now conducted.
3.2 Authorization and No Violation. The execution and
delivery of this Agreement by BBC and Merger Sub and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of BBC and Merger Sub and, subject to the terms and
conditions of this Agreement, this Agreement constitutes the
legal, valid and binding obligation of BBC and Merger Sub,
enforceable against them in accordance with its terms, except as
limited by (x) bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance laws and other similar laws
affecting creditors' rights generally, and (y) general principles
of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution, delivery and
performance of this Agreement by BBC and Merger Sub, nor the
consummation of the transactions contemplated hereby, nor the
compliance by BBC or Merger Sub with any of the provisions of
this Agreement, will: (i) except as set forth on Schedule 3.2
hereto, violate, conflict with, or result in a breach of any of
the provisions of, or constitute a
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default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination or acceleration, or the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets
of BBC or BankAtlantic under any of the terms, conditions or provisions
of (a) the Articles or Certificate of Incorporation or by-laws
(or analogous organizational documents) of BBC or BankAtlantic or
(b) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which BBC
or BankAtlantic is a party or by which BBC or BankAtlantic may be
bound, or to which BBC or BankAtlantic or their respective
properties or assets may be subject, or (ii) violate any
judgment, ruling, order, writ, injunction, decree (each an
"Order") or statute, rule, regulation, ordinance or directive
(each a "Law") applicable to BBC or BankAtlantic or any of their
respective properties or assets.
3.3 Governmental Consents. Other than approvals or waivers
from the Applicable Governmental Authorities listed on Schedule
3.3 hereto, the execution and delivery of this Agreement by BBC
and Merger Sub does not, and the performance by BBC and Merger
Sub of their respective obligations hereunder will not, require
any consent, approval, authorization or permit of, or filing by
BBC with or notification by BBC to, any Applicable Governmental
Authority, except where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not have a Material Adverse Effect as
defined in Section 4.1, or prevent or materially delay the
performance by BBC or Merger Sub of its obligations pursuant to
this Agreement. Neither BBC nor Merger Sub have any reason to
believe that any of the required approvals or waivers from any of
the Applicable Governmental Authorities will not be received or
that any such approval or waiver will contain any condition or
requirement deemed unduly burdensome by BBC or Merger Sub.
3.4 BBC SEC Reports. All reports and other documents
filed by BBC with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including but not limited to proxy statements
and reports on Form 10-K, Form 10-Q and Form 8-K (collectively,
the "BBC SEC Reports"), as of the respective dates they were
filed, complied in all material respects with the rules and
regulations of the SEC and did not contain any untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
3.5 BBC Financial Statements. BBC's audited consolidated
statements of financial condition and the related statements of
operations, changes in shareholders' equity and comprehensive
income, and cash flows as of and for the fiscal years ended
December 31, 1998, 1999 and 2000 (including any notes thereto)
and BBC's unaudited consolidated statement of financial condition
and the related statements of operations, changes in
shareholders' equity and comprehensive income, and cash flows as
of and for the six months ended June 30, 2000 and 2001 (including
any notes thereto), (collectively, the "BBC Financial
Statements"), have been prepared in conformity with United States
generally accepted accounting principles consistently applied
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("GAAP") (except for changes, if any, required by GAAP and
disclosed therein), and the statements of operations present
fairly the results of operations for the respective periods
covered and the statements of condition present fairly the
financial condition of BBC as of their respective dates except
for BBC's interim Financial Statements which are subject to
normal year-end non-material adjustments.
3.6 Information in Proxy Statement. None of the
information supplied or to be supplied by BBC in writing
specifically for inclusion or incorporation by reference in the
proxy statement (the "Proxy Statement") relating to the special
meeting of Community Bankshares' shareholders to be held in
connection with the consideration and approval of this Agreement
and the Merger (the "Special Meeting") will, at the dates mailed
to Community Bankshares' shareholders and at the times of the
Special Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. No
representation is made by BBC with respect to statements made
therein based on information supplied by Community Bankshares for
inclusion in the Proxy Statement.
3.7 Merger Sub. Merger Sub has no material liabilities or
other obligations other than those incurred or entered into in
connection with this Agreement or the transactions contemplated
hereby. The authorized capital stock of Merger Sub consists of
100 shares of Merger Sub Common Stock and all issued and
outstanding shares of Merger Sub Common Stock are owned solely by
BBC.
3.8 Ability to Pay Merger Consideration. BBC will have
available as of the Effective Time sufficient cash to pay the
Merger Consideration as set forth in Section 2.1. BankAtlantic
is and BBC believes that BankAtlantic immediately following the
Effective Time will be and will use all reasonable efforts to be,
deemed a "well-capitalized" institution pursuant to the Home
Owners Loan Act ("HOLA") and the regulations of the OTS.
3.9 Absence of Certain Changes or Events. There has
not been any material adverse change in the business, operations,
prospects, assets or financial condition of BBC since June 30,
2001 and to the best knowledge of BBC, no fact or condition
exists which BBC believes would in the future have a Material
Adverse Effect.
3.10 Legal Proceedings. Neither BBC nor Merger Sub is a
party to any, and there are no pending, or to the best knowledge
of BBC and Merger Sub, threatened legal, administrative,
arbitration or other proceedings, claims, actions or governmental
investigations of any nature against BBC or Merger Sub, except
such proceedings, claims actions or governmental investigations
which in the good faith judgment of BBC and Merger Sub will not
have a Material Adverse Effect. Neither BBC nor Merger Sub is a
party to any order, judgment or decree which would have a
Material Adverse Effect.
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3.11 Full Disclosure. No representation or warranty of BBC
contained in this Agreement, and none of the statements or
information concerning BBC and Merger Sub contained in this
Agreement or the exhibits and the schedules hereto, contains or
will contain any untrue statement of a material fact nor will
such representations, warranties, covenants or statements taken
as a whole omit a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMMUNITY BANKSHARES
Community Bankshares represents and warrants to BBC and
Merger Sub as follows:
4.1 Organization, Good Standing.
(a) Community Bankshares is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware. Community Bankshares has all necessary
corporate power to execute and deliver this Agreement, to own its
properties and assets and to carry on its business as now
conducted. Community Bankshares is qualified to conduct business
and in good standing in each jurisdiction in which the nature of
its businesses requires such qualification, and each such
jurisdiction is set forth on Schedule 4.1 hereto, except where
the failure to be duly qualified is not reasonably likely to have
a Material Adverse Effect (as hereinafter defined).
(b) For the purposes of this Agreement, the term
"Material Adverse Effect" shall mean (i) in the case of Community
Bankshares and its Subsidiaries, any effect that (A) is material
and adverse to the financial condition, results of operations,
assets, business or prospects of Community Bankshares and its
Subsidiaries (as hereinafter defined) considered as one
enterprise or (B) materially impairs the ability of Community
Bankshares to consummate the transactions contemplated by this
Agreement, provided, however, that the term "Material Adverse
Effect" shall not be deemed to include (I) the impact of changes
in (a) laws, regulations, or policies of any Federal or state
court, administrative agency, commission or other governmental
authority or interpretations thereof; or (b) GAAP, that in each
case are generally applicable to the banking industry; (II)
actions taken or to be taken by Community Bankshares upon the
written request of BBC or pursuant to this Agreement; (III)
changes in the general level of market interest rates; or (IV)
expenses incurred in connection with this Agreement and the
transactions contemplated thereby; and (ii) in the case of BBC,
any effect that materially impairs the ability of BBC to make
payment at the Effective Time of the Merger Consideration or
otherwise materially impairs the ability of BBC or BankAtlantic
to consummate any of the transactions contemplated by the
Agreement.
4.2 Capital Stock.
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(a) Community Bankshares' authorized capital stock
consists solely of 60,000,000 shares of Community Bankshares
Common Stock and 10,000,000 shares of preferred stock, par value
$1.00 per share (the "Community Bankshares Preferred Stock"). As
of the date hereof, 8,660,254 shares of Community Bankshares
Common Stock and no shares of Community Bankshares Preferred
Stock are issued and outstanding, 696,333 shares of Community
Bankshares Common Stock are reserved for issuance upon exercise
of outstanding Options and 1,910,886 shares of Community
Bankshares Common Stock are held in treasury. Schedule 4.2 sets
forth a list of all outstanding Options and the exercise prices
of such Options.
(b) All of the issued and outstanding shares of
Community Bankshares Common Stock are duly and validly authorized
and issued, fully paid and nonassessable. None of the
outstanding shares of Community Bankshares Common Stock has been
issued in violation of any preemptive rights. The Community
Bankshares Common Stock is the only security of Community
Bankshares with the right to vote on the transactions
contemplated by this Agreement or for the election of directors
of Community Bankshares. Except for the outstanding shares of
Community Bankshares Common Stock, there are no (nor will there
be on the Effective Time) shares of any class of capital stock or
equity securities of Community Bankshares outstanding and, except
for Options outstanding on the date hereof to acquire not more
than 696,333 shares of Community Bankshares Common Stock, there
are no (nor will there be) outstanding or existing Options or
other agreements, commitments or obligations relating to the
issuance of additional shares of any class of capital stock or
other equity securities of Community Bankshares. All outstanding
Options were granted under: (i) Community Bankshares' Amended and
Restated 1995 Stock Option Plan and (ii) Community Bankshares'
Amended and Restated 1999 Stock Option Plan. None of the Options
was issued in violation of applicable Law or the terms of the
plan under which it was granted. Community Bankshares is not a
party to or bound by any contract, agreement or arrangement to
sell or otherwise dispose of or redeem, purchase or otherwise
acquire any of its capital stock. There are no agreements or
understandings with respect to the voting of any shares of
Community Bankshares Common Stock or which restrict the transfer
of such shares to which Community Bankshares is a party, nor does
Community Bankshares have knowledge of any such agreements or
understandings to which Community Bankshares is not a party.
4.3 Authorization; No Violation. The execution and
delivery of this Agreement by Community Bankshares and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of Community Bankshares (other than the approval of this
Agreement and the Merger by the holders of the Community
Bankshares Common Stock), and, subject to the terms and
conditions of this Agreement, this Agreement constitutes the
legal, valid and binding obligation of Community Bankshares,
enforceable against it in accordance with its terms, except as
limited by (x) bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance laws and other similar laws
affecting creditors' rights generally, and (y) general principles
of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution, delivery and
performance of this Agreement by Community Bankshares, nor the
consummation of the transactions contemplated hereby (including
the Bank Merger), nor the compliance by Community
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Bankshares with any of the provisions of this Agreement, will: (i)
violate, conflict with, or result in a breach of any of the provisions
of, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration, or the creation
of any lien, security interest, charge or encumbrance upon any of
the properties or assets of Community Bankshares or any
Subsidiary of Community Bankshares under any of the terms,
conditions or provisions of (a) the Certificate of Incorporation
or by-laws (or analogous organizational documents) of Community
Bankshares or any of its Subsidiaries or (b) any material note,
bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Community
Bankshares or any of its Subsidiaries is a party or by which
Community Bankshares or any of its Subsidiaries may be bound, or
to which Community Bankshares or any of its Subsidiaries or their
respective properties or assets may be subject, or (ii) violate
any Order or Law applicable to Community Bankshares or any of its
Subsidiaries or any of their respective properties or assets.
4.4 Subsidiaries. Set forth on Schedule 4.4 hereto, is a
list of (i) each corporation, savings association or other
financial institution at least 25% of whose outstanding voting
stock is owned, directly or indirectly, by Community Bankshares
or by one or more of its Subsidiaries, (ii) each partnership,
joint venture, limited liability company or similar entity, at
least 25% of whose outstanding partnership or similar interests
are owned by Community Bankshares, or by one or more of its
Subsidiaries, or over which Community Bankshares or any of its
Subsidiaries, directly or indirectly, has or shares management
control, and (iii) each partnership of which Community Bankshares
or any of its Subsidiaries is a general partner (each of the
foregoing being referred to herein as a "Subsidiary"), including:
(a) its name and jurisdiction of organization, (b) the number of
shares of authorized capital stock of each class of its capital
stock (or other equity interests), (c) the number of issued and
outstanding shares of each class of its capital stock (or other
equity interests), and (d) its directors and officers or general
or managing partners or managers or managing members. Except as
set forth on Schedule 4.4 hereto, Community Bankshares does not
own more than 5% of the capital stock or similar interests in any
entities (including, without limitation, corporations, limited
liability companies, partnerships, joint ventures and inactive
corporations). All outstanding shares of the capital stock or
other ownership interests of each Subsidiary are owned of record
and beneficially by Community Bankshares. Each Subsidiary (other
than Community Savings) is duly organized and validly existing
under the laws of the State of Florida whose status is active and
has all necessary power to own its properties and assets and to
carry on its business as presently conducted, and holds all
necessary licenses and certificates from the United States, the
States of Delaware or Florida, and any other governmental
authority having jurisdiction over the conduct of its business as
it is now being conducted, except where the absence of such
license or certificate would not have a Material Adverse Effect.
Community Savings is duly organized and validly existing as a
federal savings association under the laws of the United States
and continues to hold a valid charter to do business as a federal
savings association. Each Subsidiary is duly qualified to
conduct business and is in good standing in each jurisdiction in
which the nature of the business transacted by it requires such
qualification, except where the absence of such qualification
would not have a Material Adverse Effect.
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4.5 Broker's and Finder's Fees. Except as set forth on
Schedule 4.5 hereto, Community Bankshares has not, directly or
indirectly, incurred any obligation or liability, contingent or
otherwise, for any brokers or finders in respect of the matters
provided for in this Agreement and no broker or finder has acted,
directly or indirectly, on behalf of Community Bankshares in
connection with this Agreement or the transactions contemplated
hereby.
4.6 Governmental Consents. Other than approvals or waivers
from the Applicable Governmental Authorities listed on Schedule
4.6 hereto, the execution and delivery of this Agreement by
Community Bankshares does not, and the performance by Community
Bankshares of its obligations hereunder will not, require any
consent, approval, authorization or permit of, or filing by
Community Bankshares or any of its Subsidiaries with, or
notification by Community Bankshares or any of its Subsidiaries
to, any Applicable Governmental Authority. Community Savings is,
and believes that immediately prior to the Effective Time it will
be, deemed a "well capitalized" institution pursuant to HOLA and
the regulations of the OTS.
4.7 Reports.
(a) Since January 1, 1999, Community Bankshares has
filed all reports and other documents required to be filed by it
with the SEC under the Exchange Act, including but not limited to
proxy statements and reports on Form 10-K, Form 10-Q and Form 8-K
(collectively, the "Community Bankshares SEC Reports"). As of
the respective dates they were filed with the SEC, the Community
Bankshares SEC Reports, including all documents incorporated by
reference into such reports, complied in all material respects
with the rules and regulations of the SEC and did not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) Community Bankshares and each of its Subsidiaries
has timely filed all reports, registrations and statements,
together with any amendments required to be made with respect
thereto, that were required to be filed with all Applicable
Governmental Authorities. All such reports, registrations and
statements are collectively referred to as the "Community
Reports." As of their respective dates, such Community Reports,
in all material respects (i) were complete and accurate and (ii)
complied with all the statutes, rules and regulations enforced or
promulgated by the Applicable Governmental Authorities with which
they were filed including, but not limited to, any state or
federal securities laws.
(c) Community Bankshares (i) has delivered to BBC (A)
Community Bankshares' audited consolidated statements of
financial condition and the related statements of operations,
changes in shareholders' equity and cash flows as of and for the
fiscal years ended December 31, 1998, 1999 and 2000 (including
any notes thereto) together with reports thereon of Xxxxx Xxxxxx
and Company LLP, certified public accountants, and (B) Community
Bankshares unaudited consolidated statement of financial
condition and the related statements of operations, changes in
shareholders' equity and cash flows as of and for the six months
ended June 30, 2000 and 2001 (including any notes thereto), and
(ii) will deliver to BBC any further monthly or
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quarterly statements prepared by or for Community Bankshares as soon
as such statements become available (the financial statements
referred to in clauses (i) and (ii) being referred to herein
collectively as the "Community Financial Statements"). All
Community Financial Statements other than monthly reports have
been or will be prepared in conformity with GAAP (except for
changes, if any, required by GAAP and disclosed therein), and the
statements of operations present, or will present, fairly the
results of operations for the respective periods covered and the
statements of condition present, or will present, fairly the
financial condition of Community Bankshares as of their
respective dates except for Community Bankshares' interim
Community Financial Statements which are or will be subject to
normal year-end non-material adjustments. Other than as
disclosed in the balance sheet for the six months ended June 30,
2001 (the "Reference Balance Sheet") contained in the Community
Financial Statements, neither Community Bankshares or its
Subsidiaries has any material liabilities, commitments or
obligations of any nature (whether unaccrued, contingent or
otherwise) and there is no basis for the assertion against
Community Bankshares or any Subsidiary of any such liability,
commitment or obligation, except for liabilities, commitments or
obligations arising in the ordinary course of business.
4.8 Taxes.
(a) Except as set forth on Schedule 4.8 hereto: (i)
all returns and reports ("Returns") in respect of any and all
taxes, fees, levies, duties, tariffs, imposts, and other charges
of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect
thereto) imposed by any government or taxing authority,
including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment
compensation, or net worth, taxes or other charges in the nature
of excise, withholding, ad valorem, stamp, transfer, value added,
or gains taxes; license, registration and documentation fees; and
customs' duties, tariffs, and similar charges (collectively,
"Taxes") required to be filed with respect to Community
Bankshares and each of its Subsidiaries have been timely filed;
(ii) all Taxes required to be shown on such Returns or otherwise
due, other than extended returns (which are identified on
Schedule 4.8), have been timely paid; (iii) all such Returns are
true, correct and complete in all material respects; (iv) no
adjustment relating to such Returns has been proposed formally or
informally by any Tax authority and no valid basis exists for any
such adjustment and no issue has been raised by any Taxing
authority in any examination which by application of the same or
similar principles, could reasonably be expected to result in a
proposed deficiency for any subsequent Taxable period; (v) there
are no pending or, to the knowledge of Community Bankshares,
threatened actions or proceedings for the assessment or
collection of Taxes against Community Bankshares or any of its
Subsidiaries nor, to Community Bankshares' knowledge, has any Tax
authority raised any issues regarding Taxes or Returns which
could have a material adverse impact upon the Surviving
Corporation or BBC following the consummation of the transactions
contemplated hereby; (vi) there are no liens for Taxes (other
than for current Taxes not yet due and payable) on any assets of
Community Bankshares or any of its Subsidiaries; (vii) the
Community Financial Statements contain and will contain adequate
reserves and balances to satisfy all liabilities for Taxes for
the periods covered thereby; (viii) Community Bankshares and each
of its Subsidiaries has collected all real, personal and
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intangible property Taxes attributable to its assets, all sales,
value-added and similar Taxes, and all payroll and other
withholding Taxes, and have remitted all such Taxes to the proper
Taxing authority on a timely basis and in accordance with
applicable procedures; (ix) Community Bankshares and each of its
Subsidiaries has complied in all material respects with all
information and reporting requirements required by the Code
including, without limitation, the timely filing of all
informational returns and has properly collected and remitted all
applicable "backup" withholding Taxes; (x) Community Bankshares
and each of its Subsidiaries has duly and validly complied in all
material respects with all applicable Laws regarding escheat,
abandoned or unclaimed property or similar Laws; (xi) for federal
income Tax purposes, Community Bankshares and its Subsidiaries
calculate their respective reserves for bad debts in compliance
with the requirements of the Code; (xii) neither Community
Bankshares nor any of its Subsidiaries has any pending ruling
requests, accounting method change requests or applications to
change its taxable year-end pending before any Taxing authority;
(xiii) the conversion of Community Savings from mutual to stock
form was a Tax-free transaction under the Code; and (xiv) neither
Community Bankshares nor any of its Subsidiaries has made any
election under Section 341(d) of the Code (or any corresponding
provision of State, local or foreign Tax Law).
(b) Except as set forth on Schedule 4.8, (i) with
respect to each Taxable period of Community Bankshares and its
Subsidiaries, either such Taxable period has been audited by the
relevant Taxing authority or the time for assessing or collecting
Taxes with respect to each such Taxable period has closed and
such Taxable period is not subject to review by any relevant
Taxing authority; (ii) neither Community Bankshares nor any of
its Subsidiaries has requested or been granted an extension of
time in which any Taxes may be assessed or collected by any
Taxing authority; (iii) neither Community Bankshares nor any of
its Subsidiaries has requested or been granted an extension of
the time for filing any Return to a date later than the date of
the Closing; and (iv) Community Bankshares has made available to
BBC complete copies of all federal, state and foreign income,
franchise and similar Returns, examination reports, and
statements of deficiencies assessed against or agreed to by
Community Bankshares or any of its Subsidiaries, in each case,
relating to taxable periods beginning on or after January 1,
1996.
(c) Neither Community Bankshares nor any of its
Subsidiaries will be required (i) as a result of a change in
method of accounting for a taxable period ending on or prior to
the Effective Time, to include any adjustment under Section
481(c) of the Code (or any corresponding provisions of state,
local or foreign income Tax Law) in Taxable income for any
Taxable period (or portion thereof) beginning after the Effective
Time or (ii) as a result of any "closing agreement," as described
in Section 7121 of the Code (or any corresponding provision of
state, local or foreign income Tax Law), to include any item of
income or exclude any item of deduction from any taxable period
(or portion thereof) beginning after the Effective Time; (iii)
neither Community Bankshares nor any of its Subsidiaries has been
a member of an affiliated group or filed or been included in a
combined, consolidated or unitary income Return; (iv) except as
set forth in Schedule 4.8(c), neither Community Bankshares nor
any of its Subsidiaries is a party to or bound by any Tax
allocation or Tax sharing agreement or has any current or
potential contractual obligation to indemnify any other person
with respect to Taxes; (v) neither Community Bankshares nor any
of its Subsidiaries has made any payments, or is or will become
obligated
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(under any Commitment entered into on or before the Effective
Time) to make any payments, that will be non-deductible
under Sections 162(m) and 280G of the Code (or any corresponding
provision of state, local or foreign income Tax Law); (vi) BBC
will not be required to deduct and withhold any amount pursuant
to Section 1445(a) of the Code upon the consummation of the
Merger; (vii) neither Community Bankshares nor any of its
Subsidiaries has permanent establishment in any foreign country,
as defined in the relevant Tax treaty between the United State of
America and such foreign country; and (viii) no claim has ever
been made by a taxing authority in a jurisdiction where Community
Bankshares or any of its Subsidiaries does not file Returns that
it is or may be subject to Taxes assessed by such jurisdiction.
4.9 Material Contracts. Schedule 4.9 hereto sets forth a
true and complete list of all material contracts, agreements,
arrangements and other instruments to which Community Bankshares
or any of its Subsidiaries is a party or otherwise relating to or
affecting any of their respective assets, properties or
operations (except that no information need be provided with
respect to clauses (ii) and (iii) below with respect to any of
the foregoing which are terminable by Community Bankshares
without penalty upon not more than 30 days written notice),
including, without limitation, all written or oral, express or
implied: (i) contracts, agreements, arrangements and commitments
not made in the ordinary course of business including, without
limitation, any employment, severance or separation agreements or
arrangements and any agreements or arrangements with affiliates
and related persons; (ii) purchase and supply contracts; (iii)
contracts, agreements, arrangements or understandings with
respect to the development, license, sale or use of computer
software programs or applications; (iv) contracts, agreements,
arrangements, relationships, indentures or other instruments
relating to the borrowing of money by Community Bankshares or any
of its Subsidiaries (other than in the ordinary course of the
banking business of Community Savings); (v) agreements and other
arrangements for the sale of any assets other than in the
ordinary course of business or for the grant of any options or
preferential rights to purchase any assets, property or rights;
(vi) documents granting any power of attorney with respect to the
affairs of Community Bankshares or any of its Subsidiaries; (vii)
suretyship contracts, working capital maintenance or other forms
of guaranty agreements by Community Bankshares or any of its
Subsidiaries; (viii) contracts, agreements, arrangements, or
commitments limiting or restraining Community Bankshares or any
of its Subsidiaries from engaging or competing in any lines of
business or with any person, firm, or corporation; (ix) any
contract, agreement, arrangement or commitment which cannot be
terminated by Community Bankshares at will and without penalty
relating to the employment of a consultant or the employment,
election or retention of any present or former director, officer
or employee of Community Bankshares or any of its Subsidiaries;
(x) partnership and joint venture agreements; (xi) any "material
contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC); and (xii) all amendments,
modifications, extensions or renewals of any of the foregoing
(the foregoing contracts, agreements, arrangements and documents
are hereinafter referred to collectively as the "Commitments" and
individually as a "Commitment"). Each Commitment is valid,
binding and enforceable against the parties thereto in accordance
with its terms, and is in full force and effect on the date
hereof. Community Bankshares and each of its Subsidiaries have
performed in all material respects all obligations required to be
performed by such entity to date under, and are not in default in
respect of, any Commitment, and no event has occurred which, with
due notice or
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lapse of time or both, would constitute such a default. Except
as specifically set forth on Schedule 4.9 and identified as such,
no consent of or notice to third parties is required relating to any
Commitment as a consequence of this Agreement or the transactions
contemplated herein. No other party to any Commitment is in default
in respect thereof, and to the knowledge of Community Bankshares no
event has occurred which, with due notice or lapse of time or both,
would constitute such a default. Community Bankshares has made available
to BBC true, correct and complete copies of all the written Commitments
and a brief written summary or description of each oral
Commitment, and no Commitment has been modified in any material
respect since the date it was made available.
4.10 Real Properties. Schedule 4.10 hereto describes all
real estate owned or leased by Community Bankshares or any of its
Subsidiaries, exclusive of "real estate owned" ("REO") acquired
as a result of debts previously contracted and held for resale.
All such real property, if owned by Community Bankshares or any
of its Subsidiaries (the "Real Property"), is owned under good
and marketable title, free and clear of all liens, security
interests, title defects, pledges, claims, charges mortgages or
encumbrances ("Liens"), except statutory Liens securing payments
not yet due. Except as set forth in Schedule 4.10: (i) all of
the Real Property is free from any zoning Laws and from all
special Taxes or assessments, except those generally applicable
to other similarly situated properties in the tax districts in
which such Real Property is located, (ii) Community Bankshares
and each of its Subsidiaries has the exclusive right of
possession of each tract comprising its respective Real Property,
and (iii) the boundaries of each parcel of such Real Property are
contiguous to the rights-of-way of abutting public roads, and
there is ingress and egress to and from all of such Real
Property. All improvements on such Real Property and the
operations therein conducted conform in all material respects to
all applicable health, fire, environmental, safety, zoning and
building Laws. All buildings, structures, improvements and
fixtures owned, leased or used by Community Bankshares or any of
its Subsidiaries in the conduct of their respective businesses
conform in all material respects (or are otherwise exempt from)
all applicable codes and rules adopted by national and local
associations and boards of insurance underwriters; and all such
buildings, structures, improvements and fixtures are in
satisfactory operating condition and repair.
4.11 Real Property Leases. All leases pursuant to which
Community Bankshares or any of its Subsidiaries is lessee or
lessor of any real property (the "Leases") are listed in Schedule
4.11 hereto. All such Leases are valid, legally binding, in full
force and effect, and enforceable in accordance with their terms.
There is not under any of the Leases: (i) any default by
Community Bankshares or any of its Subsidiaries or any claim of
default which with notice or lapse of time, or both, would
constitute a default by Community Bankshares or any of its
Subsidiaries; or (ii) any default or claim of default against any
lessor to or lessee of Community Bankshares or any of its
Subsidiaries, or any event of default or event which with notice
or lapse of time, or both, would constitute a default by any such
lessor or lessee. The consummation of the transactions
contemplated hereby will not result in a breach or default under
any of the Leases, and, except as set forth on Schedule 4.11
hereto and specifically identified as such, no consent of or
notice to any third party is required as a consequence thereof.
Community Bankshares has made available to BBC true, correct and
complete copies of the Leases, and no Lease has been
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modified in any respect since the date it was made available.
Community Bankshares and each of its Subsidiaries owns unencumbered
title in and to the leasehold improvements located upon its leased
properties (but not to the buildings, fixtures or the land upon
which the same are situated) except for statutory Liens securing
payments not yet due. None of the property subject to a Lease is
subject to any sublease, license or other agreement granting to
any person any right to the use, occupancy or enjoyment of such
property or any portion thereof.
4.12 Personal Property. Except as set forth in Schedule
4.12, Community Bankshares and each of its Subsidiaries owns and
has good and merchantable title, free and clear of all Liens
(except for statutory Liens securing payments not yet due) to its
respective Personal Property (as hereinafter defined) shown on
Schedule 4.12 as owned by it and to all the machinery, equipment,
furniture, fixtures, inventory, receivables and other tangible or
intangible personal property (the "Personal Property") reflected
on the consolidated statement of financial condition of Community
Bankshares as of December 31, 2000 (the "Reference Balance
Sheet") and all such property acquired since the date thereof,
except for sales and dispositions in the ordinary course of
business since the date of the Reference Balance Sheet. None of
the Liens, if any, listed on Schedule 4.12 materially adversely
affects the value of any of the items of the Personal Property to
which it relates or interferes with its use in the conduct of
business of Community Bankshares or any of its Subsidiaries.
Community Bankshares and each of its Subsidiaries holds good and
transferable leaseholds in all of their respective Personal
Property which they lease, in each case under valid and
enforceable leases. The consummation of the transactions
contemplated hereby will not result in a breach or default under
any such lease and, except as set forth in Schedule 4.12, no
consent of or notice to any third party is required as a
consequence thereof. Neither Community Bankshares nor any of its
Subsidiaries is in breach of or default under (and no event has
occurred which, with due notice or lapse of time or both, may
constitute such a lapse or default under) any lease of any items
of Personal Property leased by it. The Personal Property and
other personal property now owned, leased or used by Community
Bankshares and each of its Subsidiaries is sufficient and
adequate to carry on their respective businesses as presently
conducted and all items thereof are in good operating condition
and repair, subject only to normal wear and tear.
4.13 Investigations, Litigation. Except as set forth on
Schedule 4.13 hereto, there is and has been no investigation by
any governmental authority or agency during the past five years
or any action, suit, proceeding or claim pending or threatened,
against or adversely affecting Community Bankshares or any of its
Subsidiaries (including, without limitation, any investigation,
action, or proceeding with respect to Taxes), or the assets or
business of Community Bankshares or any of its Subsidiaries.
Except as disclosed on Schedule 4.13: (i) neither Community
Bankshares nor any of its Subsidiaries nor any director, officer,
employee or agent of Community Bankshares or any of its
Subsidiaries (in their respective capacities as such), is a party
to any, and there are no pending or, to the knowledge of
Community Bankshares, threatened, legal, administrative, arbitral
or other proceedings, claims, suits, actions or governmental
investigations of any nature against Community Bankshares or any
of its Subsidiaries, or any director, officer, employee or agent
of Community Bankshares or any of its Subsidiaries (in their
respective capacities as such), or involving any property or
assets of Community Bankshares or any of its Subsidiaries and
(ii) there is no outstanding Order of any court or governmental
authority or
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agency against or affecting Community Bankshares or any of its
Subsidiaries, or any of their respective assets, businesses or
operations.
4.14 Insurance. Community Bankshares and its Subsidiaries
have in effect insurance coverage with reputable insurers, which,
in respect to amounts, types and risks insured, is adequate and
customary for the businesses in which Community Bankshares and
its Subsidiaries are engaged. All of the insurance policies,
binders, bonds and other similar forms of insurance owned, held
or maintained by Community Bankshares or any of its Subsidiaries
are in full force and effect, and all premiums with respect
thereto covering all periods up to and including the date hereof
have been paid (other than retrospective premiums which may be
payable with respect to worker's compensation insurance
policies). Neither Community Bankshares nor any of its
Subsidiaries is in default under any such policy, and no notice
of cancellation or termination has been received with respect to
any of the foregoing, and all claims thereunder have been filed
in due and timely fashion. The insurance policies to which
Community Bankshares or any of its Subsidiaries is a party are
sufficient for compliance with all requirements of Law and, to
the extent applicable, of all Commitments to which Community
Bankshares or any of its Subsidiaries is a party and provide
adequate insurance coverage for the assets and operations of
Community Bankshares and its Subsidiaries. Neither Community
Bankshares nor any of its Subsidiaries has been refused any
insurance with respect to any assets or operations, nor has any
coverage been limited in any material respect to any operations
by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last
five years. Set forth on Schedule 4.14 is a list of all
insurance policies, binders, bonds and other similar forms of
insurance owned, held or maintained by or for the benefit of
Community Bankshares or any of its Subsidiaries.
4.15 Compliance with Laws, Regulations. Community
Bankshares and each of its Subsidiaries have all permits,
licenses, certificates of authority, orders and approvals
("Permits") of, and have made all required filings, applications
and registrations ("Filings") with, all governmental authorities
and agencies necessary to permit them to carry on their business
as presently conducted except where the failure to have such
Permits would not have a Material Adverse Effect. All such
Permits are in full force and effect, and, to the knowledge of
Community Bankshares, no suspension or cancellation of any of
them is pending or has been threatened; and all Filings are
current. Neither Community Bankshares nor any of its
Subsidiaries is in default under any Order or any license,
regulation or demand of any governmental authority or agency.
Except for statutory or regulatory restrictions of general
application, no governmental authority or agency has placed any
restrictions on the business of Community Bankshares or any of
its Subsidiaries. Community Bankshares and each of its
Subsidiaries have in all material respects conducted their
respective businesses in compliance with all applicable federal,
foreign, state and local Laws including, without limitation,
disclosure, usury, equal credit opportunity, equal employment,
fair credit reporting, consumer credit protection, truth in
lending, truth in savings, lender liability, antitrust and other
Laws. The forms, procedures, and practices used by Community
Bankshares and each of its Subsidiaries are in all material
respects in compliance with such Laws, and neither Community
Bankshares nor any of its Subsidiaries has received any
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indication from regulatory authorities that it is not in
compliance or needs to improve its compliance in these areas.
4.16 Employee Benefit Plans.
(a) Each employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), stock purchase plan, stock option
plan, fringe benefit plan, bonus plan and any other deferred
compensation agreement or plan or funding arrangement sponsored,
maintained or to which contributions are made by: (i) Community
Bankshares or any of its Subsidiaries or (ii) any other
organization which is a member of a controlled group of
organizations (within the meaning of Sections 414(b), (c), (m) or
(o) of the Code) of which Community Bankshares or any of its
Subsidiaries is a member (the "Controlled Group"), or (iii) with
respect to which Community Bankshares or any of its Subsidiaries
or any member of the Controlled Group has any liability or
potential liability (each a "Plan") is described on Schedule 4.16
hereto, designating which Plans cover employees or former
employees of Community Bankshares or any of its Subsidiaries and
which defined benefit plans, if any, hold employee contributions.
(b) With respect to each Plan, Community Bankshares
has made available to BBC current, accurate and complete copies
of such Plan (including all other instruments relating thereto)
and Summary Plan Descriptions therefor and, to the extent
applicable, copies of the most recent (i) Internal Revenue
Service determination letter and any outstanding request for a
determination letter; (ii) Form 5500 and, to the extent
applicable, attached Schedule B (including any related actuarial
valuation report) with respect to the last three Plan years for
each Plan; (iii) certified financial statements; (iv) attorney's
response to an auditor's request for information for the last
three Plan years for each Plan; (v) collective bargaining
agreements or other such contracts; (vi) Form S-8 (including any
amendments thereto); (vii) Form 5310 and any related filings with
the Pension Benefit Guaranty Corporation ("PBGC") with respect to
the last six Plan years for each Plan subject to Title IV of
ERISA; (viii) ruling letter and any outstanding request for a
ruling letter with respect to the tax-exempt status of any
voluntary employees' beneficiary association ("VEBA") which is
implementing such Plan; and (ix) in the case of a Plan that is a
"group health plan" as defined in Section 5000(b)(1) of the Code,
(A) general notification to employees of their rights under
Section 4980B of the Code and form of letter(s) distributed upon
the occurrence of a qualifying event described in Section 4980B
of the Code and (B) form of certificate distributed pursuant to
Section 9801 of the Code. Except as set forth on Schedule
4.16(b), none of the Plans or any of the foregoing referred to in
clauses (i) through (ix) above has been modified in any respect
since the date it was made available to BBC.
(c) With respect to each Plan: (i) each such Plan
which is an "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA) intended to qualify under
Sections 401(a) and 501(a) of the Code has received a favorable
determination letter as to its qualification under the Code and
nothing has occurred, whether by action or failure to act, which
may cause the loss of such qualification; (ii) each such Plan
which is intended to meet the requirements of Sections 105(h),
125 or 129 of the Code complies with, and has complied with,
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in all material respects, such requirements since inception;
(iii) (A) each VEBA which is intended to implement any Plan has
received a favorable ruling or determination letter as to its Tax-
exempt status and nothing has occurred, whether by action or
failure to act, which would cause the loss of such Tax-exempt
status and (B) the assets of such VEBA are at least equal in
value to the present value of the accrued benefit of the
participants in such VEBA; (iv) the Community Financial
Statements reflect and will reflect all employee benefit
liabilities of Community Bankshares and its Subsidiaries in a
manner satisfying the requirements of GAAP; (v) there are no
actions, suits or claims pending, or to the knowledge of
Community Bankshares, threatened, and there are no facts which
could reasonably give rise to any such actions, suits or claims;
(vi) none of Community Bankshares, nor any of its Subsidiaries,
nor any fiduciary of any Plan, nor any of their respective
employees, officers or directors has, with respect to any such
Plan, engaged in a prohibited transaction, as such term is
defined in Section 4975 of the Code or Section 406 of ERISA,
which would subject Community Bankshares or any other Plan
sponsor to any Taxes, penalties or other liabilities resulting
from prohibited transactions under Section 4975 of the Code or
under Sections 409 or 502(i) of ERISA; (vii) no event has
occurred and no condition exists that would subject Community
Bankshares or any of its Subsidiaries or any other Plan sponsor
to any Tax under Sections 4971, 4972, 4977 or 4979 of the Code or
to a penalty under Sections 502(c) or 502(l) of ERISA; (viii)
Community Bankshares and each of its Subsidiaries and each Plan
sponsor has complied in all material respects with the reporting
and disclosure requirements of ERISA; (ix) all insurance premiums
required to be paid by Community Bankshares or its Subsidiaries
as of the date hereof have been paid and all of them will be paid
or reserved against for all periods prior to the Effective Time;
and (x) neither Community Bankshares nor any of its Subsidiaries
has any "leased employees" (as such term is defined in Section
414(n) of the Code) that must be taken into account with respect
to the requirements set forth under Section 414(n)(3) of the
Code.
(d) With respect to each Plan subject to the minimum
funding requirements of Section 412 of the Code and, if
applicable, Title IV of ERISA: (i) Community Bankshares and each
of its Subsidiaries and each member of the Controlled Group have
or will have, as of the Effective Time, made all contributions or
payments to or under such Plan required by Law or by the terms of
such Plan or any contract or agreement or accrued through the
Effective Time; (ii) Community Bankshares or one of its
Subsidiaries or a member of the Controlled Group has or will
have, as of the Effective Time, made all contributions required
to be made under Section 302 of ERISA and Section 412 of the Code
(whether or not waived); (iii) no provision of such Plan nor any
amendment to such Plan would result in any limitation on the
right of Community Bankshares or any of its Subsidiaries to
receive residual amounts from any such Plan under Section 4044 of
ERISA; (iv) there is no event or condition existing which could
be deemed a "reportable event" within the meaning of Section 4043
of ERISA with respect to which the 30 day notice requirement has
not been waived other than the transactions contemplated by this
Agreement and no condition exists which would subject Community
Bankshares or any of its Subsidiaries to a penalty under Section
4071 of ERISA; (v) as of the Effective Time, Community Bankshares
or one of its Subsidiaries or a member of the Controlled Group
has or will have made all required premium payments, when due, to
the PBGC; (vi) the termination of, or withdrawal from, any such
Plan, on or prior to the Effective Time has not, and will not,
subject Community Bankshares or any of
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its Subsidiaries to any liability (other than routine administrative
expenses) to such Plan, the PBGC or to any other person or party;
and (vii) no amendment to any Plan has occurred which has required or
could require Community Bankshares or any of its Subsidiaries to
provide security to any such Plan under Section 401(a)(29) of the
Code.
(e) With respect to each Plan subject to Title IV of
ERISA, the assets of each such Plan are now and, as of the
Effective Time, will be at least equal in value to the present
value of the benefit liabilities (determined as of the date
hereof or the Effective Time, as applicable) of the participants
in such Plan.
(f) On or after the date hereof, no Plan has been, or
will be, (i) terminated, (ii) amended in any manner which would
directly or indirectly increase the benefits accrued, or which
may be accrued, by any participant thereunder or (iii) amended in
any manner which would materially increase the cost to Community
Bankshares or any of its Subsidiaries or other sponsor of
maintaining such Plan.
(g) Neither Community Bankshares nor any of its
Subsidiaries has maintained or contributed or had an obligation
to contribute to any "multiemployer plan" (within the meaning of
Section 3(37) of ERISA).
(h) With respect to any Plan which is an employee
welfare benefit plan (within the meaning of Section 3(1) of
ERISA) (a "Welfare Plan"): (i) each such Welfare Plan which is
intended to meet the requirements for tax-favored treatment under
Subchapter B of Chapter 1 of the Code meets such requirements in
all material respects, (ii) there is no disqualified benefit (as
such term is defined in Section 4976(b) of the Code) which would
subject Community Bankshares or any of its Subsidiaries to a Tax
under Section 4976(a) of the Code, (iii) each and every such
Welfare Plan which is a group health plan (as such term is
defined in Section 5000(b)(1) of the Code) complies in all
material respects with the applicable requirements of Sections
4980B and 9801 of the Code and Parts 6 and 7 of Title I of ERISA,
and (iv) each such Welfare Plan (including any such plan covering
former employees of Community Bankshares or any of its
Subsidiaries) may be amended or terminated on or at any time
after the Effective Time without subjecting either BBC, Community
Bankshares or any of its Subsidiaries or such other plan sponsor
to liability therefor.
4.17 Labor Matters.
(a) Neither Community Bankshares nor any of its
Subsidiaries is a party to nor has in effect any organized labor
contract or collective bargaining agreement. No work stoppage
involving Community Bankshares or any of its Subsidiaries is
pending or, to the knowledge of Community Bankshares, threatened,
nor is any of them involved in or, to the knowledge of Community
Bankshares, threatened with any labor dispute, discrimination or
sexual harassment claims, arbitration, lawsuit or administrative
proceeding involving any of its current or former directors,
officers or employees.
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(b) Except as set forth on Schedule 4.17 hereto,
neither Community Bankshares nor any of its Subsidiaries has,
maintains or is a party to any agreement or arrangement which:
(i) provides for the payment of separation, severance,
termination or similar-type benefits to any person, (ii)
obligates Community Bankshares or any of its Subsidiaries to pay
separation, severance, termination or similar-type benefits as a
result of any transaction contemplated by this Agreement, or
(iii) could result, separately or in the aggregate, in the
payment of any "excess parachute payment" within the meaning of
such term under Section 280G of the Code. Schedule 4.17 sets
forth, for each agreement or arrangement listed thereon, the
amount or, if appropriate, the estimated amount, of any payment
provided for pursuant thereto.
4.18 Environmental Liability. "Properties" as used in this
Section 4.18(a)-(c) inclusive, shall include all of the
following: (x) all Real Property owned, leased and/or operated by
Community Bankshares or any of its Subsidiaries, (y) all REO and
(z) all real property which serves as collateral ("Collateral
Property") for any loan or other indebtedness held by Community
Bankshares, provided, however, that the representations and
warranties of Community Bankshares with regard to any Collateral
Property shall be to the knowledge of Community Bankshares.
(a) Community Bankshares and each of its Subsidiaries
have obtained all Permits, which are required with respect to the
operation of its respective business and all Properties under any
Environmental Laws (as hereinafter defined) (such Permits being
hereinafter referred to as "Environmental Permits"), including
all federal, state and local laws relating to pollution or
protection of the environment or human health such as, but not
limited to, laws relating to emissions, discharges, releases or
threatened releases of hazardous, toxic or other pollutants,
contaminants, chemicals or industrial materials including, but
not limited to, ambient air, surface water, ground water, land
survey or subsurface strata or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of hazardous, toxic or other
pollutants, contaminants, chemicals or industrial materials,
substances or wastes (which laws, together with all regulations,
rules, codes, plans, decrees, judgments, injunctions, notices and
demand letters issued, entered, promulgated or approved
thereunder are herein referred to as "Environmental Laws") except
where the failure to obtain such Permits would not have a
Material Adverse Effect. Community Bankshares and each of its
Subsidiaries is in compliance in all material respects with the
terms and conditions of all Environmental Permits required under
the Environmental Laws, and is also in compliance in all material
respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws. Community
Bankshares has made available to BBC true and complete copies of
all notices known to Community Bankshares in whatever form (a
list of such notices, if any, is set forth on Schedule 4.18)
received by any previous owner or operator of any Properties or
any business currently owned or operated by Community Bankshares
or any of its Subsidiaries within the five years preceding the
date of this Agreement alleging noncompliance with any
Environmental Law.
(b) There is no civil, criminal or administrative
action, demand, claim, investigation or proceeding pending or, to
the knowledge of Community Bankshares, threatened
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against Community Bankshares or any of its Subsidiaries with regard
to any Properties, under or relating in any way to the Environmental
Laws.
(c) With regard to any of the Properties, except as
set forth on Schedule 4.18 hereto, there are no past, present or
known future events, conditions, circumstances, or plans which
may interfere with or prevent compliance or continued compliance
in all material respects with the Environmental Laws, or which
may give rise to any common law or other legal liability,
including, but not limited to, liability under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA")
or which otherwise may form the basis of any claim, action,
demand, proceeding, notice of violation or investigation, based
on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling or the
emission, discharge, release or threatened release into the
environment of any pollutant, contaminant, chemical, industrial
toxic or hazardous material, substance or waste. Without in any
way limiting the foregoing, no release, emission or discharge
into the environment of any "hazardous substance" (as that term
is currently defined under CERCLA or any applicable similar state
law) or "petroleum" or "petroleum-based substances" (as those
terms are defined in the Federal Storage Tank Regulations, 40
C.F.R. Part 280) which would give rise to liability under any
Environmental Laws has occurred, is currently occurring or, to
the extent known is probable to occur in the future in connection
with the ownership or operation of any Properties by Community
Bankshares or any of its Subsidiaries and there is no spill,
deposit, or discharge of any such hazardous substance or
petroleum or petroleum-based substance, at, on, into, under or
having originated from any of the Properties. Except as set
forth on Schedule 4.18, to the knowledge of Community Bankshares,
none of the Properties or any other assets of Community
Bankshares or any of its Subsidiaries, include any equipment,
machinery, device, or other apparatus that contains
polychlorinated biphenyls that is now or ever has been leaking;
any asbestos or asbestos-containing material; any wetlands or any
areas subject to any legal requirement or restriction in any way
related to wetlands (including, without limitation, requirements
or restrictions related to buffer or transition areas or open
waters) or, except as set forth on Schedule 4.18 hereto, any
underground tank above ground storage tank, surface impoundment,
septic tank, pit, swamp or lagoon in which hazardous materials,
petroleum or petroleum-based substances are being or have been
treated, stored, or disposed of.
4.19 Deposit Accounts.
(a) Schedule 4.19 sets forth a complete and correct
list, as of the most recent practicable date within fifteen days
prior to the date hereof, with respect to the amounts of demand
deposit accounts, passbook accounts, statement savings accounts,
money market savings accounts, negotiable order of withdrawal
("NOW") accounts; certificates of deposits with principal
balances of less than $100,000; certificates of deposits with
principal balances of $100,000 or more held by natural persons;
certificates of deposit of $100,000 or more held other than by
natural persons; and any other appropriate characterizations for
those deposit accounts. Schedule 4.19 also sets forth: (i) each
deposit account, regardless of amount, beneficially owned by any
foreign person, (ii) deposits where the customer has directed
Community Bankshares or any of its Subsidiaries to not mail
account statements to the customer, and (iii) all payable through
accounts. Schedule 4.19
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further sets forth the approximate rates of interest being paid, the
term of the deposits and the cost of funds within each such deposit
category along with the percentage the total deposits in each such
category represents with respect to all deposit accounts of Community
Savings. The taking and collection of deposits by Community Savings is
and has been done in compliance in all material respects with all
applicable Laws, including without limitation, those relating to suspicious
activity reporting and cash transaction reporting.
(b) Neither Community Bankshares nor any of its
Subsidiaries maintains any office or pays any employee, agent or
independent contractor outside of the United States with respect
to the solicitation, taking, sending or transmitting of loans,
loan payments or deposits.
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4.20 Loans.
(a) All loan commitments of, and all loans held by,
Community Bankshares or any of its Subsidiaries (the "Loans")
represent bona fide, valid and binding arms'-length loan
transactions with the borrowers and all of said Loans are
repayable upon the dates set forth in the respective borrower's
notes and loan agreements. None of the credits entered or given
effect with respect to any Loan was gratuitous or given for a
consideration other than the payment of money to the person to
whom payment was due thereunder. All of the Loans are valid and
enforceable in accordance with their terms, except to the extent
that enforcement of the same may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally and by general
principles of equity and to the knowledge of Community Bankshares
no Loan is subject to any defenses, counterclaims or set offs of
any nature. Neither Community Bankshares nor its Subsidiaries
has waived, compromised or otherwise relinquished any of its
rights under any Loan, including, without limitation, the right
of a lender to foreclosure in respect of a secured Loan. Except
as set forth on Schedule 4.20(a), no Loan is made to or with,
directly or indirectly, any Related Party (as defined in Section
4.24 hereof). Neither Community Bankshares nor its Subsidiaries
has received any notice of any offset, defense or counterclaim
to, right of refund or credit (other than any right of refund or
credit of unearned finance charges or unearned premiums) under,
or any right of rescission with respect to, any payment or other
obligation under any of the Loans. Schedule 4.20(a) hereto also
contains a complete list of all Loans, if any, where a default
has occurred, or with notice or lapse of time, or both, would
render Loans in default. Other than interest reserves
established in the ordinary course of business at the initial
funding of the Loan, except as set forth on Schedule 4.20(a),
neither Community Bankshares nor its Subsidiaries has made any
principal or interest payments in respect of any Loans using its
own funds. Each of the Loans was issued in accordance in all
material respects with all applicable statutes and regulatory
requirements and have been made in the ordinary course of
business and (except as limited by this Agreement) in accordance
with its customary past practices. Schedule 4.20(a) hereto
contains a true and complete list of all outstanding Loans
existing as of the date hereof setting forth for each such Loan:
(a) the name of the lender and borrower, (b) the loan number, (c)
any guarantors, endorsors or co-makers, (d) the term of the Loan,
(e) the original principal amount, (f) the current outstanding
balance, (g) the rate of interest and (h) whether such Loan is
secured and the nature, priority and description (including
location) of the collateral securing such Loan. Documentation
maintained by Community Bankshares and its Subsidiaries in the
loan file with respect to each of its Loans is in accordance with
applicable loan policies and all applicable Laws. Except as
indicated on Schedule 4.20(a), there are no Loans in excess of $1
million that are now characterized as owner-occupied residential
Loans which were originated as development or construction Loans
to builders or developers to finance the construction of the
residence.
(b) Each currently outstanding Loan is evidenced by a
promissory note duly executed by the borrower(s). Each Loan
designated on Schedule 4.20(a) as secured has in effect a
mortgage, security agreement, or other instrument, duly executed
by the borrower(s) and containing enforceable provisions to
protect and assert a secured party's rights and remedies
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thereunder. For each Loan secured under a security agreement,
such security interest is evidenced by a valid filing in
accordance with the Uniform Commercial Code where such a filing
is required, which grants the secured party a perfected security
interest in the collateral described therein; and for each Loan
secured by real property, the related mortgage, deed of trust or
other security agreement has been recorded in the appropriate
local land records and constitutes a perfected security interest
in the real property securing such Loan, and the holder of the
Loan has obtained a mortgage title insurance policy insuring such
mortgage.
(c) Schedule 4.20(c) indicates any Loan which was not
originated directly by Community Savings. Except as specifically
noted on Schedule 4.20(c), Community Bankshares and its
Subsidiaries do not hold any indirect Loans and carry no dealer
reserves and are not a party to any "flow purchase" or other
similar obligations that would obligate them to purchase any
Loans (or participations therein) from any third party.
(d) Except as provided by the standard seller/servicer
agreements of Xxxxxx Xxx and Xxxxxxx Mac, neither Community
Bankshares nor any Subsidiary has sold any Loans where the
purchaser or subsequent transferee may have recourse against
Community Bankshares or its Subsidiaries or the right to require
Community Bankshares or its Subsidiaries to repurchase any Loans.
(e) Community Bankshares' reserve for possible loan
losses is adequate under GAAP and applicable provisions of the
Office of Thrift Supervision to provide for all losses, net of
recoveries relating to loans previously charged off, on
outstanding Loans. Community Bankshares has no knowledge with
respect to any borrower's inability to repay any Loan which would
require a specific reserve for such Loan or which would cause the
general reserve for loan losses to be inadequate. Such reserve
shall in no event be reduced prior to the Effective Time unless
the failure to reduce such reserve would cause the Community
Financial Statements to violate GAAP.
(f) Except as set forth in Schedule 4.20(f), other
than in connection with required flood insurance, neither
Community Bankshares nor any of its Subsidiaries has advanced any
amounts to obtain force-placed collateral protection insurance
("CPI") and they are not parties to any agreement or arrangement
which would require the placement of CPI with respect to any
Loans.
(g) Schedule 4.20(g) hereto sets forth any Loan
participations and any interests in syndicated Loans held by
Community Bankshares or any of its Subsidiaries.
4.21 Derivatives Contracts. Neither Community Bankshares
nor any of its Subsidiaries is a party to and none of them has
agreed to enter into any exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial
contract or any other contract not included in the Community
Financial Statements which is a derivatives contract (including
various combinations thereof), and, except as set forth in
Schedule 4.21, it does not own any securities that are identified
in OTS Thrift Bulletin 13a as Complex Securities or Structured
Notes.
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4.22 Absence of Certain Changes. Except as set forth in
Schedule 4.22, since June 30, 2001, (i) Community Bankshares and
its Subsidiaries have conducted their respective businesses in
the ordinary and usual course, consistent with past practices,
and (ii) there has not been any event, occurrence, development or
set of circumstances or facts which (A) has had or could
reasonably be expected to constitute or result in a Material
Adverse Effect on Community Bankshares and its Subsidiaries, or
(B) which would result in a violation of the covenants set forth
in Section 5.2 of this Agreement had such events, occurrences,
development or set of circumstances or facts occurred after the
date hereof.
4.23 Investment Portfolio. Schedule 4.23 sets forth a true
and correct list of all securities held by Community Bankshares
or any of its Subsidiaries and identifies the security, the
maturity and the yield thereon. There are no impediments or
restrictions on the sale or transfer of securities held by
Community Bankshares or any of its Subsidiaries. All United
States treasury securities, obligations of United States
government agencies and corporations, obligations of states and
political subdivisions of the United States and other investment
securities held by Community Bankshares or any of its
Subsidiaries for its own account, as reflected in the Community
Financial Statements, are, and at all times prior to the
Effective Time shall be, carried in accordance with GAAP.
4.24 Related Party Transactions. Except as set forth in
Schedule 4.24, neither Community Bankshares nor any of its
Subsidiaries, has any contract, extension of credit (direct or
indirect), business arrangement, depository relationship or other
relationship with (i) any present or former director or officer
of Community Bankshares or any of its Subsidiaries; (ii) any
stockholder of Community Bankshares beneficially owning five
percent (5%) or more of the outstanding equity securities of
Community Bankshares; or (iii) any affiliate of (i) or (ii) above
(each, a "Related Party"). Except as set forth in Schedule 4.24,
each extension of credit disclosed in Schedule 4.24 has been made
in the ordinary course of business, and on the same terms,
including interest rate and collateral, as those prevailing at
the time for comparable arms'-length transactions, does not
involve more than the normal risk of collectibility or present
other unfavorable features and complies in all respects with the
provisions of Regulation O and all other applicable Laws. Except
as set forth on Schedule 4.24 hereto, no Related Party holds
directly or indirectly any interest in any deposit account listed
on Schedule 4.24 hereto.
4.25 Fiduciary Activities. Except as indicated on Schedule
4.25 hereto, neither Community Bankshares nor any of its
Subsidiaries is directly or indirectly engaged in any fiduciary
or custodial activities.
4.26 Intangible Property. Set forth on Schedule 4.26 hereto
is a list and brief description of all foreign and domestic
trademarks, service marks, trade names, software and copyrights
(whether or not registered and, if applicable, including pending
applications for registration), owned, used, licensed or
controlled by Community Bankshares or any of its Subsidiaries
(collectively, the "Intangible Property"). Except as set forth
on Schedule 4.26: (a) Community Bankshares and each of its
Subsidiaries has the exclusive right and license to use its
respective
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Intangible Property, free and clear of any claim or conflict
with the rights of others; (b) no royalties, honorariums
or fees are payable by Community Bankshares or any of its
Subsidiaries to any person by reason of the ownership, use or
license of any of the Intangible Property; (c) there have been no
claims made against Community Bankshares or any of its
Subsidiaries asserting the invalidity, abuse, misuse, or
unenforceability of any of the Intangible Property or any license
relating thereto, and no grounds for any such claims exist; (d)
neither Community Bankshares nor any of its Subsidiaries has made
any claim of any violation or infringement by others of its
rights in the Intangible Property, and, to Community Bankshares'
knowledge, no grounds for any such claims exist; (e) neither
Community Bankshares nor any of its Subsidiaries has received any
written notice that it is in conflict with or infringing upon the
asserted rights of others in connection with the Intangible
Property and neither the ownership, use or license of the
Intangible Property by Community Bankshares or any of its
Subsidiaries nor the operation of their respective businesses is
infringing or has infringed upon any rights of others; (f) the
consummation of the transactions contemplated hereby will not
alter or impair any of the Intangible Property; and (g) no
interest in any of Community Bankshares' or any of its
Subsidiaries' rights to any Intangible Property has been
assigned, transferred, licensed or sublicensed to third parties.
To the extent any of the Intangible Property constitutes
proprietary or confidential information, Community Bankshares
believes it has adequately safeguarded such information from
disclosure.
4.27 Absence of Regulatory Actions. Except as set forth on
Schedule 4.27, neither Community Bankshares nor any of its
Subsidiaries nor to their knowledge, any of their respective
officers, directors, consultants or employees is or during the
past five years has been a party to any cease and desist order,
consent order, assistance agreement, supervisory agreement or
other written agreement or any memorandum of understanding with,
or a party to any commitment letter or similar written
undertaking to, or is subject to any order or directive by, or is
a recipient of any extraordinary supervisory letter from any
Applicable Governmental Authority nor has it ever been advised by
any Applicable Governmental Authority that it is contemplating
issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar written undertaking.
Neither Community Bankshares nor any of its Subsidiaries has
received any objection from any Applicable Governmental Authority
to any response to any alleged violation, criticism or exception
with respect to any report or statement relating to Community
Bankshares or any of its Subsidiaries.
4.28 Customer Lists and Information. Except as set forth in
Schedule 4.28, neither Community Bankshares nor any of its
Subsidiaries has sold, disclosed or transferred all or part of
any list of the depositors, borrowers or customers of Community
Bankshares or any of its Subsidiaries. All of such information
is held and maintained in accordance in all material respects
with all applicable Laws.
4.29 FDIC Status; Liquidation Account.
(a) Community Savings is an insured depository
institution under the Federal Deposit Insurance Act, the deposit
accounts of which are insured by the FDIC to the maximum
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extent permitted by Law, and Community Savings has paid all premiums
and assessments and filed all reports required in connection
therewith and is in compliance in all material respects with all
Laws and other conditions and requirements of the FDIC for the
maintenance of insurance by the FDIC. The FDIC has not notified
Community Savings that it has nor does Community Bankshares or
Community Savings have any knowledge that the FDIC has commenced
any inquiries, investigations, special audits or other
proceedings relating to Community Savings that could adversely
affect the insurance coverage provided by the FDIC for Community
Savings' deposit accounts.
(b) The liquidation account established by Community
Savings in connection with its conversion from mutual to stock
form has been maintained by it since its establishment in
accordance in all material respects with all applicable Laws and
its records with respect to such account are accurate.
4.30 Community Reinvestment Act Compliance. Community
Savings is in compliance in all material respects with the
applicable provisions of the Community Reinvestment Act of 1977
and the regulations promulgated thereunder, and received a CRA
rating of at least satisfactory as of its last examination.
Community Savings has not been advised in writing by an
Applicable Governmental Authority and is not aware of the
existence of any fact or circumstance or set of facts or
circumstances which, if true, would cause it to fail to be in
compliance with such provisions.
4.31 Information in Proxy Statement. None of the
information included or incorporated by reference in the Proxy
Statement other than information provided by BBC or any of its
Subsidiaries or the agents thereof will, at the dates mailed to
Community Bankshares' shareholders and at the times of Special
Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The Proxy Statement will comply in all material respects with the
provisions of the DGCL and the Exchange Act and the rules and
regulations thereunder. No representation is made by Community
Bankshares with respect to statements made therein based on
information supplied by BBC in writing specifically for inclusion
in the Proxy Statement. The Proxy Statement, including any
amendments thereto, will be distributed to Community Bankshares'
shareholders in accordance with the certificate of incorporation
and by-laws of Community Bankshares, and all applicable Laws,
including, without limitation, the DGCL and the Exchange Act.
4.32 State Takeover Laws; Certificate of Incorporation.
Community Bankshares has taken all action necessary to exempt the
Merger, this Agreement and the transactions contemplated hereby
from, and the Merger, this Agreement and the transactions
contemplated hereby are exempt from (a) any applicable state
takeover Laws and (b) any applicable takeover provisions in the
Community Bankshares' certificate of incorporation or by-laws.
4.33 Opinion of Financial Advisor. Friedman, Billings,
Xxxxxx and Co., Inc. has delivered to the board of directors of
the Community Bankshares its written opinion to the effect
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that the Merger Consideration is fair to the shareholders of
Community Bankshares from a financial point of view.
4.34 Full Disclosure. No representation or warranty of
Community Bankshares contained in this Agreement, and none of the
statements or information concerning Community Bankshares and its
Subsidiaries contained in this Agreement or the exhibits and the
schedules hereto, contains or will contain any untrue statement
of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
Community Bankshares covenants and agrees with BBC that
Community Bankshares will, from and after the date of this
Agreement and until the Effective Time, act as follows:
5.1 Ordinary Course, Insurance, Preservation of Business.
Community Bankshares shall and shall cause each of its
Subsidiaries to do the following, except as otherwise required by
this Agreement or requested or agreed to in writing in advance by
BBC:
(a) carry on its business only in the ordinary course
and consistent with its policies, procedures and practices in
substantially the same manner as heretofore conducted;
(b) except as they may terminate in accordance with
their terms or in accordance with the terms of this Agreement,
keep in full force and effect, and not cause or permit to exist a
default of any of its obligations under, any Commitments;
(c) use its best efforts to keep in full force and
effect the insurance coverage in effect on the date hereof to the
extent that such insurance continues to be reasonably available;
(d) maintain, renew, keep in full force and effect and
preserve its material rights, franchises, permits and licenses
and use its best efforts to preserve its business organization
and retain its present employee force so that it will be
available to BBC on and after the Effective Time, and to maintain
its existing, or substantially equivalent, relationships with
other banks and financial institutions and to use its best
efforts to maintain the continuance of its general customer
relationships; and
(e) duly comply in all material respects with all Laws
and Orders applicable to it and to the conduct of its business.
The foregoing notwithstanding, and notwithstanding anything
else herein to the contrary, under no circumstances shall
Community Bankshares originate or permit any of its Subsidiaries
(including specifically construction loans to third party
purchasers from Subsidiaries) to originate
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any new construction Loan or issue any commitment in respect of any
new construction Loan or make any disbursement under any existing
construction Loan (unless Community Bankshares or any of its Subsidiaries
is legally obligated to make such disbursement) other than in
accordance with the criteria and standards set forth in Schedule
5.1 hereto without the prior written consent of BBC, which consent BBC
may not unreasonably withhold.
5.2 Prohibited Action Without Approval. Community
Bankshares shall not, and shall cause each of its Subsidiaries
not to, directly or indirectly, do any of the following, except
with the prior written consent of BBC:
(a) incur or agree to incur any obligation or
liability (absolute or contingent), other than the taking of
deposits and other liabilities incurred in the ordinary course of
business and consistent with prior practice and liabilities
arising out of, incurred in connection with, or related to the
consummation of this Agreement; make or permit any amendment or
termination of any Commitment which would materially adversely
affect its rights thereunder, acquire (by merger, consolidation,
or acquisition of stock or assets) any corporation, partnership
or other business organization or division or substantial part
thereof or any branches or deposits thereof; sell or, except as
set forth on Schedule 5.2(a), otherwise dispose of its assets or
acquire any assets or deposits except in the ordinary course of
its business (provided, however that the sale of Loans (other
than sales which have been committed to prior to the date hereof)
shall not be deemed to be in the ordinary course of business);
enter into, dispose or divest itself of any Subsidiary or joint
venture or cause any business entity to become a Subsidiary or
affiliate; sell or otherwise dispose of any Real Property owned
or operated by Community Bankshares or any of its Subsidiaries,
except for the bona fide sale of Real Property and REO to non-
affiliated third parties in the ordinary course of business;
except as set forth in Schedule 5.2(a), enhance, expand, modify,
replace or alter any computer or data processing system owned,
leased or licensed by Community Bankshares or any of its
Subsidiaries (including, without limitation, any software
associated with any such computer or system); make, originate or
otherwise acquire any Loans, or any Loan commitments, or any line
of credit, in an individual amount in excess of $1 million
(provided, however, that Community Bankshares and its
Subsidiaries (i) may extend additional amounts to its existing
borrowers who have loan balances in excess of $1.0 million as of
the date hereof in additional amounts not to exceed an aggregate
of 10% of said borrower's balances on the date hereof and (ii)
may make or acquire new Loans in excess of $1.0 million and up to
$5 million with the approval of two lending officers designated
by BBC who shall use their best efforts to provide within one
business day of a request by the Chief Lending Officer of
Community Savings a decision with respect to such Loans); or
acquire any interest or participation in Loans originated by
other financial institutions or brokers, including, but not
limited to, syndicated Loans; or enter into any contract,
agreement, commitment or arrangement with respect to any of the
foregoing; or
(b) enter into any Commitment or make any capital
expenditure in excess of $50,000, provided, however, that
additional capital expenditures may be made to the extent and in
the amounts indicated on Schedule 5.2(b) relating to (i) the
Fiserv conversion to the VISION system, (ii) the construction of
the Abacoa branch and (iii) the purchase of the Bluffs office; or
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(c) issue (other than upon the exercise of previously
outstanding Options granted prior to the date hereof), sell,
redeem or acquire for value, any debt securities or any shares of
the capital stock or other equity securities or other ownership
interests of Community Bankshares or any of its Subsidiaries, or
declare, issue or pay any dividend or other distribution of
assets, whether consisting of money, other personal property,
real property or other things of value, to its shareholders
except for (i) Community Bankshares' regular quarterly cash
dividend of $.11 per share declared and payable in a manner
substantially consistent with past practices but only to the
extent that Community Bankshares has consolidated net income
during the prior quarterly period excluding Transaction Costs (as
hereinafter defined) and (ii) dividends by Community Savings to
Community Bankshares in amounts sufficient to enable Community
Bankshares to pay its ordinary operating expenses as they become
due and its accrued liabilities, including, but not limited to,
accounting, legal, printing, investment banking, and regulatory
application fees, expenses and costs relating to the transactions
contemplated by this Agreement; or
(d) (i) amend its certificate of incorporation or
by-laws or any other constitutive, organic or governing document
or (ii) split, combine or reclassify any shares of its capital
stock; or
(e) except as disclosed in Schedule 5.2(e), grant any
increase in compensation or benefits to its employees or to its
officers other than increases granted in the ordinary course of
business consistent with past practice and in no event in excess
of an individual increase of 5% annually; pay any bonus other
than bonuses paid in the ordinary course of business consistent
with past practice; enter into any severance agreements or
arrangements with its officers; grant any material increase in
fees or other increases in compensation or other benefits to any
of its directors; or effect any change in retirement benefits for
any class of its employees or officers (unless such change is
required by applicable law); or
(f) amend any existing employment contract or enter
into any new employment contract that Community Bankshares does
not have the unconditional right to terminate without penalty
(other than liability for services already rendered), at any time
on or after the Effective Time; or
(g) adopt any new Plan or make any material change in
or to any existing Plan other than any such change that is
required by Law; or
(h) enter into any transactions other than in the
ordinary course of business or mortgage, pledge or subject to any
Lien any of its Properties or assets not already subject to a
mortgage, pledge or other Lien as of the date hereof and shall
not increase or modify the terms of any such mortgages, pledges
or Liens; or
(i) compromise or otherwise settle or adjust any
assertion or claim of a deficiency in Taxes (or interest thereon
or penalties in connection therewith) or file any appeal
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from an asserted deficiency, or file any federal or state Return
before furnishing a copy to BBC and affording BBC an opportunity
to comment thereon except to the extent that furnishing a copy to
BBC or awaiting comments would result in such appeal or Return
not being timely filed; or
(j) enter into any Related Party transaction of the
type contemplated by Section 4.24 hereof, except for transactions
relating to deposit relationships or Loans made in the ordinary
course by Community Savings consistent with its policies and
procedures and Regulation O; or
(k) subject to any legally binding commitment or loan
agreement as of the date hereof, make or commit to make any Loans
outside of Community Bankshares' geographic lending area or which
are not in compliance with Community Savings' loan underwriting
policies and procedures; advance or commit to advance any new
funds to customers who presently have a Loan internally or
externally classified; make or commit to make any new Loan to a
borrower which is a corporation, partnership or other non-natural
person, which is not personally guaranteed by the principals of
the borrower; or convert any Loan to develop or construct
residential housing to a permanent Loan unless contractually
obligated to do so; or
(l) open, or file an application with any federal or
other regulatory agency with respect to the opening of any
additional office, branch or banking facility, or the acquisition
or establishment of any additional banking or nonbanking facility
or close any of its existing offices or branches; or
(m) purchase any investment securities other than
federal funds, government securities with maturities of less than
one year or Federal Home Loan Bank overnight accounts or make any
material change to its current pricing strategy relating to its
deposit accounts; or
(n) take any action which: (i) could reasonably be
expected to adversely affect the ability to obtain the necessary
approvals of Applicable Governmental Authorities required for the
transactions contemplated hereby or (ii) could reasonably be
expected to adversely affect the ability to perform the covenants
and agreements under the Agreement; or
(o) make any change in the credit policies or
procedures of Community Savings, the effect of which is to make
any such policy or procedure less restrictive or enter into any
new lending or leasing programs; or
(p) make any change in its accounting methods or
practices other than those required by GAAP, directed by
Applicable Governmental Authorities or pursuant to the terms of
this Agreement; or
(q) take, cause or permit the occurrence of any change
or event which would render any of its representations and
warranties contained herein untrue in any respect at and as of
the Effective Time; or
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(r) enter into any contract, agreement, commitment or
arrangement, whether written or otherwise, with respect to any of
the foregoing.
5.3 Notice. Community Bankshares will promptly notify BBC
(i) of any event of which it obtains knowledge which materially
adversely affects the financial condition, operations, business,
assets or prospects of Community Bankshares or any of its
Subsidiaries, (ii) of any event or circumstance that would cause
or constitute a breach of any of the representations, warranties,
or covenants of Community Bankshares contained herein. Community
Bankshares will promptly notify BBC in the event it determines
that it is unable to fulfill any of the conditions to the
performance of BBC hereunder. Community Bankshares will consult
with BBC regarding any suggestions made by any regulatory
authority.
5.4 Liabilities. Community Bankshares shall, and shall
cause each of its Subsidiaries to, pay or discharge their
respective current liabilities in the ordinary course of business
when the same become due and payable, except for such liabilities
as may be subject to a good faith dispute or counterclaim.
5.5 Goodwill. Community Bankshares shall not nor shall it
permit any of its Subsidiaries to enter into any transaction
which will create goodwill on its books and records under GAAP.
5.6 Operating Expenses. Except as required by law or
regulation as may be necessary to preserve and protect the assets
of Community Bankshares and its Subsidiaries, Community
Bankshares shall not, and shall cause each of its Subsidiaries
not to, increase the level of its operating expenses in excess of
5% on an annualized basis based on the results of operations for
the twelve months ended June 30, 2001, excluding therefrom any
(i) expenses incurred in connection with this Agreement and the
transactions contemplated hereby including, but not limited to,
investment banking fees and expenses, legal fees and expenses,
application fees, accounting fees and printing expenses and (ii)
expenses incurred at the direction of BBC pursuant to the terms
of this Agreement.
5.7 Transaction Costs. The expenses incurred by Community
Bankshares and its Subsidiaries in connection with the
transactions contemplated by this Agreement, including but not
limited to, investment banking fees and expenses, legal fees and
expenses, application fees, accounting fees and printing expenses
(the "Transaction Costs"), shall in no event exceed $2.75
million. Notwithstanding the foregoing, such limitation on
Transaction Costs shall not include any fees and expenses
incurred in connection with (i) any challenges or protests by any
third parties to any applications or submissions filed in
connection with the transactions contemplated hereby, (ii) any
Competing Transaction, (iii) any legal proceedings arising out of
or related to this Agreement or the transactions contemplated
hereby, or (iv) any proxy contest in connection with the
submission of this Agreement to the shareholders of Community
Bankshares, but the foregoing shall not constitute a waiver by
BBC or preclude a determination that there has been a Material
Adverse Effect.
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ARTICLE VI
ADDITIONAL COVENANTS OF COMMUNITY BANKSHARES
Community Bankshares hereby covenants and agrees with BBC
that Community Bankshares will act and will cause its Subsidiaries
to act as follows:
6.1 Access to Information. From the date hereof through
the Effective Time, Community Bankshares shall permit BBC and its
authorized representatives reasonable access during regular
business hours to the properties of Community Bankshares and its
Subsidiaries. Community Bankshares shall and shall cause its
Subsidiaries to make their respective directors, management and
other employees and agents and authorized representatives
(including counsel and independent public accountants) available
to confer with BBC and its authorized representatives at
reasonable times and upon reasonable request, and Community
Bankshares shall disclose and make available to BBC and shall
cause its agents and authorized representatives to disclose and
make available to BBC, all books, papers and records relating to
the assets, properties, operations, obligations and liabilities
of Community Bankshares and its Subsidiaries. BBC may make or
cause to be made such investigation of the records, business and
properties of Community Bankshares and its Subsidiaries as BBC
deems necessary or advisable to familiarize itself and its
advisers with such business, properties, and other matters,
provided that any such investigation shall be reasonably related
to the transactions contemplated hereby and shall not unduly
interfere with the normal operations of Community Bankshares and
its Subsidiaries.
6.2 Confidential Treatment of Information. The parties
hereto and their representatives shall hold in confidence all
data and information obtained with respect to the other parties
or their business, and shall not use such data or information or
disclose the same to others, except such data or information as
is already known to such party or is published or is a matter of
public record, or as otherwise required by Law or as may be
disclosed with the written consent of the other party. In the
event this Agreement is terminated, each party shall upon request
promptly return to the other(s) any statements, documents,
schedules, exhibits or other written information obtained,
reflecting or derived from information provided by them in
connection with this Agreement. Furthermore, the parties hereto
shall not use such information and data for any competitive or
commercial purposes.
6.3 Management Reports and Risk Management.
(a) Community Bankshares will promptly provide to BBC
copies of (i) the reports of management of Community Bankshares
and its Subsidiaries relating to operations, deposit activity,
lending activity, delinquency schedules and additions to loan
loss reserves and such other reports as BBC may reasonably
request, (ii) minutes of all meetings of the Board of Directors
of Community Bankshares and its Subsidiaries and each committee
thereof during the prior month other than any portion of such
minutes that relate to any Competing Transaction (as hereinafter
defined) or the fiduciary duties of such directors with respect
to the transactions contemplated hereby, (iii) the payroll report
for the prior month, and (iv) monthly Community Financial
Statements and reports prepared by or for Community Bankshares
for the preceding
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calendar month, including a statement of financial condition and
an income statement for Community Bankshares and its Subsidiaries.
Throughout the period prior to the Effective Time, Community
Bankshares shall make one of more of its designated representatives
available to confer on a regular and frequent basis with
representatives of BBC and to report on the general status of the
ongoing operations of Community Bankshares and its Subsidiaries.
BBC shall be advised of and shall be permitted to attend as an
observer all management and major loan meetings and shall be provided
with any reports circulated to participants simultaneously with such
circulation. Further, with respect to joint venture activities and the
Loans identified on Schedule 6.3(a), meetings of representatives of the
parties shall be held on a monthly basis to review the status of
the development or Loans, as applicable, and to review and agree
upon plans and advances for the following month.
(b) Community Bankshares agrees that, from the
date hereof through the Effective Time, it shall regularly inform
and consult with BBC concerning Community Savings'
asset/liability and interest rate risk management.
6.4 Fiserv and Other Vendor Agreements. Community
Bankshares shall migrate to the VISION system as required by that
certain Addendum by and between Community Savings and Fiserv so
as to avoid any penalty or liquidated damages upon cancellation
or termination of the Fiserv or VISION system services. BBC and
Community Bankshares shall coordinate the providing of notice of
cancellation or termination of any vendor agreements involving
Community Bankshares or its Subsidiaries if the parties jointly
agree that such termination or cancellation is desirable.
6.5 Loan Loss Allowance. Community Bankshares shall, upon
the request of BBC made at any time prior to Closing, adjust
Community Bankshares' accruals and allowance for loan losses in
an amount determined by BBC in accordance with BBC's practices,
such adjustment to be effective on the day immediately preceding
the Effective Time, provided, however, that Community Bankshares
shall not be required to take such action unless BBC certifies in
writing that all conditions to Closing set forth in Article IX
hereof have been satisfied or waived; that no such action will be
required to be taken more than five business days before Closing
or if such action would be inconsistent with GAAP or regulatory
accounting principles; and no accrual or reserve made by
Community Bankshares or any of its Subsidiaries pursuant to this
subsection, or any litigation or regulatory proceedings arising
out of any such accrual or reserve, shall constitute or be deemed
to be a breach or violation of any representation, warranty,
covenant, condition or other provision of this Agreement or to
constitute an event which permits or requires termination of this
Agreement pursuant to Article X hereof.
6.6 Acquisition Proposals.
(a) Except for the transactions contemplated by this
Agreement, Community Bankshares shall not, directly or
indirectly, and shall cause its and its Subsidiaries' officers,
directors, employees, subsidiaries, agents or advisors or other
representatives not to, directly or indirectly: (i) solicit,
encourage, initiate, participate or knowingly facilitate
(including by way of
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furnishing information) in any negotiations, discussions or
inquiries with respect to any Competing Transaction (as defined
below), or continue any such negotiations or discussions which may
have been initiated prior to the date hereof with any party other
than BBC or (ii) in connection with, or in contemplation of, any
Competing Transaction or any potential Competing Transaction, except
as required by Law, disclose any information to any person concerning
the business and properties of Community Bankshares, afford to any
person (other than BBC and its advisors and agents) access to the
properties, books or records of Community Bankshares or any of
its Subsidiaries or otherwise assist or encourage any person in
connection with any of the foregoing; provided, however, that
nothing in this Section 6.6 shall prohibit the Board of Directors
of Community Bankshares from furnishing information to, or
entering into discussions or negotiations with, any person in
connection with an unsolicited bona fide Competing Transaction
received after the date of this Agreement by such person if
Community Bankshares' Board of Directors determines in good
faith: (i) after consulting with its independent financial
advisors, that such person is reasonably likely to be capable of
completing such Competing Transaction, taking into account the
legal, financial, regulatory and other aspects of such Competing
Transaction, and the person making such Competing Transaction,
and that such Competing Transaction could reasonably be expected
to result in a Superior Proposal (as defined below) and (ii) if,
and only to the extent that: (a) the Board of Directors of
Community Bankshares, after consultation with outside legal
counsel, believes that such action is required for such Board of
Directors to comply with its duties to its shareholders imposed
by Delaware Law and (b) prior to furnishing such information to,
or entering into discussions or negotiations with, such person,
Community Bankshares obtains from such person an executed
confidentiality and standstill agreement on terms no less
favorable to Community Bankshares, as the case may be, than those
contained in that certain Confidentiality Agreement between
Community Bankshares and BBC dated July 11, 2001, unless the
Board of Directors of Community Bankshares, after consultation
with outside legal counsel, believes that such requirement would
violate its duties to its shareholders imposed by Delaware Law.
Community Bankshares shall notify BBC promptly if any proposal or
offer, or any inquiry or contact with any person with respect
thereto, regarding a Competing Transaction is made and provide
BBC in reasonable detail the material terms of any proposal and
shall keep BBC promptly advised of the status of any such
proposal. Each party hereto agrees not to release any third
party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party.
(b) A "Competing Transaction" means any of the
following involving Community Bankshares, as the case may be
(other than the Merger contemplated by this Agreement): (i) a
merger, consolidation, share exchange, business combination or
other similar transaction involving Community Bankshares or
Community Savings, (ii) any sale, lease, exchange, transfer or
other disposition of 50 percent or more of the assets of
Community Bankshares or Community Savings, (iii) a Tender Offer
or Exchange Offer (as such terms are defined in Section 12.1(d)
hereof) for 20 percent or more of the outstanding voting
securities of Community Bankshares, or (iv) any solicitation
(made in accordance with Rule 14a-3 under the Exchange Act) in
opposition to the approval of the Merger by the shareholders of
Community Bankshares.
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(c) A "Superior Proposal" shall mean any bona fide
Competing Transaction which is on terms that the Board of
Directors of Community Bankshares concludes in its good faith
judgment (based upon the written advice of its independent
financial advisors), provides for consideration which would
exceed the value of the consideration provided for in the Merger,
after taking into account all relevant factors, including without
limitation, any financing conditions, timing of the closing
thereof and the risk of nonconsummation.
6.7 Approval by Community Bankshares' Shareholders; Proxy
Statement.
(a) Community Bankshares shall call the Special
Meeting to be held as promptly as reasonably practicable after
the date of this Agreement for the purpose of voting upon the
Merger, this Agreement and the other transactions contemplated by
this Agreement. Community Bankshares, through its Board of
Directors, shall recommend that Community Bankshares'
shareholders approve the Merger, this Agreement and the other
transactions contemplated by this Agreement, shall include such
recommendation in the Proxy Statement, shall at BBC's request
publicly reaffirm the approval by such Board of Directors and
shall not amend, modify, revoke or withdraw such recommendation;
provided, that such Board of Directors shall not be obligated to
make such recommendation if Community Bankshares shall have
received an unsolicited Superior Proposal and such Board of
Directors determines, in good faith after consultation with its
financial advisors and legal counsel, that the making of such
recommendation would violate the Board of Directors' duties to
its shareholders under Delaware Law; provided, further, that in
no event may the Board of Directors take such action earlier than
the conclusion of the second business day following BBC's receipt
of written notice of the intention of the Board of Directors to
do so. Community Bankshares shall use its best efforts to
solicit from its shareholders proxies in favor of the approval of
this Agreement and the Merger pursuant to the Proxy Statement,
and shall take all other action necessary or advisable to obtain
the vote or consent of shareholders required by the DGCL to
obtain such approval, except to the extent that the Board of
Directors of Community Bankshares has received an unsolicited
Superior Proposal and determines in good faith after consultation
with outside legal counsel that the withdrawal, modification or
change of its recommendation is necessary in order to avoid
violating its fiduciary duties to Community Bankshares'
shareholders under Delaware Law. Community Bankshares may, and,
if requested by BBC, shall, retain a proxy solicitor reasonably
acceptable to BBC in connection with the Special Meeting.
(b) Community Bankshares shall prepare the Proxy
Statement and any amendments or supplements thereto and Community
Bankshares shall file the Proxy Statement and any such amendments
or supplements with the SEC; provided, however, that Community
Bankshares shall not file the Proxy Statement or any such
amendment or supplement with the SEC without the prior consent of
BBC, which consent shall not be unreasonably withheld. Community
Bankshares will advise BBC, prior to distributing the Proxy
Statement to its shareholders, of the time when Community
Bankshares intends to distribute the Proxy Statement, and
Community Bankshares shall not distribute the Proxy Statement
without the prior consent of BBC, which consent shall not be
unreasonably withheld. Community Bankshares shall promptly
notify BBC of the issuance of any Order suspending the use of the
Proxy Statement, of the initiation or threat
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of any proceeding for any such purpose, or of any request by the
SEC for the amendment or supplement of the Proxy Statement for
additional information.
6.8 Consents and Approvals by Third Parties. Community
Bankshares shall use its best efforts to obtain as soon as
practicable all consents and approvals of any third parties
necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
ARTICLE VII
ADDITIONAL COVENANTS OF BBC AND COMMUNITY BANKSHARES
7.1 Regulatory Approvals. As promptly as practicable
following the execution of this Agreement, BBC shall prepare and
BBC and Community Bankshares will submit any necessary
applications to any Applicable Governmental Authorities for
approval of the transactions contemplated hereby, including, but
not limited to, the OTS; provided, however, BBC shall not file
such applications without the prior consent of Community
Bankshares, which consent will not be unreasonably withheld.
Community Bankshares shall cooperate with and shall assist BBC in
the preparation and filing of all such applications. Community
Bankshares shall and shall cause each of its Subsidiaries to
promptly furnish BBC with any information relating to Community
Bankshares or such Subsidiary, as applicable, which is required
under any applicable law or regulation for inclusion in any
filing that BBC is required to make with any Applicable
Governmental Authority in order to consummate the transactions
contemplated by this Agreement. Community Bankshares represents,
warrants and covenants to BBC that all information so furnished
shall be true and correct in all material respects without
omission of any material fact required to be stated to make the
information stated therein not misleading.
7.2 SEC Filings and Offering Materials. If reasonably
requested by BBC, Community Bankshares shall promptly provide BBC
with any information concerning Community Bankshares and its
Subsidiaries in connection with any filing which it may make with
the SEC or with any other document which it may prepare in
connection with an offering of its securities and shall timely
cooperate and assist BBC in connection therewith including in
connection with obtaining its accountants' consent if required in
connection with such filings. Community Bankshares represents,
warrants and covenants to BBC that all information furnished
shall be true and correct in all material respects without
omission of any material fact required to make the information
stated therein not misleading. If any event relating to
Community Bankshares or any of its Subsidiaries should be
discovered which should be set forth in an amendment of, or a
supplement to, any such SEC filing or offering document,
Community Bankshares shall promptly inform BBC and shall furnish
all necessary information to BBC relating to such event.
7.3 Publicity and Reports. BBC and Community Bankshares
shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this
Agreement or the transactions contemplated hereby and shall
provide the other with draft copies of any proposed press
releases and a reasonable opportunity to comment thereon, and
shall not issue any such press release or make any such public
statement before such consultation and
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opportunity to comment, except as may be required by applicable
Law or the rules of the New York Stock Exchange or the Nasdaq Stock
Market.
7.4 Employees and Employee Benefit Plans.
(a) Full-time employees of Community Bankshares and
its Subsidiaries who are employed by BBC or its Subsidiaries
after the Effective Time will be eligible to participate in
benefit plans of BBC and its Subsidiaries that are generally
available to their full-time employees on a uniform and non-
discriminatory basis in accordance with and subject to the terms
and provisions of such benefit plans, with credit for years of
service with Community Bankshares and its Subsidiaries for the
purpose of determining eligibility for participation, vesting and
entitlement to vacation time and sick pay (but not for the
purpose of accrual or restoration of benefits under any existing
or future benefit plan of BBC or any of its Subsidiaries where
benefits are calculated on an actuarial basis, including any
qualified or non-qualified defined benefit plan or restoration
plan). Contributions to (and accrual of benefits, to the extent
applicable, if any, under) benefit plans of BBC and its
Subsidiaries on behalf of continuing full-time employees of
Community Bankshares and its Subsidiaries shall only relate to
qualifying compensation earned by such employees after the
Effective Time subject to the terms and provisions of such
benefit plans. Notwithstanding anything contained above,
continuing full-time employees of Community Bankshares and its
Subsidiaries who meet any applicable age or year of service
requirements shall be eligible to participate in any qualified
plan of BBC or any of its Subsidiaries as of the Effective Time.
BBC shall amend its qualified plans to the extent necessary to
accomplish the foregoing, provided that such amendments are
consistent with the Code and any other applicable Law. BBC shall
use its best efforts to cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a
pre-existing condition under the corresponding Community Savings
group health plan) and eligibility waiting periods under its
group health plans to be waived with respect to such participants
and their eligible dependents.
(b) General Severance. If the employment of any full-
time employee of Community Bankshares or any of its Subsidiaries
is involuntarily terminated other than for Cause (as hereinafter
defined) within six months following the Effective Time, BBC or
its applicable Subsidiary shall provide severance benefits to
such employee in a lump sum cash amount equal to the sum of (i)
such employee's regular salary for a one-week period (as in
effect immediately prior to the Effective Time) multiplied by the
total number of whole years of such employee's full-time
employment at Community Bankshares and its Subsidiaries (subject
to a minimum severance of two weeks for those employees who have
at least one year of service as of the Effective Time and a
maximum severance of 26 weeks), and (ii) the employee's accrued
but unused vacation and personal emergency days, plus the
continuation of any insurance benefits that the terminated
employee was receiving through the end of the calendar month in
which the employee receives his or her lump sum severance
payment, provided, however, such period of continued coverage
shall be no less than fifteen days. Notwithstanding the
foregoing, however, in no event shall BBC or any of its
Subsidiaries have any obligation to provide severance benefits
pursuant to this Section 7.4(b) to any full-time employee
(i) whose termination of employment occurs due to resignation or
discharge for Cause or (ii) who is entitled to severance benefits
or the equivalent thereof under
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the terms of any employment or change in control severance agreement
with Community Bankshares or its Subsidiaries. "Cause" shall mean
termination because of the employee's (a) conviction of, or plea of
guilty or nolo contendere to, a felony or a crime of falsehood or moral
turpitude, (b) willful misconduct or gross negligence, (c) breach
of fiduciary duty, (d) failure to perform stated duties if such
failure is not cured following written notice to the employee, or
(e) willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease and desist
order.
(c) Employment and Change in Control Severance
Agreements. BBC shall honor all existing employment and change
in control severance agreements (the "Severance Agreements") of
Community Bankshares and its Subsidiaries that are in effect as
of the date of this Agreement, each of which is disclosed on
Schedule 7.4(c), which schedule describes in reasonable detail
the amount of payments and benefits which could become due and
payable to each such person under the agreements as a result of a
termination of employment and/or a change in control of Community
Bankshares. The cash severance and other fringe benefits
provided for by such employment and change in control severance
agreements shall be paid or provided to the respective officers
over the time period following the Effective Time specified in
the agreements (or in a lump sum at the officer's election)
regardless of whether or not the officer is subsequently hired by
BBC or any of its Subsidiaries, with the insurance coverages to
be provided to the respective individual pursuant to their
agreements. Community Bankshares represents and warrants that
the amounts reflected in Schedule 7.4(c) (A) have been calculated
in a manner consistent with, and according to, the provisions of
the Agreements (copies of which have been furnished by Community
Bankshares to BBC), and (B) represent good faith estimates of the
amounts payable as of the future date specified therein based
upon assumptions regarding interest rates, compensation or the
assumed date of Closing, which are disclosed in Schedule 7.4(c),
and (ii) the amounts payable under such Severance Agreements are
good faith estimates subject to change due to changes in interest
rates, compensation or the assumed date of Closing. Provided
that the methodologies used are in accordance with the
requirements of the Severance Agreements, BBC acknowledges that
substantially the same methodologies will be used to calculate
the amounts payable under the Severance Agreements at Closing.
Notwithstanding the foregoing, the present value of the cash
severance, fringe benefits and other parachute amounts (including
any parachute amounts associated with the accelerated vesting of
stock options and restricted stock awards) shall not exceed the
respective officer's limit under Section 280G of the Code. The
employees of Community Bankshares and its subsidiaries who have
Severance Agreements shall also be entitled to receive their
accrued but unused vacation and personal emergency days as of the
Effective Time.
(d) ESOP. Community Bankshares shall take all
necessary action to cause the Community Bankshares ESOP to be
terminated as of the Effective Time. Community Bankshares will
adopt amendments to the ESOP, to the extent necessary, that
provide (i) the Merger Consideration received by the Community
Bankshares ESOP trustee in connection with the Merger with
respect to the unallocated shares of Community Bankshares Common
Stock shall be first applied by the Community Bankshares ESOP
trustee to the full repayment of the Community Bankshares ESOP
loan, (ii) the balance of the Merger Consideration (if any)
received by the
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Community Bankshares ESOP trustee with respect to the unallocated
shares of Community Bankshares Common Stock shall be allocated as
earnings to the accounts of all participants in the Community
Bankshares ESOP who have accounts remaining under the Community
Bankshares ESOP (whether or not such participants are then
actively employed) and beneficiaries in proportion to the
account balances of such participants and beneficiaries as of
the first day of the Community Bankshares ESOP plan year in which
the Effective Time occurs, (iii) the accounts of all participants
and beneficiaries in the Community Bankshares ESOP immediately
prior to the Effective Time shall become fully vested as of the
Effective Time, and (iv) as may be requested by the IRS in
connection with the request for a determination letter as
described below. BBC agrees that for a period of two years
following the Effective Time, BBC will provide to members of the
administrative committee on the date hereof quarterly reports
regarding the status and the administration of the ESOP.
The Merger Consideration received by the Community
Bankshares ESOP Trustee shall be applied as provided for in the
ESOP and as may be required by law. As soon as practicable after
the date hereof, Community Bankshares shall file or cause to be
filed all necessary documents with the IRS, including the
amendments described above, for a determination letter for
termination of the Community Bankshares ESOP as of the Effective
Time. As soon as practicable after the later of the Effective
Time or the receipt of a favorable determination letter for
termination from the IRS, the account balances in the Community
Bankshares ESOP shall be distributed to participants and
beneficiaries in accordance with applicable law and the ESOP.
Prior to the Effective Time, no prepayments shall be made on the
Community Bankshares ESOP loan and contributions to the Community
Bankshares ESOP and payments on the Community Bankshares ESOP
loan shall be made consistent with past practices on the
regularly scheduled payment dates. The termination of the ESOP
shall not subject Community Bankshares or BBC to any obligation
or liability.
(e) 401 (k) Plan. Community Bankshares and its
Subsidiaries shall take all necessary action to cause the
Community Bankshares 401(k) Plan to be terminated as of the
Effective Time. As soon as practicable after the date hereof,
Community Bankshares shall file or cause to be filed all
necessary documents with the IRS for a determination letter for
termination of the Community Bankshares 401(k) Plan as of the
Effective Time. As soon as practicable after receipt of the
favorable determination letter for termination from the IRS, the
account balances in the 401(k) Plan shall be distributed to
participants and beneficiaries in accordance with applicable law
and the 401(k) Plan documents. From the date hereof through the
Closing Date, Community Bankshares and its Subsidiaries shall be
permitted to make employer profit sharing contributions and
401(k) matching contributions to the Community Bankshares 401(k)
Plan on a periodic monthly basis, consistent with past practices.
The termination of the 401(k) shall not subject Community
Bankshares or BBC to any obligation or liability. BBC agrees
that for a period of two years following the Effective Time, BBC
will provide to members of the administrative committee on the
date hereof quarterly reports regarding the status and the
administration of the 401(k) Plan.
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(f) SERP. BBC and its Subsidiaries agree to honor
Community Bankshares' Amended and Restated Supplemental
Retirement Income Plan (the "SERP") and to timely make the
payments to each of the SERP participants set forth on Community
Bankshares Disclosure Schedule 7.4(f). Schedule 7.4(f) details
all amounts payable pursuant to the SERP. BBC and its
Subsidiaries and their respective successors and assigns agree
not to make any changes to the SERP that would adversely affect
the SERP participants in any manner, provided that no additional
benefits will accrue under the SERP after the Effective Time and
provided that nothing herein shall limit BBC's right to terminate
the SERP after payment to the participants pursuant to its terms.
Except as indicated on Schedule 7.4(f), amounts payable under the
SERP are accrued on the Community Financial Statements to the
extent required by GAAP.
(g) Consulting Agreement. Effective as of the
Effective Time, BBC agrees that either it and/or BankAtlantic
Bank will enter into a one-year consulting agreement with Xxxxx
X. Xxxxxxx, Xx. providing for (i) an annual consulting fee of
$300,000 payable in equal monthly installments, (ii) medical and
dental benefits for Xx. Xxxxxxx and his eligible dependents for
the term of the agreement to the same extent and at the same cost
provided to BBC executive officers, and (iii) the use of an
office and of the automobile owned by Community Savings, with the
form of the consulting agreement to be substantially in the form
attached as Schedule 7.4(g).
(h) Retention Bonuses. Following execution of this Agreement
in order to insure an orderly Closing and transition period, Community
Bankshares and BBC shall identify individual employees of
Community Bankshares and its Subsidiaries who will be entitled to
receive a "retention" bonus in the event that such employee
remains an employee and satisfactorily fulfills the duties and
responsibilities of his or her position through a designated date
subsequent to the Effective Time.
(j) Enforceability. The obligations of BBC under this
Section 7.4 are intended to be enforceable against BBC directly
by the persons identified in such paragraphs and shall be binding
on any successors and permitted assigns of BBC.
7.5 Indemnification.
(a) After the Effective Time, BankAtlantic shall
indemnify, defend and hold harmless each person who is now, or
who has been at any time before the date hereof or who becomes
before the Effective Time, an officer or director of Community
Bankshares or any of its Subsidiaries (the "Indemnified Parties")
against all losses, claims, damages, costs, expenses (including
attorney's fees), liabilities or judgments or amounts that are
paid in settlement (which settlement shall require the prior
written consent of BBC, which consent shall not be unreasonably
withheld) of or in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, or
administrative (each a "Claim"), in which an Indemnified Party
is, or is threatened to be made, a party based in whole or in
part on or arising in whole or in part out of the fact that such
person is or was a director or officer of Community Bankshares or
any of its Subsidiaries if such Claim pertains to any matter or
fact arising, existing or occurring before the Effective Time
(including, without limitation, the Merger) regardless of whether
such Claim is
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asserted or claimed before, or at or after, the Effective Time
(the "Indemnified Liabilities"), to the fullest extent permitted
under applicable state law or the OTS regulations, whichever is
applicable, in effect as of the date hereof or as amended applicable
to a time before the Effective Time and under the Certificate of
Incorporation, Charter or by-laws or Board of Directors' resolutions
of Community Bankshares or any of its Subsidiaries, whichever is
applicable, as in effect on the date hereof. BBC shall pay expenses
in advance of the final disposition of any such action or proceeding
to each Indemnified Party to the fullest extent permitted by applicable
Law in effect on the date hereof or as amended applicable to a
time before the Effective Time upon receipt of any undertaking
required by applicable Law. Any Indemnified Party wishing to
claim indemnification under this Section 7.5(a), upon learning of
any Claim, shall notify BBC (but the failure so to notify BBC
shall not relieve it from any liability which it may have under
this Section 7.5(a) except to the extent such failure materially
prejudices BBC) and shall deliver to BBC any undertaking required
by applicable Law. BBC shall ensure, to the extent permitted
under applicable Law, whichever is applicable, that all
limitations of liability existing in favor of the Indemnified
Parties as provided in the Certificate of Incorporation, Charter
or by-laws of Community Bankshares or any of its Subsidiaries(as
the case may be), as in effect on the date hereof, or allowed
under applicable Law as in effect on the date hereof or as such
law or regulation may be amended applicable to a time before the
Effective Time, with respect to Indemnified Liabilities shall
survive the consummation of the Transactions.
(b) For a period of six years from and after the
Effective Time, BBC shall cause to be maintained in effect the
current policies of directors' and officers' liability insurance
maintained by Community Bankshares and its Subsidiaries (provided
that BBC may substitute therefor policies from a financially
capable insurer of at least the same coverage and amount
containing terms and conditions which are substantially no less
advantageous, or in the event such coverage is provided through
BBC's insurer it may be on terms and conditions (other than
coverage and amounts) consistent with BBC's current coverage), or
in lieu thereof obtain single limit tail coverage for such period
(which shall be purchased by Community Bankshares immediately
prior to Closing upon the request of BBC), with respect to claims
arising from facts or events which occurred before the Effective
Time.
(c) The obligations of BBC provided under paragraphs
(a) and (b) of this Section 7.5 are intended to be enforceable
against BBC directly by the Indemnified Parties and shall be
binding on all successors and permitted assigns of BBC.
7.6 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary,
proper or advisable on the part of such party, to consummate and
make effective the transactions contemplated by this Agreement at
the earliest practicable date, including obtaining all required
consents, approvals, waivers, exemptions, amendments and
authorizations, giving all notices, and making or effecting all
filings, registrations, applications, designations and
declarations, including, but not limited to, those described in
the schedules to this Agreement, and each party shall cooperate
fully with the other (including by providing any necessary
information) with respect to the foregoing. In case at any
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time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and/or directors
of BBC or Community Bankshares will take all such necessary
action. The parties agree and acknowledge that it may be
necessary to restructure the transactions contemplated herein to
address regulatory concerns or the concerns of tax counsel. The
parties agree to use their best efforts to address any such
concerns and to restructure the transactions as reasonably
necessary to address such concerns provided, however that (i) the
Merger Consideration is not thereby changed in kind or reduced in
amount as a result of such restructuring and (ii) such
modification will not materially delay or jeopardize receipt of
any required approvals of Applicable Governmental Authorities.
7.7 Tax Treatment. The parties hereto acknowledge and
agree to treat the Merger for federal and state income Tax
purposes as a taxable acquisition of the Community Bankshares
Common Stock by BBC. None of the parties hereto shall take any
position on any Return or otherwise inconsistent therewith.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BBC
The obligations of BBC to effect the transactions
contemplated hereby shall be subject to the fulfillment at or
prior to the Effective Time of each of the following conditions
(any one or more of which may be waived by BBC, but only in
writing):
8.1 Status as of Effective Time. At and as of the Effective Time:
(a) the representations and warranties of Community
Bankshares contained in this Agreement shall have been true and
correct in all material respects (except for representations and
warranties qualified by materiality which shall have been true
and correct in all respects) on the date of this Agreement and
shall continue to be true and correct in all material respects
(except for representations and warranties qualified by
materiality which shall continue to be true and correct in all
respects) as though made at and as of the Effective Time except
for (i)representations and warranties relating to a time or times
other than the Effective Time that were or will be true, correct
and complete at such other time or times and (ii) where the
failure or failures of such representations and warranties to be
so true, correct, and complete, individually or in the aggregate,
without giving effect to any materiality qualifications or
references to materiality therein, does not result or could not
reasonably be expected to result in a Material Adverse Effect on
Community Bankshares;
(b) Community Bankshares shall have in all material
respects performed and satisfied or otherwise complied with, or
caused such performance and satisfaction of and compliance with,
all covenants, terms and conditions required by this Agreement to
be performed and satisfied or otherwise complied with by it on or
prior to the Effective Time;
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(c) there shall not have occurred any event or
condition which has caused, or is reasonably likely to cause a
Material Adverse Effect with respect to Community Bankshares or
its Subsidiaries; and
(d) there shall be delivered to BBC a certificate
(dated the Effective Time and signed by the President of
Community Bankshares) stating that the conditions set forth in
clauses (a) through (c) above have been satisfied.
8.2 Required Action. All action required to be taken by or
on the part of Community Bankshares or any of its Subsidiaries to
authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Board of
Directors and shareholders of Community Bankshares or such
Subsidiary, as applicable, and BBC and BankAtlantic shall have
received certified copies of the resolutions evidencing such
authorizations.
8.3 Consents, Waivers. All consents, approvals, waivers,
exemptions, amendments and authorizations required to be obtained
prior to the Effective Time shall have been obtained at or prior
to the Effective Time, and all filings, registrations,
applications, designations and declarations required prior to the
Effective Time shall have been made or effected at or prior to
the Effective Time, and BBC shall have obtained the consents and
approvals of the third parties set forth on Schedule 8.3 hereto,
none of which shall contain or be subject to any conditions which
BBC in its reasonable opinion deems unduly burdensome or which
would materially reduce the value of the Merger to BBC.
8.4 Regulatory Approval. All approvals, waivers and
authorizations of, filings and registrations with, and
notifications to, all Applicable Governmental Authorities
required for consummation of the transactions contemplated by
this Agreement shall have been obtained or made and shall be in
full force and effect and all applicable waiting periods shall
have expired. No such approvals or authorizations shall contain
or be subject to any terms or conditions (other than those
generally imposed in similar transactions) which BBC in its
reasonable opinion deems unduly burdensome or which would
materially reduce the value of the Merger to BBC; provided,
however, that for the purposes hereof no term or condition
contained in such approvals or authorizations with respect to (i)
any required increases in capital levels, (ii) limitations on
future growth or (iii) limitations of business activities shall
be deemed to be unduly burdensome or to materially reduce the
value of the Merger to BBC. Such approvals, and the transactions
contemplated hereby, shall not have been contested by any federal
or state governmental or regulatory authority.
8.5 No Action to Prevent Consummation. No decision of any
federal, state or foreign court awarding substantial damages or
penalty against any of the parties or affiliates thereof in
connection with the Merger shall have been rendered.
8.6 No Action to Prevent or Restrict Merger. No order,
judgment or decree shall be outstanding against a party hereto or
a third party that would have the effect of preventing
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completion of the Merger; no suit, action or other proceeding shall
be pending or threatened by any governmental body in which it is
sought to restrain or prohibit the Merger; and no suit, action or
other proceeding shall be pending before any court or
governmental agency in which it is sought to restrain or prohibit
the Merger or obtain other substantial monetary or other relief
against one or more of the parties hereto in connection with this
Agreement and which BBC determines in good faith, based upon the
advice of counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a
significant potential to be resolved in such a way as to deprive
it of any of the material benefits to it of the Merger.
8.7 Dissenters' Rights. Holders of not more than 15% of
the outstanding shares of Community Bankshares Common Stock shall
have exercised, or shall remain entitled to exercise, dissenters?
appraisal rights in connection with the Merger under applicable
Law.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMMUNITY BANKSHARES
The obligations of Community Bankshares to effect the
transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Effective Time of each of the
following conditions (any one or more of which may be waived by
Community Bankshares, but only in writing):
9.1 Representations, Warranties and Covenants. The
representations and warranties of BBC contained in this Agreement
shall be true and correct in all material respects (except for
representations and warranties qualified by materiality which
shall have been true and correct in all respects) as of the date
of this Agreement and shall continue to be true and correct in
all material respects (except for representations and warranties
qualified by materiality, which shall continue to be true and
correct in all respects) as though such representations and
warranties were made at and as of the Effective Time, except for
such representations and warranties relating to a time or times
other than the Effective Time that were or will be true, correct
and complete at such other time or times, and BBC shall have in
all material respects performed and satisfied or otherwise
complied with, or caused such performance and satisfaction of and
compliance with, all covenants, terms and conditions required by
this Agreement to be performed and satisfied or otherwise
complied with by it on or prior to the Effective Time; and at the
Effective Time there shall be delivered to Community Bankshares a
certificate (dated the Effective Time and signed by the President
of BBC), stating that the foregoing conditions have been
satisfied.
9.2 Consents, Waivers. All consents, approvals, waivers,
exemptions, amendments and authorizations required to be obtained
by BBC prior to the Effective Time shall have been obtained at or
prior to the Effective Time, and all filings, registrations,
applications, designations and declarations required on the part
of BBC prior to the Effective Time shall have been made or
effected at or prior to the Effective Time.
9.3 No Material Adverse Effect. There shall not have
occurred any event or condition which has caused or is reasonably
likely to cause a Material Adverse Effect with respect to BBC.
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9.4 Regulatory Approval. All approvals and authorizations
of, filings and registrations with, and notifications to, all
Applicable Governmental Authorities required for consummation of
the transactions contemplated by this Agreement shall have been
obtained or made and shall be in full force and effect and all
applicable waiting periods shall have expired. No such approvals
or authorizations shall contain or be subject to any terms or
conditions (other than those generally imposed in similar
transactions) which would materially adversely affect the terms
of the Merger as they relate to the stockholders of Community
Bankshares. Such approvals, and the transactions contemplated
hereby, shall not have been contested by any federal or state
governmental or regulatory authority.
9.5 No Action to Prevent Consummation. No order, judgment
or decree shall be outstanding against a party hereto or a third
party that would have the effect of preventing completion of the
Merger; no suit, action or other proceeding shall be pending or
threatened by any governmental body in which it is sought to
restrain or prohibit the Merger; and no suit, action or other
proceeding shall be pending before any court or governmental
agency in which it is sought to restrain or prohibit the Merger
or obtain other substantial monetary or other relief against one
or more of the parties hereto in connection with this Agreement
and which Community Bankshares determines in good faith, based
upon the advice of counsel, makes it inadvisable to proceed with
the Merger because any such suit, action or proceeding has a
significant potential to be resolved in such a way as to deprive
it of any of the material benefits to it of the Merger.
9.6 No Action to Prevent or Restrict Merger. No Law or
Order shall have been proposed, promulgated or enacted by any
governmental or regulatory agency or court of competent
jurisdiction which prevents or restricts or could prevent or
restrict the Merger.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination of Agreement. Notwithstanding any
provision to the contrary herein, this Agreement may be
terminated at any time on or prior to the Effective Time:
(a) by mutual written consent of BBC and Community
Bankshares; or
(b) by BBC or Community Bankshares after June 30, 2002
or such later date as may be mutually agreed upon in writing by
the parties, provided, however, that the terminating party is not
otherwise in material breach of its representations, warranties
or obligations under this Agreement; or
(c) by BBC if Community Bankshares shall have
materially breached its representations and warranties or
defaulted in the observance or in the due and timely performance
of any of its covenants and agreements herein contained and such
breach or default (i) shall reasonably be expected to result in a
Material Adverse Effect and (ii) shall not have been cured within
twenty days after written notice specifying the alleged breach or
default; or
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(d) by Community Bankshares if BBC shall have
materially breached its representations and warranties or
defaulted in the observance or in the due and timely performance
of any of its covenants and agreements herein contained and such
breach or default (i) shall reasonably be expected to result in a
Material Adverse Effect and (ii) shall not have been cured within
twenty days after written notice specifying the alleged breach or
default; or
(e) by either Community Bankshares or BBC in the event
any approval of any Applicable Governmental Authority required
for consummation of the Merger and the other transactions
contemplated by this Agreement shall have been denied by final
nonappealable action of such authority or if any action taken by
such authority is not appealed within the time limit for appeal;
or
(f) by either BBC or Community Bankshares if the
shareholders of Community Bankshares shall have voted at the
Special Meeting and such vote upon the Merger and this Agreement
shall not have been sufficient to approve the foregoing; or
(g) by BBC if: (i) the Board of Directors of Community
Bankshares withdraws, modifies or changes its recommendation of
this Agreement and the Merger so that it is not in favor of the
Merger or shall have resolved to do so, (ii) the Board of
Directors of Community Bankshares shall have approved or
recommended to the shareholders of Community Bankshares a
Competing Transaction or taken a neutral position or no position
with respect to any Competing Transaction or shall have resolved
to do so, (iii) a Tender Offer or Exchange Offer (as hereinafter
defined) for 20 percent or more of the outstanding shares of
capital stock of Community Bankshares is commenced and the Board
of Directors of Community Bankshares fails to recommend against
acceptance of such tender offer or exchange offer by its
shareholders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its
shareholders), or (iv) the Board of Directors of Community
Bankshares fails to reaffirm publicly and unconditionally its
recommendation to its shareholders of the Merger, which
reaffirmation must be made within three business days after BBC's
written request to do so;
(h) by Community Bankshares, if the Board of Directors
of Community Bankshares, following receipt of the advice of
outside legal counsel that failure to so terminate would be
inconsistent with its duties to its shareholders under applicable
Law, shall have finally determined to approve, endorse or
recommend a Superior Proposal to Community Bankshares'
shareholders after complying with Section 6.6; provided, however,
that Community Bankshares may not terminate this Agreement
pursuant to this Section 10.1(h) until two business days have
elapsed following delivery to BBC of written notice of such
determination of Community Bankshares (which written notice shall
inform BBC of the material terms and conditions of the Competing
Transaction); provided further, however, that such termination
under this Section 10.1(h) shall not be effective until Community
Bankshares has paid BBC the amounts required to be paid pursuant
to Section 12.1 to the extent payment is due at the time of such
termination.
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10.2 Effect of Termination. If this Agreement is terminated
pursuant to this Article X, written notice thereof shall promptly
be given by the party electing such termination to the other
party and, subject to the expiration of the cure periods provided
in clauses 10.1(c) and 10.1(d) above, if any, this Agreement
shall terminate without further actions by the parties and no
party shall have any further obligations under this Agreement;
provided, however, that nothing herein shall relieve any party
from any liability for the willful or intentional breach of any
of its representations or warranties or the willful or
intentional breach of any of its covenants or agreements
contained in this Agreement; and, provided, further, that
Sections 6.2 and 12.1 hereof shall continue to be in full force
and effect upon any termination of this Agreement.
10.3 Amendment and Waiver. This Agreement may be amended or
modified in whole or in part at any time only by a writing signed
by the parties hereto. Any term, condition or provision of this
Agreement may be waived in writing at any time by the party which
is entitled to the benefits thereof.
ARTICLE XI
SURVIVAL
11.1 Survival of the Representations and Warranties. No
investigation by the parties hereto made heretofore or hereafter
shall affect the representations and warranties of the parties
which are contained herein and each such representation and
warranty shall survive such investigation. The representations
and warranties of the parties hereto contained in this Agreement
or in any exhibit or schedule to this Agreement shall not survive
the Effective Time.
ARTICLE XII
MISCELLANEOUS
12.1 Payment of Expenses.
(a) Each party hereto shall pay its own fees and
expenses incident to preparing for, entering into, and carrying
out this Agreement and the transactions contemplated hereby.
(b) Notwithstanding any provision in this Agreement to
the contrary, in order to induce BBC and Merger Sub to enter into
this Agreement and as a means of compensating BBC and Merger Sub
for the substantial direct and indirect monetary and other
damages and costs incurred and to be incurred in connection with
this Agreement in the event the transactions contemplated hereby
do not occur as a result of circumstances described below,
Community Bankshares agrees to pay BBC, and BBC shall be entitled
to payment of, a fee (the "Fee") of $6.0 million (less any
amounts paid pursuant to the provisions of Section 12.1(f)
hereof) upon the occurrence of a Termination Event (as defined
herein) so long as the Termination Event occurs prior to a Fee
Termination Event (as defined herein). The parties hereto
acknowledge that the actual amount of such damages and costs
would be impracticable or extremely difficult to determine, and
that the sum of $6.0 million constitutes a reasonable estimate by
the parties under the circumstances existing as of the date of
this Agreement of such damages and costs. Such
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payment shall be made to BBC by wire transfer in immediately available
funds to an account specified by BBC within five business days after the
occurrence of a Termination Event. A Fee Termination Event shall
be the first to occur of the following: (i) the Effective Time,
(ii) 12 months after termination of this Agreement in accordance
with its terms following the occurrence of a Preliminary
Termination Event (as defined herein), (iii) termination of this
Agreement in accordance with the terms hereof prior to the
occurrence of a Termination Event or a Preliminary Termination
Event (other than a termination of this Agreement by BBC pursuant
to Section 10.1(c) hereof), or (iv) 12 months after the
termination of this Agreement by BBC pursuant to Section 10.1(c)
hereof as a result of a willful or intentional breach of any
representation, warranty, covenant or agreement by Community
Bankshares.
(c) For purposes of this Agreement, a "Termination
Event" shall mean any of the following events:
(i) (A) Community Bankshares, without having
received BBC's prior written consent, shall have entered
into an agreement to engage in a Competing Transaction with
any person (the term "person" for purposes of this Agreement
shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a
corporation, general or limited partnership, joint venture,
limited liability company, trust, business association,
group acting in concert, or any person acting in a
representative capacity) other than BBC or any subsidiary of
BBC, or the Board of Directors of Community Bankshares shall
have approved or recommended that the shareholders of
Community Bankshares approve or accept any Competing
Transaction with any person other than BBC or any subsidiary
of BBC or a Competing Transaction described in clauses (i),
(ii) or (iii) of Section 6.6(b) shall have been consummated;
or
(ii) any person, other than BBC, shall have
acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership, or any "group" (as
such term is defined in Section 13(d)(3) of the Exchange
Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 20% or more of
the aggregate voting power represented by the outstanding
Community Bankshares Common Stock.
(d) For purposes of this Agreement, a "Preliminary
Termination Event" shall mean any of the following events:
(i) any person (other than BBC) shall have
commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement
under the Securities Act of 1933, as amended ("Securities
Act"), with respect to, a tender offer or exchange offer to
purchase any shares of Community Bankshares Common Stock
such that, upon consummation of such offer, such person
would own or control 20% or more of Community Bankshares
Common Stock outstanding (such an offer being referred to
herein as a "Tender Offer" and an "Exchange Offer,"
respectively,
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regardless of whether the provisions of Regulations 14D or 14E
under the Exchange Act apply to such Tender Offer or Exchange
Offer);
(ii) (A) the holders of Community Bankshares
Common Stock shall not have approved this Agreement at the
meeting of such shareholders held for the purpose of voting
on this Agreement, (B) such meeting shall not have been held
or shall have been canceled prior to termination of the
Agreement or (C) the Board of Directors of Community
Bankshares shall have withdrawn, modified or changed its
recommendation of this Agreement and the Merger so that it
is not in favor of the Merger, in each case after any person
(other than BBC) shall have (x) publicly announced a
proposal, or an intention to make a proposal, to Community
Bankshares or its shareholders to engage in a Competing
Transaction, (y) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect
to an Exchange Offer or (z) filed an application or given
notice, whether in draft or final form, with the appropriate
regulatory authorities for approval to engage in a Competing
Transaction; or
(iii) Community Bankshares shall have
willfully breached any representation, warranty, covenant or
obligation contained in this Agreement and such breach would
entitle BBC to terminate this Agreement under Section
10.1(c) hereof (without regard to the cure period provided
for therein unless such cure is promptly effected without
jeopardizing consummation of the Merger pursuant to the
terms of this Agreement) after any person (other than BBC)
shall have (x) made, or indicated an intention to make, a
proposal to Community Bankshares or its shareholders to
engage in a Competing Transaction, (y) commenced a Tender
Offer or filed a registration statement under the Securities
Act with respect to an Exchange Offer or (z) filed an
application or given notice, whether in draft or final form,
with the appropriate regulatory authorities for approval to
engage in a Competing Transaction.
(e) Community Bankshares shall promptly notify BBC in
writing of the occurrence of any Preliminary Termination Event or
Termination Event.
(f) If BBC or Community Bankshares terminates this
Agreement pursuant to Section 10.1(f) and at or before the time
of the Special Meeting there had not been publicly announced a
proposal to Community Bankshares or its shareholders to engage in
a Competing Transaction, then Community Bankshares shall pay to
BBC, prior to or concurrently with such termination, the
documented out-of-pocket expenses incurred by BBC in connection
with the transactions contemplated by this Agreement not to
exceed $1,500,000 in the aggregate; provided, however, that
Community Bankshares shall not be required to reimburse BBC for
such expenses if at the time of such termination BBC had
materially breached its representation, warranties or covenants
hereunder.
(g) In the event that this Agreement is terminated as
a consequence of the fact that BBC failed for any reason to
receive all approvals, waivers and authorizations of Applicable
Governmental Authorities required for consummation of the
transactions contemplated by this
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Agreement, then BBC shall pay to Community Bankshares, within five
business days of such termination, the documented out-of-pocket
expenses incurred by Community Bankshares in connection with the
transactions contemplated by this Agreement not to exceed $1.5 million
in the aggregate; provided, however, that BBC shall not be required to
reimburse Community Bankshares for such expenses if at the time
of such termination Community Bankshares had materially breached
its representations, warranties or covenants or if the failure to
obtain such approvals, waivers or authorizations resulted as a
consequence of facts or circumstances relating to Community
Bankshares or its Subsidiaries.
(h) Any amounts required to be paid pursuant to this
Section 12.1 shall be made to the party entitled to receive such
amounts by wire transfer of immediately available funds to an
account designated by such party.
(i) In the event that a party shall fail to pay any
amount required to be paid under this Section 12.1, such amount
shall be increased to include the costs and expenses actually
incurred or accrued by the party entitled to receive such amount
(including, without, limitation, fees and expenses of counsel) in
connection with the collection under and enforcement of this
Section 12.1, together with interest on such unpaid amount,
commencing on the date that such amount became due, at a rate
equal to the rate of interest publicly announced from time to
time by Chase Manhattan, as such bank's prime rate plus 2.00%.
12.2 Binding Effect. Neither this Agreement nor any rights,
duties or obligations hereunder shall be assignable by Community
Bankshares, in whole or in part, and any attempted assignment in
violation of this prohibition shall be null and void. This
Agreement shall, however, be assignable by BBC to an affiliate of
BBC without the consent of Community Bankshares. Subject to the
foregoing, all of the terms and provisions hereof shall be
binding upon, and inure to the benefit of, the successors and
permitted assigns of the parties hereto.
12.3 Law Governing. This Agreement will be governed and
enforced in all respects, including validity, interpretation and
effect, by the Laws of the State of Florida without giving effect
to its principles of conflicts of laws.
12.4 Counterparts. This Agreement may be executed in
several counterparts and one or more separate documents, all of
which together shall constitute one and the same instrument with
the same force and effect as though all of the parties had
executed the same document.
12.5 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly received (i) on the date given if delivered personally or by
facsimile, telecopier, cable, telegram or telex or (ii) on the
date received if sent by overnight delivery service or (iii) five
days after having been mailed by registered or certified mail
(return receipt requested), to the parties at the following
addresses (or at such other address for a party as shall be
specified by like notice):
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If either to BBC or BankAtlantic, addressed to:
BankAtlantic Bancorp, Inc. or BankAtlantic, A Federal
Savings Bank
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
With copies addressed to:
Xxxxxxx Xxxxxx Xxxxxx Xxxxxxxx
Xxxxxxxx & Xxxxxxxxx, P.A.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Community Bankshares, addressed to:
Community Savings Bankshares, Inc.
000 XX Xxxxxxx Xxx
Xxxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Xx.
Facsimile: (000) 000-0000
With a copy addressed to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X., 00xx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
12.6 Entire Agreement. All exhibits and schedules referred
to in this Agreement are integral parts hereof, and this
Agreement, together with such exhibits and schedules, constitute
the entire agreement among the parties hereto with respect to the
matters contained herein and therein, and supersede all prior
agreements and understandings between the parties with respect
thereto.
12.7 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
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12.8 Knowledge of the Parties. Where any representation or
warranty contained in this Agreement is expressly qualified by
reference to the knowledge of any of the parties hereto, each of
the parties hereto acknowledges and confirms that it has made
reasonable inquiry as to the matters that are the subject of such
representations and warranties. Where reference is made to
Community Bankshares' knowledge or any similar phrase, such
reference shall be deemed to include the respective executive
officers and directors of Community Bankshares and each of its
Subsidiaries, all of whom shall be deemed to have conducted the
inquiry required in this Section 12.8.
12.9 Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any
provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees and
expenses through all appeals in addition to any other remedy.
12.10 No Third Party Beneficiary. Except as permitted
in Sections 7.4 and 7.5 hereof, nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon
or give any person or entity other than the parties hereto and
their respective heirs, personal representatives, legal
representatives, successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
12.11 Injunctive Relief. It is possible that remedies
at law may be inadequate and, therefore, the parties hereto shall
be entitled to equitable relief including, without limitation,
injunctive relief, specific performance or other equitable
remedies in addition to all other remedies provided hereunder or
available to the parties hereto at law or in equity.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
BANKATLANTIC BANCORP, INC.
By: /s/ Xxxx X. Xxxxx
------------------------
Xxxx X. Xxxxx
Chairman of the Board
CSB MERGER SUB, INC.
By: /s/ Xxxx X. Xxxxx
------------------------
Xxxx X. Xxxxx
Chairman of the Board
COMMUNITY SAVINGS BANKSHARES, INC.
By: /s/ Xxxxxxxxx X. Xxxx
------------------------
Xxxxxxxxx X. Xxxx
Chairman of the Board
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