UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2015
BANK OF THE CAROLINAS CORPORATION
(Exact name of Registrant as specified in its charter)
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NORTH CAROLINA |
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000-52195 |
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20-4989192 |
(State or other jurisdiction
of incorporation) |
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(Commission
File No.) |
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(IRS Employer
Identification number) |
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135 BOXWOOD VILLAGE DRIVE, MOCKSVILLE, NORTH CAROLINA |
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27028 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (336) 751-5755
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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x |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 |
Entry into a Material Definitive Agreement. |
Agreement and Plan of Merger and Reorganization
On May 6, 2015, Bank of the Carolinas Corporation (the Company) and its wholly owned subsidiary, Bank of the
Carolinas (the Bank), entered into a definitive agreement and plan of merger and reorganization (the Agreement) with Bank of the Ozarks, Inc. (Ozarks), and its wholly owned subsidiary, Bank of the Ozarks, relating
to a proposed merger transaction. The Agreement provides that, upon the terms and subject to the conditions set forth therein, (i) the Company will merge with and into Ozarks, with Ozarks continuing as the surviving corporation (the
Merger), and (ii) the Bank will merge with and into Bank of the Ozarks, with Bank of the Ozarks continuing as the surviving bank.
Subject to the terms and conditions of the Agreement, upon completion of the Merger, each share of Company common stock issued and outstanding
immediately prior to the effective time of the Merger will be converted into the right to receive shares of Ozarks common stock (plus cash in lieu of any fractional share) based on the purchase price of $64.7 million, subject to certain additional
purchase price adjustments set forth in the Agreement. The number of Ozarks shares to be issued will be determined based on Ozarks 10-day average closing stock price as of the second business day prior to the closing date, subject to a minimum
and maximum price of $29.28 and $48.80, respectively.
The Company has agreed to take all necessary action so that, prior to the effective
time of the Merger, all outstanding options and other rights to purchase shares of the Companys common stock will be terminated and cancelled.
The Agreement contains usual and customary representations and warranties that the Company and Ozarks made to each other as of specific dates.
The assertions embodied in those representations and warranties were made solely for purposes of the contract between the Company and Ozarks and may be subject to important qualifications and limitations agreed to by the parties in connection with
negotiating its terms. Moreover, the representations and warranties are subject to a contractual standard of materiality that may be different from what may be viewed as material to shareholders, and the representations and warranties may have been
used to allocate risk between the Company and Ozarks rather than establishing matters as facts.
The Agreement contains customary closing
conditions, including, among others, approval of the Merger by the Companys shareholders, the registration of Ozarks common stock to be issued to the Companys shareholders, and receipt of required regulatory approvals.
From the date of the Agreement, the Company is subject to customary nonsolicitation restrictions on its ability to solicit alternative
acquisition proposals from third parties, furnish information to and engage in discussions with third parties regarding alternative acquisition proposals, release a third party from a confidentiality or standstill agreement or enter into an
agreement with respect to an alternative acquisition proposal. The Company has also agreed to recommend that the Companys shareholders vote to approve the Merger.
Notwithstanding the nonsolicitation restrictions, prior to the time that shareholder approval is obtained, the Companys board of
directors may change its recommendation to shareholders, or engage in discussions or negotiations with a third party regarding an alternative acquisition proposal or furnish information to such a third party if, but only if, prior to taking such
action, the Companys board of directors has determined in good faith, after consultation with and having considered the advice of its outside financial advisor and outside legal counsel, that such proposal constitutes a Superior
Proposal and that the board of directors is required to take such actions to comply with its fiduciary duties to the Companys shareholders under applicable law. The Company is required to provide Ozarks the opportunity to match such
Superior Proposal or to revise its proposal such that the alternative acquisition proposal no longer constitutes a Superior Proposal. A Superior Proposal means any bona fide, unsolicited acquisition proposal that the Companys board
of directors reasonably determines in good faith, after consultation with its outside financial advisor and outside legal counsel, is reasonably capable of being completed and is more favorable to the shareholders of Company from a financial point
of view than the Merger.
2
The Agreement provides certain termination rights for both the Company and Ozarks and further
provides that, upon termination of the Agreement under certain circumstances, the Company will be obligated to pay Ozarks a termination fee of $2.3 million or a liquidated damages payment of $500,000.
In connection with the Agreement, certain directors and principal holders of the Companys common stock entered into voting agreements
with Ozarks agreeing to, among other things, vote their shares of the Companys common stock in favor of the Merger and restricting the transfer of such shares of the Companys common stock during the period between signing of the
Agreement and the completion of the Merger.
The Agreement has been approved by the boards of directors of each of the Company and Ozarks.
Subject to the required approval of the Companys shareholders, requisite regulatory approvals, the effectiveness of the registration statement to be filed by Ozarks with respect to the Ozarks common stock to be issued in the transaction, and
other customary closing conditions, the Merger is expected to be completed in the third quarter of 2015.
The foregoing summary of the
Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Agreement, which is attached hereto as Exhibit 2.1, and is incorporated herein by reference.
First Amendment to Tax Benefits Preservation Plan
As originally reported in its Current Report on Form 8-K filed with the Securities and Exchange Commission on July 17, 2014, as amended on
July 18, 2014, the Company entered into a Tax Benefits Preservation Plan, dated as of July 11, 2014 (the Plan), with Broadridge Corporate Issuer Solutions, Inc., as Rights Agent (the Rights Agent). The purpose of
the Plan is to protect the Companys ability to use certain tax assets, such as net operating loss carryforwards (the Tax Benefits), to offset future income. The Companys use of the Tax Benefits in the future would be
significantly limited if it experiences an ownership change for U.S. federal income tax purposes. In general, an ownership change will occur if there is a cumulative increase in the Companys ownership by 5-percent
shareholders (as defined under U.S. income tax laws) that exceeds 50 percentage points over a rolling three-year period. The Plan is designed to reduce the likelihood that the Company will experience an ownership change by discouraging any
person from becoming a beneficial owner of 4.99% or more of the then outstanding shares of its common stock.
On May 6, 2015, the
Company amended the Tax Benefits Preservation Plan (the Amendment). The purpose of the Amendment is to clarify and make explicit, among other things, that neither the execution, delivery, or announcement of the Merger or any voting
agreement entered into in connection with the Merger will cause any person to become an Acquiring Person nor constitute a Shares Acquisition Date, a Distribution Date, all as defined in the Plan, or otherwise
cause any rights to become exercisable pursuant to the Plan.
Item 2.02 |
Results of Operations and Financial Condition. |
On May 6, 2015, the Company posted
a slide presentation on the Investor Relations page of its Internet website containing additional information regarding the Merger. The slide presentation contains certain results of the Companys operations and financial condition as of
March 31, 2015. A copy of the slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The slide
presentation contains certain results of the Companys operations and financial condition as of March 31, 2015, and information based on such results, including:
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Valuation multiples for the Merger of approximately 1.35x book value and tangible book value based on the Companys total stockholders equity of $48,001,162 as of March 31, 2015 |
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Total assets as of March 31, 2015 of approximately $363 million |
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Total loans as of March 31, 2015 of approximately $279 million |
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Total deposits as of March 31, 2015 of approximately $314 million |
3
The information contained in Item 2.02 of this Current Report shall not be deemed
filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the Securities Act),
or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01 |
Regulation FD Disclosures. |
A copy of the press release announcing the Merger is
furnished as Exhibit 99.1 to this Current Report.
As discussed in Item 2.02, the Company has posted on the Investor Relations page
of its Internet website a slide presentation regarding the Merger. A copy of the slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The foregoing description is qualified in its entirety by reference to such exhibit.
The Company is not undertaking to update this presentation.
As provided in General Instruction B.2 to Form 8-K, the information furnished
in Exhibits 99.1, 99.2 and 99.3 of this Current Report on Form 8-K shall not be deemed filed for purposes of section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and such information shall not be deemed
incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 |
Financial Statements and Exhibits. |
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Exhibit No. |
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Description of Exhibit |
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2.1 |
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Agreement and Plan of Merger and Reorganization, dated as of May 6, 2015, by and among Bank of the Ozarks, Inc., Bank of the Ozarks, Bank of the Carolinas Corporation, and Bank of the Carolinas. Pursuant to Item 602(b)(2) of
Regulation S-K, certain schedules to this Agreement have not been filed with this exhibit. The schedules contain various items relating to the business of and the representations and warranties made by the Company and the Bank. The Company agrees to
furnish supplementally any omitted schedule to the SEC upon request. |
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2.2 |
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List of Schedules to the Agreement and Plan of Merger and Reorganization |
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99.1 |
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Press Release dated May 6, 2015 |
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99.2 |
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Slide Presentation dated May 6, 2015 |
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99.3 |
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Bank of the Ozarks/Bank of the Carolinas Q&A |
ADDITIONAL INFORMATION
In connection with the proposed Merger, Ozarks will file a registration statement on Form S-4 with the Securities and Exchange Commission (the
SEC) to register the Ozarks shares that will be issued to the Companys shareholders in connection with the transaction. The registration statement will include a proxy statement of the Company and a prospectus of Ozarks and other
relevant materials in connection with the proposed merger transaction involving the Company and Ozarks. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE (AND ANY
OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION OR INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH DOCUMENTS WILL CONTAIN IMPORTANT
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INFORMATION REGARDING THE PROPOSED MERGER TRANSACTION. The proxy statement/prospectus, as well as other filings containing information about the Company and Ozarks will be available without
charge at the SECs Internet site (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, when available, without
charge, from the Companys website at http://www.bankofthecarolinas.com and on Ozarks website at http://www.bankozarks.com under the Investor Relations tab.
The Company and Ozarks and their respective directors, executive officers and certain other members of management and employees may be deemed
to be participants in the solicitation of proxies from shareholders of the Company in connection with the proposed Merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the
solicitation of shareholders of the Company in connection with the proposed Merger will be set forth in the proxy statement/prospectus when it is filed with the SEC. You can find information about the executive officers and directors of the Company
in its Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 31, 2015. You can find information about the directors and executive officers of Ozarks in its Annual Report on Form 10-K for the year ended
December 31, 2014 and its definitive proxy statement filed with the SEC on March 25, 2015.
Statements contained in this Form
8-K that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results
to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to factors discussed in documents filed by the Company and Ozarks with the SEC from time to time. Neither the Company nor Ozarks
undertakes and both specifically disclaim any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company or Ozarks.
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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BANK OF THE CAROLINAS CORPORATION |
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By: |
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/s/ Megan W. Patton |
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Megan W. Patton |
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Senior Vice President and Chief Financial Officer |
Dated: May 6, 2015
6
EXHIBIT INDEX
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Exhibit No. |
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Description of Exhibit |
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2.1 |
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Agreement and Plan of Merger and Reorganization, dated as of May 6, 2015, by and among Bank of the Ozarks, Inc., Bank of the Ozarks, Bank of the Carolinas Corporation, and Bank of the Carolinas. Pursuant to Item 602(b)(2) of
Regulation S-K, certain schedules to this Agreement have not been filed with this exhibit. The schedules contain various items relating to the business of and the representations and warranties made by the Company and the Bank. The Company agrees to
furnish supplementally any omitted schedule to the SEC upon request. |
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2.2 |
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List of Schedules to the Agreement and Plan of Merger and Reorganization |
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99.1 |
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Press Release dated May 6, 2015 |
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99.2 |
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Slide Presentation dated May 6, 2015 |
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99.3 |
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Bank of the Ozarks/Bank of the Carolinas Q&A |
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
DATED AS OF MAY 6, 2015
BY AND AMONG
BANK OF
THE OZARKS, INC.,
BANK OF THE OZARKS,
BANK OF THE CAROLINAS CORPORATION
AND
BANK OF THE
CAROLINAS
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ARTICLE I THE MERGER |
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1 |
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Section 1.01 |
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The Merger |
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1 |
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Section 1.02 |
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Articles of Incorporation and Bylaws |
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2 |
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Section 1.03 |
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Directors and Officers of Surviving Entity |
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2 |
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Section 1.04 |
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Bank Merger |
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2 |
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Section 1.05 |
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Effective Time; Closing |
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2 |
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Section 1.06 |
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Additional Actions |
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3 |
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ARTICLE II MERGER CONSIDERATION; EXCHANGE PROCEDURES |
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3 |
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Section 2.01 |
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Merger Consideration |
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3 |
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Section 2.02 |
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Stock-Based Awards |
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4 |
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Section 2.03 |
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Rights as Shareholders; Stock Transfers |
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4 |
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Section 2.04 |
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Fractional Shares |
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5 |
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Section 2.05 |
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Plan of Reorganization |
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5 |
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Section 2.06 |
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Exchange Procedures |
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5 |
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Section 2.07 |
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Deposit of Merger Consideration |
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5 |
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Section 2.08 |
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Delivery of Merger Consideration |
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6 |
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Section 2.09 |
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Anti-Dilution Provisions |
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7 |
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY AND COMPANY
BANK |
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7 |
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Section 3.01 |
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Making of Representations and Warranties |
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7 |
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Section 3.02 |
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Organization, Standing and Authority |
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8 |
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Section 3.03 |
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Capital Stock |
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8 |
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Section 3.04 |
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Subsidiaries |
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10 |
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Section 3.05 |
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Corporate Power; Minute Books |
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10 |
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Section 3.06 |
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Corporate Authority |
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11 |
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Section 3.07 |
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Regulatory Approvals; No Defaults |
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11 |
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Section 3.08 |
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SEC Reports; Financial Statements |
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12 |
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Section 3.09 |
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Regulatory Reports |
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13 |
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Section 3.10 |
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Absence of Certain Changes or Events |
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13 |
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Section 3.11 |
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Legal Proceedings |
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14 |
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Section 3.12 |
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Compliance With Laws |
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15 |
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Section 3.13 |
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Company Material Contracts; Defaults |
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15 |
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Section 3.14 |
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Agreements with Regulatory Agencies |
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16 |
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Section 3.15 |
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Brokers; Fairness Opinion |
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16 |
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Section 3.16 |
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Employee Benefit Plans |
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17 |
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Section 3.17 |
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Labor Matters |
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20 |
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Section 3.18 |
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Environmental Matters |
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20 |
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Section 3.19 |
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Tax Matters |
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21 |
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Section 3.20 |
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Investment Securities |
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23 |
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Section 3.21 |
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Derivative Transactions |
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23 |
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Section 3.22 |
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Regulatory Capitalization |
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23 |
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Section 3.23 |
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Loans; Nonperforming and Classified Assets |
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Section 3.24 |
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Allowance for Loan and Lease Losses |
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25 |
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Section 3.25 |
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Trust Business; Administration of Fiduciary Accounts |
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25 |
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Section 3.26 |
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Investment Management and Related Activities |
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25 |
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Section 3.27 |
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Repurchase Agreements |
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25 |
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Section 3.28 |
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Deposit Insurance |
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25 |
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Section 3.29 |
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CRA, Anti-money Laundering and Customer Information Security |
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Section 3.30 |
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Transactions with Affiliates |
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Section 3.31 |
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Tangible Properties and Assets |
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26 |
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Section 3.32 |
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Intellectual Property |
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Section 3.33 |
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Insurance |
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28 |
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Section 3.34 |
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Antitakeover Provisions |
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28 |
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Section 3.35 |
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Company Information |
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28 |
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Section 3.36 |
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Transaction Costs |
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Section 3.37 |
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No Knowledge of Breach |
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER BANK |
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29 |
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Section 4.01 |
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Making of Representations and Warranties |
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Section 4.02 |
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Organization, Standing and Authority |
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29 |
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Section 4.03 |
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Capital Stock |
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29 |
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Section 4.04 |
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Corporate Power |
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30 |
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Section 4.05 |
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Corporate Authority |
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30 |
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Section 4.06 |
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SEC Documents; Financial Statements |
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30 |
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Section 4.07 |
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Regulatory Reports |
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31 |
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Section 4.08 |
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Regulatory Approvals; No Defaults |
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31 |
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Section 4.09 |
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Buyer Information |
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32 |
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Section 4.10 |
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Absence of Certain Changes or Events |
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32 |
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Section 4.11 |
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Compliance with Laws |
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32 |
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Section 4.12 |
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Brokers |
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33 |
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Section 4.13 |
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Tax Matters |
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33 |
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Section 4.14 |
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Regulatory Capitalization |
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33 |
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Section 4.15 |
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No Financing |
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33 |
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Section 4.16 |
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No Knowledge of Breach |
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33 |
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ARTICLE V COVENANTS |
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33 |
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Section 5.01 |
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Covenants of Company |
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33 |
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Section 5.02 |
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Covenants of Buyer |
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38 |
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Section 5.03 |
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Commercially Reasonable Efforts |
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38 |
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Section 5.04 |
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Shareholder Approval |
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39 |
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Section 5.05 |
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Registration Statement; Proxy Statement-Prospectus; NASDAQ Listing; Deposit of Merger Consideration |
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39 |
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Section 5.06 |
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Regulatory Filings; Consents |
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41 |
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Section 5.07 |
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Publicity |
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42 |
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Section 5.08 |
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Access; Information |
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42 |
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Section 5.09 |
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No Solicitation by Company; Superior Proposals |
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43 |
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Section 5.10 |
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Indemnification |
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46 |
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Section 5.11 |
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Employees; Benefit Plans |
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47 |
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Section 5.12 |
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Notification of Certain Changes |
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50 |
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Section 5.13 |
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Current Information |
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50 |
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Section 5.14 |
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Board Packages |
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50 |
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Section 5.15 |
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Transition; Informational Systems Conversion |
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50 |
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Section 5.16 |
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Access to Customers and Suppliers |
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51 |
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Section 5.17 |
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Environmental Assessments |
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51 |
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Section 5.18 |
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Certain Litigation |
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52 |
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Section 5.19 |
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Director Resignations |
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52 |
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Section 5.20 |
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Coordination |
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52 |
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Section 5.21 |
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Transactional Expenses |
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54 |
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Section 5.22 |
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Assumption by Buyer of Certain Obligations |
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54 |
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Section 5.23 |
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Confidentiality |
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54 |
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iii
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Section 5.24 |
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Section 16 Matters |
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55 |
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Section 5.25 |
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Exchange Act Deregistration |
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55 |
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Section 5.26 |
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Tax Matters |
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56 |
|
|
|
|
Section 5.27 |
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Rights under Tax Preservation Agreement |
|
|
56 |
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|
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Section 5.28 |
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Trust Preferred Securities |
|
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56 |
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ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER |
|
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57 |
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Section 6.01 |
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Conditions to Obligations of the Parties to Effect the Merger |
|
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57 |
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|
Section 6.02 |
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Conditions to Obligations of Company |
|
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57 |
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Section 6.03 |
|
Conditions to Obligations of Buyer |
|
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58 |
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Section 6.04 |
|
Frustration of Closing Conditions |
|
|
59 |
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ARTICLE VII TERMINATION |
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59 |
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Section 7.01 |
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Termination |
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59 |
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Section 7.02 |
|
Termination Fee; Liquidated Damages |
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61 |
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Section 7.03 |
|
Effect of Termination |
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62 |
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ARTICLE VIII DEFINITIONS |
|
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62 |
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Section 8.01 |
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Definitions |
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62 |
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ARTICLE IX MISCELLANEOUS |
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73 |
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Section 9.01 |
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Survival |
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73 |
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Section 9.02 |
|
Waiver; Amendment |
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73 |
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Section 9.03 |
|
Governing Law; Waiver of Right to Trial by Jury |
|
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73 |
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Section 9.04 |
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Expenses |
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73 |
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Section 9.05 |
|
Notices |
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74 |
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Section 9.06 |
|
Entire Understanding; No Third Party Beneficiaries |
|
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74 |
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Section 9.07 |
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Severability |
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74 |
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Section 9.08 |
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Enforcement of the Agreement |
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75 |
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Section 9.09 |
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Interpretation |
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75 |
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Section 9.10 |
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Assignment |
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75 |
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Section 9.11 |
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Counterparts |
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75 |
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Exhibit A Form of Voting Agreement |
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Exhibit B Plan of Bank Merger |
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Exhibit C Form of Non-Compete Agreement |
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iv
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this Agreement) is dated as of May 6, 2015, by and among
Bank of the Ozarks, Inc., an Arkansas corporation with its principal office in Little Rock, Arkansas (Buyer), Bank of the Ozarks, an Arkansas state banking corporation with its principal office in Little Rock, Arkansas and
a wholly-owned subsidiary of Buyer (Buyer Bank), Bank of the Carolinas Corporation, a North Carolina corporation with its principal office in Mocksville, North Carolina (Company) and Bank of the
Carolinas, a North Carolina chartered bank and wholly-owned subsidiary of Company (Company Bank).
W I T N
E S S E T H
WHEREAS, the respective boards of directors of each of Buyer, Buyer Bank, Company and Company Bank have
(i) determined that this Agreement and the business combination and related transactions contemplated hereby are in the best interests of their respective entities and shareholders; (ii) determined that this Agreement and the transactions
contemplated hereby are consistent with and in furtherance of their respective business strategies; and (iii) approved this Agreement;
WHEREAS, in accordance with the terms of this Agreement, (i) Company will merge with and into Buyer, with Buyer as the surviving
entity (the Merger), and thereafter (ii) Company Bank will merge with and into Buyer Bank, with Buyer Bank as the surviving entity (the Bank Merger);
WHEREAS, as a material inducement and as additional consideration to Buyer to enter into this Agreement, certain directors and
principal holders of the Company Common Stock have entered into voting agreements with Buyer dated as of the date hereof, the form of which is attached hereto as Exhibit A (each a Voting Agreement and collectively,
the Voting Agreements), pursuant to which each such person has agreed, among other things, to vote all shares of Company Common Stock owned by such person in favor of the approval of this Agreement and the transactions
contemplated hereby, upon the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the parties desire to
make certain representations, warranties and agreements in connection with the transactions described in this Agreement and to prescribe certain conditions thereto.
NOW, THEREFORE, in consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. Subject to the terms and conditions of this Agreement, at the Effective Time, Company shall merge with
and into Buyer in accordance with the NCBCA and
1
the ABCA. Upon consummation of the Merger, the separate corporate existence of Company shall cease and Buyer shall survive and continue to exist as a corporation incorporated under the ABCA
(Buyer, as the surviving entity in the Merger, sometimes being referred to herein as the Surviving Entity).
Section 1.02 Articles of Incorporation and Bylaws. The Articles of Incorporation and Bylaws of the Surviving Entity upon
consummation of the Merger shall be the Articles of Incorporation and Bylaws of Buyer as in effect immediately prior to the Effective Time.
Section 1.03 Directors and Officers of Surviving Entity. The directors of the Surviving Entity immediately after the Merger shall
be the directors of Buyer in office immediately prior to the Effective Time. The Executive Officers of the Surviving Entity immediately after the Merger shall be the Executive Officers of Buyer immediately prior to the Effective Time. Each of the
directors and Executive Officers of the Surviving Entity immediately after the Merger shall hold office until his or her successor is elected and qualified or otherwise in accordance with the Articles of Incorporation and Bylaws of the Surviving
Entity.
Section 1.04 Bank Merger. At the later of immediately following the Effective Time or as promptly as practicable
thereafter, Company Bank will be merged with and into Buyer Bank upon the terms and with the effect set forth in the Plan of Bank Merger, substantially in the form attached hereto as Exhibit B.
Section 1.05 Effective Time; Closing.
(a) Subject to the terms and conditions of this Agreement, Buyer, Buyer Bank, Company and Company Bank will make all such filings as may be
required to consummate the Merger and the Bank Merger by applicable Laws. The Merger shall become effective as set forth in the articles of merger (the Articles of Merger) related to the Merger that shall be filed with the
North Carolina Secretary of State and the Arkansas Secretary of State, respectively, on the Closing Date. The Effective Time of the Merger shall be the later of (i) the date and time of filing of the Articles of
Merger, or (ii) the date and time when the Merger becomes effective as set forth in the Articles of Merger, which shall be no later than ten (10) Business Days after all of the conditions to the Closing set forth in ARTICLE VI (other than
conditions to be satisfied at the Closing, which shall be satisfied or waived at the Closing) have been satisfied or waived in accordance with the terms hereof.
(b) The Bank Merger shall become effective as set forth in the articles of merger providing for the Bank Merger (the Articles of
Bank Merger) that shall be filed with the Arkansas State Bank Department, the North Carolina Office of the Commissioner of Banks, the North Carolina Secretary of State and, if applicable, any federal bank regulatory agencies, at the
later of immediately following the Effective Time or as promptly as practicable thereafter.
(c) The closing of the transactions
contemplated by this Agreement (the Closing) shall take place beginning immediately prior to the Effective Time (such date, the Closing Date) at the offices of Kutak Rock LLP, 124 W. Capitol Ave.,
Suite 2000, Little Rock, AR 72201, or such other place as the parties may mutually agree. At the Closing, there shall be delivered to Buyer and Company the Articles of Merger, the Articles of Bank Merger and such other certificates and other
documents required to be delivered under ARTICLE VI hereof.
2
Section 1.06 Additional Actions. If, at any time after the Effective Time, Buyer
shall consider or be advised that any further deeds, documents, assignments or assurances in Law or any other acts are necessary or desirable to carry out the purposes of this Agreement, Company, Company Bank, Companys Subsidiaries and their
respective officers and directors shall be deemed to have granted to Buyer and Buyer Bank, and each or any of them, an irrevocable power of attorney to execute and deliver, in such official corporate capacities, all such deeds, assignments or
assurances in Law or any other acts as are necessary or desirable to carry out the purposes of this Agreement, and the officers and directors of Buyer or Buyer Bank, as applicable, are authorized in the name of Company, Company Bank and
Companys Subsidiaries or otherwise to take any and all such action.
ARTICLE II
MERGER CONSIDERATION; EXCHANGE PROCEDURES
Section 2.01 Merger Consideration. Subject to the provisions of this Agreement, at the Effective Time, automatically by virtue of
the Merger and without any action on the part of Buyer, Buyer Bank, Company Bank, Company or any shareholder of Company:
(a) Each share
of Buyer Common Stock that is issued and outstanding immediately prior to the Effective Time shall remain outstanding following the Effective Time and shall be unchanged by the Merger.
(b) Each share of Company Common Stock owned directly by Buyer (other than shares in trust accounts, managed accounts and the like for the
benefit of customers or shares held as collateral for outstanding debt previously contracted) immediately prior to the Effective Time shall be cancelled and retired at the Effective Time without any conversion thereof, and no payment shall be made
with respect thereto.
(c) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares, treasury stock and shares described in Section 2.01(b) above) shall automatically and without any further action on the part of the holder thereof be converted into the right to receive the number of shares of Buyer
Common Stock determined using the Exchange Ratio.
(d) Each outstanding share of Company Common Stock the holder of which has perfected
appraisal rights under the NCBCA and has not effectively withdrawn or lost such right as of the Effective Time (the Dissenting Shares) shall not be converted into or represent a right to receive the Merger Consideration
hereunder, and the holder thereof shall be entitled only to such rights as are granted by the NCBCA. Company shall give Buyer prompt notice upon receipt by Company of any such demands for payment of the fair value of such shares of Company Common
Stock and of withdrawals of such notice and any other instruments provided pursuant to Law (any shareholder duly making such demand being hereinafter called a Dissenting Shareholder), and Buyer shall have the right to
participate in all negotiations and
3
proceedings with respect to any such demands. Company shall not, except with the prior written consent of Buyer, voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment, or waive any failure to timely deliver a written demand for appraisal or the taking of any other action by such Dissenting Shareholder as may be necessary to perfect appraisal rights under the NCBCA. Any payments made in
respect of Dissenting Shares shall be made by the Surviving Entity. If any Dissenting Shareholder shall effectively withdraw or lose (through failure to perfect or otherwise) such holders right to such payment at or prior to the Effective
Time, such holders shares of Company Common Stock shall be converted into a right to receive the Merger Consideration in accordance with the applicable provisions of this Agreement.
Section 2.02 Stock-Based Awards.
(a) Immediately prior to the Effective Time, all unvested Company Restricted Shares, if any, shall vest in full so as to no longer be subject
to any forfeiture or vesting requirements of the Company Stock Plans, and all such shares of Company Common Stock shall be considered outstanding shares for all purposes of this Agreement, including, without limitation, for purposes of the right to
receive the Merger Consideration with respect thereto. The Board of Directors of the Company (Company Board) (or, if appropriate, any committee thereof administering the Company Stock Plans) shall adopt such resolutions or
take such other actions as may be required to effect the foregoing.
(b) Except as otherwise provided in Section 2.02(a) with
respect to Company Restricted Shares, Company shall take all requisite action so that, prior to the Effective Time, all Company Stock Options, and any other Rights, contingent or accrued, to acquire or receive Company Common Stock or benefits
measured by the value of such shares, and each award of any kind consisting of Company Common Stock that may be held, awarded, outstanding, payable or reserved for issuance under the Company Stock Plans, or otherwise, immediately prior to the
Effective Time, whether or not then vested or exercisable, shall be, by virtue of the Merger and without any further action, terminated and cancelled. Prior to the Effective Time, the Company Board shall adopt any resolutions and take any actions
(including obtaining any consents) that may be necessary to effectuate the provisions of this Section 2.02.
(c) Buyer may at any
time and without the approval of Company change the method of effecting the business combination contemplated by this Agreement if and to the extent that it deems such a change to be desirable; provided, however, that no such change shall
(i) alter or change the amount of the consideration to be issued to holders of Company Common Stock as Merger Consideration as currently contemplated in this Agreement, (ii) reasonably be expected to materially impede or delay consummation
of the Merger, (iii) adversely affect the federal income tax treatment of holders of Company Common Stock in connection with the Merger, or (iv) require submission to or approval of the Companys shareholders after the plan of merger
set forth in this Agreement has been approved by the Companys shareholders. In the event that Buyer elects to make such a change, the parties agree to execute appropriate documents to reflect the change.
Section 2.03 Rights as Shareholders; Stock Transfers. All shares of Company Common Stock, when converted as provided in
Section 2.01(c), shall no longer be outstanding and shall
4
automatically be cancelled and retired and shall cease to exist, and each Certificate or Book-Entry Shares previously evidencing such shares shall thereafter represent only the right to receive
for each such share of Company Common Stock, the Merger Consideration and any cash in lieu of fractional shares of Buyer Common Stock in accordance with this ARTICLE II. At the Effective Time, holders of Company Common Stock shall cease to be, and
shall have no rights as, shareholders of Company, other than the right to receive the Merger Consideration and cash in lieu of fractional shares of Buyer Common Stock as provided under this ARTICLE II. After the Effective Time, there shall be no
registration of transfers on the stock transfer books of Company of shares of Company Common Stock.
Section 2.04 Fractional
Shares. Notwithstanding any other provision hereof, no fractional shares of Buyer Common Stock and no certificates or scrip therefor, or other evidence of ownership thereof, will be issued in the Merger. In lieu thereof, Buyer shall pay or cause
to be paid to each holder of a fractional share of Buyer Common Stock, rounded to the nearest one hundredth of a share, an amount of cash (without interest and rounded to the nearest whole cent) determined by multiplying the fractional share
interest in Buyer Common Stock to which such holder would otherwise be entitled by the Buyer Average Stock Price.
Section 2.05
Plan of Reorganization. It is intended that the Merger shall constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the Code), and that this Agreement
shall constitute a plan of reorganization as that term is used in Sections 354 and 361 of the Code. The business purpose of the Merger and the Bank Merger is to combine two financial institutions to create a strong community-based
commercial banking franchise. From and after the date of this Agreement and until the Closing, each party hereto shall use its commercially reasonable efforts to cause the Merger to qualify as a reorganization under Section 368(a) of the Code.
Section 2.06 Exchange Procedures. As promptly as practicable after the Effective Time but in no event later than three
(3) Business Days after the Closing Date, and provided that Company has delivered, or caused to be delivered, to the Exchange Agent all information that is necessary for the Exchange Agent to perform its obligations as specified herein, the
Exchange Agent shall mail or otherwise cause to be delivered to each holder of record of shares of Company Common Stock (Holder) appropriate and customary transmittal materials, which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates or Book-Entry Shares shall pass, only upon delivery of the Certificates or Book-Entry Shares to the Exchange Agent, as well as instructions for use in effecting the surrender of the
Certificates or Book-Entry Shares in exchange for the Merger Consideration as provided for in this Agreement (the Letter of Transmittal).
Section 2.07 Deposit of Merger Consideration.
(a) At or before the Effective Time, Buyer shall deposit, or shall cause to be deposited, with the Exchange Agent stock certificates
representing the number of shares of Buyer Common Stock sufficient to deliver, and Buyer shall instruct the Exchange Agent to timely deliver the Merger Consideration (together with, to the extent then determinable, any cash payable in lieu of
fractional shares pursuant to Section 2.04, and if applicable, cash in an aggregate amount sufficient to make the appropriate payment to the holders of Dissenting
5
Shares) (collectively, the Exchange Fund), and Buyer shall instruct the Exchange Agent to timely pay such Merger Consideration and cash in lieu of fractional shares in
accordance with this Agreement.
(b) Any portion of the Exchange Fund that remains unclaimed by the shareholders of Company for one
(1) year after the Effective Time (as well as any interest or proceeds from any investment thereof) shall be delivered by the Exchange Agent to Buyer. Any shareholders of Company who have not theretofore complied with this
Section 2.07 and Section 2.08(a) shall thereafter look only to Buyer for the Merger Consideration deliverable in respect of each share of Company Common Stock such shareholder holds as determined pursuant to this Agreement,
in each case without any interest thereon. If outstanding Certificates or Book-Entry Shares for shares of Company Common Stock are not surrendered or the payment for them is not claimed prior to the date on which such shares of Buyer Common Stock or
cash would otherwise escheat to or become the property of any governmental unit or agency, the unclaimed items shall, to the extent permitted by abandoned property and any other applicable Law, become the property of Buyer (and to the extent not in
its possession shall be delivered to it), free and clear of all claims or interest of any Person previously entitled to such property. Neither the Exchange Agent nor any party to this Agreement shall be liable to any holder of shares of Company
Common Stock represented by any Certificate or Book-Entry Shares for any Merger Consideration (or any dividends or distributions with respect thereto) paid to a public official pursuant to applicable abandoned property, escheat or similar Laws.
Buyer and the Exchange Agent shall be entitled to rely upon the stock transfer books of Company to establish the identity of those Persons entitled to receive the Merger Consideration specified in this Agreement, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to ownership of any shares of Company Common Stock represented by any Certificate or Book-Entry Shares, Buyer and the Exchange Agent shall be entitled to tender to the custody of any court of
competent jurisdiction any Merger Consideration represented by such Certificate or Book-Entry Shares and file legal proceedings interpleading all parties to such dispute, and will thereafter be relieved with respect to any claims thereto.
Section 2.08 Delivery of Merger Consideration.
(a) Upon surrender to the Exchange Agent of its Certificate(s) or Book-Entry Share(s), accompanied by a properly completed Letter of
Transmittal timely delivered to the Exchange Agent, a Holder will be entitled to receive as promptly as practicable after the Effective Time the Merger Consideration and any cash in lieu of fractional shares of Buyer Common Stock to be issued or
paid in consideration therefor (with such cash rounded to the nearest whole cent) in respect of the shares of Company Common Stock represented by its Certificate(s) or Book-Entry Share(s). The Exchange Agent and Buyer, as the case may be, shall not
be obligated to deliver cash and/or shares of Buyer Common Stock to a Holder to which such Holder would otherwise be entitled as a result of the Merger until such Holder surrenders the Certificates or Book-Entry Shares representing the shares of
Company Common Stock for exchange as provided in this ARTICLE II, or, an appropriate affidavit of loss and indemnity agreement and/or a bond in such amount as may be required in each case by Buyer (but not more than the customary amount required
under Buyers agreement with its transfer agent).
6
(b) All shares of Buyer Common Stock to be issued pursuant to the Merger shall be deemed issued
and outstanding as of the Effective Time and if ever a dividend or other distribution is declared by Buyer in respect of the Buyer Common Stock, the record date for which is at or after the Effective Time, that declaration shall include dividends or
other distributions in respect of all shares of Buyer Common Stock issuable pursuant to this Agreement. No dividends or other distributions in respect of the Buyer Common Stock shall be paid to any holder of any unsurrendered Certificate or
Book-Entry Shares until such Certificate or Book-Entry Shares are surrendered for exchange in accordance with this ARTICLE II. Subject to the effect of applicable Laws, following surrender of any such Certificate or Book-Entry Shares, there shall be
issued and/or paid to the holder of the certificates representing whole shares of Buyer Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, the dividends or other distributions with a record date after
the Effective Time theretofore payable with respect to such whole shares of Buyer Common Stock and not paid and (ii) at the appropriate payment date, the dividends or other distributions payable with respect to such whole shares of Buyer Common
Stock with a record date after the Effective Time but with a payment date subsequent to surrender.
(c) Buyer (through the Exchange Agent,
if applicable) shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock such amounts as Buyer is required to deduct and withhold under applicable Law. Any
amounts so deducted and withheld shall be remitted to the appropriate Governmental Authority and upon such remittance shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Stock in respect of which
such deduction and withholding was made by Buyer.
Section 2.09 Anti-Dilution Provisions. In the event that on or after the
first trading day used in determining the Buyer Average Stock Price and before the Effective Time Buyer changes (or establishes a record date for changing) the number of, or provides for the exchange of, shares of Buyer Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, reverse stock split, stock dividend, recapitalization, reclassification, or similar transaction with respect to the outstanding Buyer Common Stock, the Exchange Ratio shall be
equitably adjusted; provided that, for the avoidance of doubt, no such adjustment shall be made with regard to the Buyer Common Stock if (i) Buyer issues additional shares of Buyer Common Stock and receives consideration for such shares
in a bona fide third party transaction, or (ii) Buyer issues employee or director stock options, restricted stock awards, grants or similar equity awards or Buyer issues Buyer Common Stock upon exercise or vesting of any such options, grants or
awards.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY AND COMPANY BANK
Section 3.01 Making of Representations and Warranties.
(a) On or prior to the date hereof, Company has delivered to Buyer a schedule (the Disclosure Schedule) setting
forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a
7
provision hereof or as an exception to one or more representations or warranties contained in ARTICLE III or to one or more of its covenants contained in ARTICLE V; provided, however, that
nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or a warranty unless such schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail.
(b) Except as set forth in the Disclosure Schedule, Company and Company Bank hereby represent and warrant, jointly and severally, to
Buyer that the statements contained in this ARTICLE III are correct as of the date of this Agreement and will be correct as of the Closing Date (as though made on and as of the Closing Date), except as to any representation or warranty which
specifically speaks as of an earlier date (including without limitation representations made as of the date hereof), which only need be correct as of such earlier date.
Section 3.02 Organization, Standing and Authority.
(a) Company is a North Carolina corporation duly organized, validly existing and in good standing under the laws of the State of North
Carolina, and is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. Company has full corporate power and authority to carry on its business as now conducted. Company is duly licensed or qualified to do
business as a foreign corporation or other entity in each jurisdiction where its ownership or leasing of property or the conduct of its business requires such qualification, except where the failure to be so licensed or qualified has not had, and is
not reasonably likely to have, a Material Adverse Effect on Company.
(b) Company Bank is a North Carolina chartered bank duly organized,
validly existing and in good standing under the Laws of the State of North Carolina. Company Bank has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to own,
lease and operate its properties, to engage in the business and activities now conducted by it. Company Bank is duly licensed or qualified to do business in the State of North Carolina and each other jurisdiction where its ownership or leasing of
property or the conduct of its business requires such qualification, except where the failure to be so licensed or qualified has not had, and is not reasonably likely to have, a Material Adverse Effect on Company Bank. Company Banks deposits
are insured by the FDIC in the manner and to the full extent provided by applicable Law, and all premiums and assessments required to be paid in connection therewith have been paid by Company Bank when due. Company Bank is a member of the Federal
Home Loan Bank of Atlanta, Georgia.
Section 3.03 Capital Stock.
(a) The authorized capital stock of the Company consists of (i) 500,000,000 shares of Company Common Stock, of which 462,028,831 shares
are issued and outstanding, (ii) 80,000,000 shares of non-voting common stock, no par value, none of which are issued and outstanding and (iii) 3,000,000 shares of preferred stock, no par value, none of which are issued and outstanding.
There are no shares of Company Common Stock held by any of Companys Subsidiaries. The outstanding shares of Company Common Stock are duly authorized and validly issued and fully paid and non-assessable and have not been issued in violation of
nor are they subject to preemptive rights of any Company shareholder. All shares of the Companys capital stock issued since January 1, 2010, have been issued in compliance with and not in violation of any applicable federal or state
securities Laws.
8
(b) There are 4,500 outstanding Company Stock Options. Disclosure Schedule
Section 3.03(b) sets forth for each grant or award of Company Stock Options, or other equity awards outstanding (i) the name of the grantee, (ii) date of the grant, (iii) expiration date, (iv) the vesting schedule,
(v) exercise price, (vi) number of shares of Company Common Stock, or any other security of the Company, subject to such award, and (vii) the number of shares subject to such award that are exercisable or have vested as of the date of
this Agreement. All shares of Company Common Stock issuable upon exercise of Company Stock Options, upon their issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights and will not be issued in violation of preemptive rights or any Law. Each Company Stock Option complies with or is exempt from Section 409A of the Code, was properly accounted for
on the books and records of Company and qualifies for the tax and accounting treatment afforded thereto in Companys Tax Returns and financial statements, respectively. Except for the Rights that have been issued pursuant to the Tax Benefits
Preservation Plan, dated as of July 11, 2014, between the Company and Broadridge Corporate Issuer Solutions, Inc., as Rights Agent (the Tax Preservation Agreement), there are no outstanding shares of capital stock of
any class, or any options, warrants or other similar rights, convertible or exchangeable securities, phantom stock rights, stock appreciation rights, stock based performance units, agreements, arrangements, commitments or understandings
to which Company or any of its Subsidiaries is a party, whether or not in writing, of any character relating to the issued or unissued capital stock or other securities of Company or any of Companys Subsidiaries or obligating Company or any of
Companys Subsidiaries to issue (whether upon conversion, exchange or otherwise) or sell any share of capital stock of, or other equity interests in or other securities of, Company or any of Companys Subsidiaries other than those listed
in Disclosure Schedule Section 3.03(b). Except as set forth in Disclosure Schedule Section 3.03(b), there are no obligations, contingent or otherwise, of Company or any of Companys Subsidiaries to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or capital stock of any of Companys Subsidiaries or any other securities of Company or any of Companys Subsidiaries or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any such Subsidiary or any other entity. Except as set forth in Disclosure Schedule Section 3.03(b), there are no agreements or arrangements under which the Company is obligated to register the
sale of any of its securities under the Securities Act. Other than the Voting Agreements, there are no agreements, arrangements or other understandings with respect to the voting of Companys capital stock. As of the close of business on the
day that is one (1) Business Day before the Effective Time, there will be no Company Stock Options outstanding or other commitments of any kind obligating Company to issue any shares of Company Common Stock.
(c) All of the outstanding shares of capital stock of each of Companys Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights, and all such shares are owned by Company or another Subsidiary of Company free and clear of all security interests, liens, claims, pledges, taking actions, agreements, limitations in Companys
voting rights, charges or other encumbrances of any nature whatsoever, except as set forth in Disclosure Schedule Section 3.03(c). Except as set forth in Disclosure Schedule Section 3.03(c), neither Company nor any of its
Subsidiaries has any trust preferred securities or other similar securities outstanding.
9
Section 3.04 Subsidiaries.
(a) Disclosure Schedule Section 3.04(a) sets forth a complete and accurate list of all of Companys Subsidiaries, including
the jurisdiction of organization of each such Subsidiary and all jurisdictions that the Company and each Company Subsidiary is qualified to do business. Except as set forth in Disclosure Schedule Section 3.04(a), (i) Company owns,
directly or indirectly, all of the issued and outstanding equity securities of each Company Subsidiary, (ii) no equity securities of any of Companys Subsidiaries are or may become required to be issued (other than to Company) by reason of
any contractual right or otherwise, (iii) there are no contracts, commitments, understandings or arrangements by which any of such Subsidiaries is or may be bound to sell or otherwise transfer any of its equity securities (other than to Company
or a wholly-owned Subsidiary of Company), (iv) there are no contracts, commitments, understandings or arrangements relating to Companys rights to vote or to dispose of such securities and (v) all of the equity securities of each such
Subsidiary are held by Company, directly or indirectly, are validly issued, fully paid and nonassessable, are not subject to preemptive or similar rights and are owned by Company free and clear of all Liens.
(b) Except as set forth on Disclosure Schedule Section 3.04(b), neither Company nor any of Companys Subsidiaries owns (other
than in a bona fide fiduciary capacity or in satisfaction of a debt previously contracted) beneficially, directly or indirectly, any equity securities or similar interests of any Person, or any interest in a partnership or joint venture of any kind.
(c) Each of Companys Subsidiaries has been duly organized and qualified and is in good standing under the Laws of the jurisdiction
of its organization and is duly qualified to do business and is in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified. A complete and accurate list of all such
jurisdictions is set forth on Disclosure Schedule Section 3.04(a).
Section 3.05 Corporate Power; Minute Books.
(a) Company and each of its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and
to own all of its properties and assets; and each of Company and Company Bank has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby, subject
to receipt of all necessary approvals of Governmental Authorities, the Regulatory Approvals and the Requisite Company Shareholder Approval.
(b) The Company has made available to Buyer a complete and correct copy of its Articles of Incorporation and the Bylaws or equivalent
organizational documents, each as amended to date, of the Company and each of its Subsidiaries, the minute books of the Company and each of its Subsidiaries, and the stock ledgers and stock transfer books of the Company and each of its Subsidiaries.
Neither the Company nor any Subsidiary is in violation of any of the terms of its Articles of Incorporation, Bylaws or equivalent organizational documents. The
10
minute books of the Company and each of its Subsidiaries contain records of all meetings held by, and all other corporate actions of, their respective shareholders and boards of directors
(including committees of their respective boards of directors) or other governing bodies, which records are complete and accurate in all material respects. The stock ledgers and the stock transfer books of the Company and each of its Subsidiaries
contain complete and accurate records of the ownership of the equity securities of the Company and each of its Subsidiaries as of the date of this Agreement.
Section 3.06 Corporate Authority. Subject only to the receipt of the Requisite Company Shareholder Approval at the Company
Meeting, this Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action of Company and Company Bank and Companys and Company Banks respective boards of directors on or prior to the date
hereof. The Company Board has taken all necessary action to render the Tax Preservation Agreement inapplicable to the Merger and the other transactions contemplated hereby. Company Board has directed that this Agreement be submitted to the
Companys shareholders for approval at a meeting of such shareholders and, except for the receipt of the Requisite Company Shareholder Approval in accordance with the NCBCA and Companys Articles of Incorporation and Bylaws, no other vote
of the shareholders of Company or Company Bank is required by Law, the Articles of Incorporation of Company and Company Bank, the Bylaws of Company and Company Bank or otherwise to approve this Agreement and the transactions contemplated hereby.
Each of Company and Company Bank has duly executed and delivered this Agreement and, assuming due authorization, execution and delivery by Buyer and Buyer Bank, this Agreement is a valid and legally binding obligation of Company and Company Bank,
enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting
creditors rights or by general equity principles).
Section 3.07 Regulatory Approvals; No Defaults.
(a) Subject to the receipt of the Regulatory Approvals, the Requisite Company Shareholder Approval and the required filings under federal and
state securities Laws, and except as set forth on Disclosure Schedule Section 3.07, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation,
the Merger and the Bank Merger) by the Company and Company Bank do not and will not (i) constitute a breach or violation of, or a default under, result in the creation of any Lien under, result in a right of termination or the acceleration of
any right or obligation under, any Law, rule or regulation or any judgment, decree, order, permit, license, credit agreement, indenture, loan, note, bond, mortgage, reciprocal easement agreement, lease, instrument, concession, contract, franchise,
agreement or other instrument or obligation of the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries, properties or assets is subject or bound, (ii) constitute a breach or violation of, or a default under,
the Articles of Incorporation, Bylaws or similar governing documents of the Company, Company Bank, or any Company Subsidiary, or (iii) require the consent or approval of any third party or Governmental Authority under any such Law, rule or
regulation or any judgment, decree, order, permit, license, credit agreement, indenture, loan, note, bond, mortgage, reciprocal easement agreement, lease, instrument, concession, contract, franchise, agreement or other instrument or obligation.
(b) The Company has no Knowledge of any reason (i) why the Regulatory Approvals referred to in Section 6.01(b) will not be
received in customary time frames from the applicable Governmental Authorities having jurisdiction over the transactions contemplated by this Agreement or (ii) why any Burdensome Condition would be imposed.
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Section 3.08 SEC Reports; Financial Statements.
(a) Except as disclosed in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the
Company 2014 Form 10-K) and all other reports, registration statements, definitive proxy statements or information statements required to be filed with the SEC or furnished to the SEC by the Company or any of its
Subsidiaries subsequent to January 1, 2010, under the Securities Act, or under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (collectively, the Company SEC Documents), all of such Company SEC Documents and
all Company SEC Documents filed with the SEC after the date hereof, in the form filed or to be filed, at the time of filing thereof, (i) complied or will comply in all material respects as to form with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (ii) did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not misleading. Each of the balance sheets contained in or incorporated by reference into any such Company SEC Document (including the related notes and schedules thereto) fairly
presents in all material respects and will fairly present in all material respects the financial position of the entity or entities to which such balance sheet relates as of its date, and each of the statements of income and changes in
shareholders equity and cash flows or equivalent statements in such Company SEC Documents (including any related notes and schedules thereto) fairly presents in all material respects and will fairly present in all material respects the results
of operations, changes in shareholders equity and changes in cash flows, as the case may be, of the entity or entities to which such statement relates for the periods to which it relates and in each case has been prepared in accordance with
GAAP consistently applied during the periods involved (except in the case of unaudited interim financial statements, as permitted by the rules of the SEC). Except for those liabilities that are fully reflected or reserved against in the most recent
audited consolidated balance sheet of the Company and its Subsidiaries contained in the Company 2014 Form 10-K, and except for liabilities reflected in Company SEC Documents filed prior to the date hereof or incurred in the Ordinary Course of
Business consistent with past practices or in connection with this Agreement, since December 31, 2014, neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on its consolidated balance sheet or in the notes thereto.
(b) The Company and each of its
Subsidiaries, officers and directors are in compliance with, and have complied, with the applicable provisions of the Sarbanes-Oxley Act and the related rules and regulations promulgated under such act and the Exchange Act. The Company (i) has
established and maintains disclosure controls and procedures and internal controls over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15
under the Exchange Act, and (ii) has disclosed based on its most recent evaluations, to its outside auditors and the audit committee of the Company Board (A) all significant deficiencies and material
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weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect the
Companys ability to record, process, summarize and report financial data and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over
financial reporting.
(c) Except as disclosed in the Companys Annual Report on Form 10-K for the fiscal year ended December 31,
2013 (as amended on May 16, 2014, October 10, 2014 and December 12, 2014), since January 1, 2010, neither Company nor any of its Subsidiaries nor, to Companys Knowledge, any director, officer, employee, auditor,
accountant or representative of Company or any of its Subsidiaries has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing
practices, procedures, methodologies or methods of Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that Company or any of its Subsidiaries has
engaged in questionable accounting or auditing practices.
Section 3.09 Regulatory Reports. Since January 1, 2010, the
Company and its Subsidiaries have duly filed with the FRB, the FDIC, the North Carolina Office of the Commissioner of Banks and any other applicable Governmental Authority, in correct form, the reports required to be filed under applicable Laws and
regulations and have paid all fees and assessments due and payable in connection therewith and such reports were complete and accurate and in compliance with the requirements of applicable Laws and regulations. Other than normal examinations
conducted by a Governmental Authority in the regular course of the business of Company and its Subsidiaries, no Governmental Authority has notified Company or any of its Subsidiaries that it has initiated any proceeding or, to Companys
Knowledge, threatened an investigation into the business or operations of Company or any of its Subsidiaries since January 1, 2010. There is no unresolved violation, criticism, or exception by any Governmental Authority with respect to any
report or statement relating to any examinations or inspections of Company or any of its Subsidiaries and, except as set forth in Disclosure Schedule Section 3.09, there has been no formal or informal inquiries by, or disagreements or
disputes with, any Governmental Authority with respect to the business, operations, policies or procedures of the Company or any of its Subsidiaries since January 1, 2010.
Section 3.10 Absence of Certain Changes or Events. Except as disclosed in the Company SEC Documents filed with or furnished to the
SEC prior to the date hereof, or as otherwise expressly permitted or expressly contemplated by this Agreement, since December 31, 2014, there has not been (a) any change or development in the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations, cash flows or properties of Company or any of its Subsidiaries which has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with
respect to Company, and no fact or condition exists which is reasonably likely to cause a Material Adverse Effect with respect to Company in the future; (b) any change by Company or any of its Subsidiaries in its accounting methods, principles
or practices, other than changes required by applicable Law or GAAP or regulatory accounting as concurred by Companys independent accountants; (c) except as disclosed in Disclosure Schedule Section 3.10(c), any entry by
Company or any of its Subsidiaries into any contract or commitment of (i) more than $50,000 or (ii) $25,000 per annum
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with a term of more than one year, other than purchases or sales of investment securities, and loans and loan commitments, all in the Ordinary Course of Business; (d) any declaration,
setting aside or payment of any dividend or distribution in respect of any capital stock of Company or any of its Subsidiaries or any redemption, purchase or other acquisition of any of its securities, other than in the Ordinary Course of Business;
(e) except as disclosed in Disclosure Schedule Section 3.10(e), any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, or any other increase in the compensation payable or to become payable to any
directors, officers or employees of Company or any of its Subsidiaries (other than normal salary adjustments to employees made in the Ordinary Course of Business), or any grant of severance or termination pay, or any contract or arrangement entered
into to make or grant any severance or termination pay, any payment of any bonus, or the taking of any action not in the Ordinary Course of Business with respect to the compensation or employment of directors, officers or employees of Company or any
of its Subsidiaries; (f) any election or changes in existing elections made by Company or any of its Subsidiaries for federal or state Tax purposes; (g) except as disclosed in Disclosure Schedule Section 3.10(g), any material
change in the credit policies or procedures of Company or any of its Subsidiaries, the effect of which was or is to make any such policy or procedure less restrictive in any respect; (h) except as disclosed in Disclosure Schedule
Section 3.10(h), any material acquisition or disposition of any assets or properties, or any contract for any such acquisition or disposition entered into other than (1) investment securities in Companys or any of its
Subsidiaries investment portfolio or (2) loans and loan commitments purchased, sold, made or entered into in the Ordinary Course of Business; or (i) any lease of real or personal property entered into, other than in connection with
foreclosed property or in the Ordinary Course of Business.
Section 3.11 Legal Proceedings. Except as set forth in
Disclosure Schedule Section 3.11:
(a) There are no civil, criminal, administrative or regulatory actions, suits, demand
letters, demands for indemnification, claims, hearings, notices of violation, arbitrations, investigations, orders to show cause, market conduct examinations, notices of non-compliance or other proceedings of any nature pending or, to Companys
Knowledge, threatened against Company or any of its Subsidiaries or to which Company or any of its Subsidiaries is a party, including without limitation, any such actions, suits, demand letters, demands for indemnification, claims, hearings, notices
of violation, arbitrations, investigations, orders to show cause, market conduct examinations, notices of non-compliance or other proceedings of any nature that would challenge the validity or propriety of the transactions contemplated by this
Agreement; and
(b) There is no material injunction, order, judgment or decree imposed upon Company or any of its Subsidiaries, or the
assets of Company or any of its Subsidiaries, and neither Company nor any of its Subsidiaries has been advised of, or has Knowledge of, the threat of any such action.
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Section 3.12 Compliance With Laws.
(a) Company and each of its Subsidiaries is, and except as set forth in Disclosure Schedule Section 3.12(a), have been since
January 1, 2010, in compliance in all material respects with all applicable federal, state, local and foreign Laws, judgments, orders or decrees applicable thereto or to the employees conducting such businesses, including, without limitation,
Laws related to data protection or privacy, the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth
in Lending Act, the Dodd-Frank Act, and any other Law relating to discriminatory lending, financing or leasing practices, and Sections 23A and 23B of the Federal Reserve Act and the Sarbanes-Oxley Act, except where the failure to be in such
compliance would not have a Material Adverse Effect with respect to the Company.
(b) Company and each of its Subsidiaries have all
permits, licenses, authorizations, orders and approvals of, and each has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit it to own or lease its properties and to conduct its
business as presently conducted, except where the permit, license, authorization, order or approval would not be expected to have a Material Adverse Effect with respect to the Company. All such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Companys Knowledge, no suspension or cancellation of any of them is threatened.
(c) Except as set forth in Disclosure Schedule Section 3.12(c), neither Company nor any of its Subsidiaries has received, since
January 1, 2010, written or, to the Companys Knowledge, oral notification from any Governmental Authority (i) asserting that it is not in compliance with any of the Laws which such Governmental Authority enforces or
(ii) threatening to revoke any license, franchise, permit or governmental authorization (nor do any grounds for any of the foregoing exist).
Section 3.13 Company Material Contracts; Defaults.
(a) Except as disclosed in Disclosure Schedule Section 3.13(a), neither Company nor any of its Subsidiaries is a party to, bound
by or subject to any agreement, contract, arrangement, commitment or understanding (whether written or oral) (i) with respect to the employment of any directors, officers, employees or consultants, (ii) which would entitle any present or
former director, officer, employee or agent of Company or any of its Subsidiaries to indemnification from Company or any of its Subsidiaries, (iii) the benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this Agreement, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement, (iv) which grants
any right of first refusal, right of first offer or similar right with respect to any assets or properties of Company or its Subsidiaries; (v) which provides for payments to be made by Company or any of its Subsidiaries upon a change in control
thereof; (vi) which provides for the lease of personal property having a value in excess of $10,000 individually or $25,000 in the aggregate; (vii) which relates to capital expenditures and involves future payments in excess of $25,000
individually or $50,000 in the aggregate; (viii) which relates to the disposition or acquisition of
15
assets or any interest in any business enterprise outside the Ordinary Course of Business of Company or any of its Subsidiaries; (ix) which is not terminable on sixty (60) days or less
notice and involving the payment of more than $25,000 per annum; or (x) which materially restricts the conduct of any business by Company or any of its Subsidiaries. Each contract, arrangement, commitment or understanding of the type described
in this Section 3.13(a), whether or not set forth on Disclosure Schedule Section 3.13(a), is referred to herein as a Company Material Contract. Company has previously made available to Buyer true,
complete and correct copies of each such Company Material Contract, including any and all amendments and modifications thereto.
(b)
Neither Company nor any of its Subsidiaries is in default under any contract, agreement, commitment, arrangement, lease, insurance policy or other instrument, including but not limited to any Company Material Contract, to which it is a party, by
which its assets, business, or operations may be bound or affected, or under which it or its assets, business, or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would
constitute such a default, except to the extent that such default or event of default could not reasonably be expected to have a Material Adverse Effect. No power of attorney or similar authorization given directly or indirectly by Company or any of
its Subsidiaries is currently outstanding.
(c) Disclosure Schedule Section 3.13(c) sets forth a true and complete list of
(i) all agreements, contracts, arrangements, or commitments pursuant to which consents or waivers are or may be required and (ii) all notices which are or may be required to be given thereunder, in each case, prior to the performance by
the Company or Company Bank of this Agreement and the consummation of the Merger, the Bank Merger and the other transactions contemplated hereby and thereby.
Section 3.14 Agreements with Regulatory Agencies. Except as set forth in Disclosure Schedule Section 3.14, neither
Company nor any of its Subsidiaries is subject to any cease-and-desist or other order issued by, or is a party to any written agreement, consent order or memorandum of understanding with, or is a party to any commitment letter or similar undertaking
to, or is a recipient of any extraordinary supervisory letter from, or is subject to any order or directive by, or has adopted any board resolutions at the request of any Governmental Authority (each, whether or not set forth in Disclosure
Schedule Section 3.14, a Company Regulatory Agreement) that restricts, or by its terms will in the future restrict, the conduct of the Companys or any of its Subsidiaries business or that in any manner
relates to their capital adequacy, credit or risk management policies, dividend policies, management, business or operations, nor has Company or any of its Subsidiaries been advised by any Governmental Authority that it is considering issuing or
requesting (or is considering the appropriateness of issuing or requesting) any Company Regulatory Agreement. To Companys Knowledge, there are no investigations relating to any regulatory matters pending before any Governmental Authority with
respect to the Company or any of its Subsidiaries.
Section 3.15 Brokers; Fairness Opinion. Neither Company, Company Bank nor
any of its officers, directors or any of its Subsidiaries has employed any broker or finder or incurred, nor will it incur, any liability for any brokers fees, commissions or finders fees in connection with any of the transactions
contemplated by this Agreement, except that Company has engaged, and
16
will pay a fee or commission to FIG Partners, LLC (Company Financial Advisor), in accordance with the terms of a letter agreement between Company Financial Advisor and
Company, a true, complete and correct copy of which has been previously delivered by Company to Buyer. The Company has received the opinion of the Company Financial Advisor (and, if it is in writing, has provided a copy of such opinion to Buyer) to
the effect that, as of the date of this Agreement and based upon and subject to the qualifications and assumptions set forth therein, the Merger Consideration is fair, from a financial point of view, to the holders of shares of Company Common Stock,
and, as of the date of this Agreement, such opinion has not been withdrawn, revoked or modified.
Section 3.16 Employee Benefit
Plans.
(a) All benefit and compensation plans, contracts, policies or arrangements (i) covering current or former employees of
Company, any of its Subsidiaries or any of Companys related organizations described in Code Sections 414(b), (c) or (m) (Controlled Group Members) (such current and former employees collectively, the
Company Employees), (ii) covering current or former directors of Company, any of its Subsidiaries, or Controlled Group Members, or (iii) with respect to which the Company, any of its Subsidiaries, or any
Controlled Group Members has or may have any liability or contingent liability (including liability arising from affiliation under Section 414 of the Code or Section 4001 of ERISA) including, but not limited to, employee benefit
plans within the meaning of Section 3(3) of ERISA, health/welfare, change in control, fringe benefit, deferred compensation, defined benefit plan, defined contribution plan, stock option, stock purchase, stock appreciation rights, stock
based, incentive, bonus plans and other policies, plans or arrangements whether or not subject to ERISA (all such plans, contracts, policies or arrangements in (i)-(iii) hereof are collectively referred to as the Company Benefit
Plans), are identified and described in Disclosure Schedule Section 3.16(a). Neither Company nor any of its Subsidiaries or Controlled Group Members has any stated plan, intention or commitment to establish any new company
benefit plan or to modify any Company Benefit Plan (except to the extent required by Law).
(b) Company has provided Buyer with true and
complete copies of all Company Benefit Plans including, but not limited to, any trust instruments and insurance contracts forming a part of any Company Benefit Plans and all amendments thereto, summary plan descriptions and summary of material
modifications, IRS Form 5500 (for the three (3) most recently completed plan years), the most recent IRS determination, opinion, notification and advisory letters, with respect thereto and any correspondence from any regulatory agency. In
addition, any annual and periodic accounting, service contract, fidelity bonds and employee and participant disclosures pertaining to the Company Benefit Plans have been made available to the Buyer.
(c) All Company Benefit Plans are in compliance in form and operation with all applicable Laws, including ERISA and the Code. Each Company
Benefit Plan which is intended to be qualified under Section 401(a) of the Code (Company 401(a) Plan), has received a favorable determination or opinion letter from the IRS, and neither Company nor Company Bank is
aware of any circumstance that could reasonably be expected to result in revocation of any such favorable determination or opinion letter or the loss of the qualification of such Company 401(a) Plan under Section 401(a) of the Code, and nothing
has occurred that would be expected
17
to result in the Company 401(a) Plan ceasing to be qualified under Section 401(a) of the Code. All Company Benefit Plans have been administered in accordance with their terms. There is no
pending or, to Companys Knowledge, threatened litigation or regulatory action relating to the Company Benefit Plans. Neither Company nor any of its Subsidiaries or any Controlled Group Members has engaged in a transaction with respect to any
Company Benefit Plan, including a Company 401(a) Plan that could subject Company, any of its Subsidiaries or any Controlled Group Members to a tax or penalty under any Law including, but not limited to, Section 4975 of the Code or
Section 502(i) of ERISA. No Company 401(a) Plan has been submitted under or been the subject of an IRS voluntary compliance program submission. There are no audits, investigations, inquiries or proceedings pending or threatened by the IRS or
the Department of Labor with respect to any Company Benefit Plan.
(d) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by Company, any of its Subsidiaries or Controlled Group Members with respect to any ongoing, frozen or terminated single employer plan, within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by Company, any of its Subsidiaries, Controlled Group Members or any entity which is considered one employer with Company, any of its Subsidiaries or Controlled Group Members under Section 4001 of ERISA or Section 414
of the Code (an ERISA Affiliate). Neither Company, Company Bank nor any ERISA Affiliate (or their predecessor) has ever maintained a plan subject to Title IV of ERISA or Section 412 of the Code. None of Company,
Company Bank, or any ERISA Affiliate has contributed to (or been obligated to contribute to) a multiemployer plan within the meaning of Section 3(37) of ERISA at any time and neither Company, any of its Subsidiaries or Controlled
Group Members has incurred, and does not expect to incur, any withdrawal liability with respect to a multiemployer plan under Subtitle E of Title IV of ERISA (regardless of whether based on contributions of an ERISA Affiliate). No notice of a
reportable event, within the meaning of Section 4043 of ERISA has been required to be filed for any Company Benefit Plan or by any ERISA Affiliate or will be required to be filed in connection with the transactions contemplated by
this Agreement.
(e) All contributions required to be made with respect to all Company Benefit Plans have been timely made or have been
reflected on the consolidated financial statements of Company. No Company Benefit Plan or single-employer plan of an ERISA Affiliate has an accumulated funding deficiency (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding funding waiver.
(f) Except as set forth in Disclosure
Schedule Section 3.16(f), no Company Benefit Plan provides or has any liability to provide life insurance, medical or other employee welfare benefits to any Company Employee, or any of their affiliates, upon his or her retirement or
termination of employment for any reason, except as may be required by Law, and neither Company nor any Subsidiary has ever represented, proposed or contracted (whether in oral or written form) to any Company Employee (either individually, or to
Company Employees as a group) that such Company Employee(s) would be provided with life insurance, medical or other employee welfare benefits, upon their retirement or termination of employment.
(g) All Company Benefit Plans that are group health plans have been operated in compliance with the group health plan continuation
requirements of Section 4980B of the Code
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and all other applicable sections of ERISA and the Code. Company may amend or terminate any such Company Benefit Plan at any time without incurring any liability thereunder for future benefits
coverage at any time after such termination.
(h) Except as set forth in Disclosure Schedule Section 3.16(h) or otherwise
provided for in this Agreement, the execution of this Agreement, shareholder approval of this Agreement or consummation of any of the transactions contemplated by this Agreement will not (i) entitle any Company Employee to severance pay or any
increase in severance pay upon any termination of employment after the date hereof, (ii) accelerate the time of payment or vesting (except as required by Law) or trigger any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Company Benefit Plans, (iii) result in any breach or violation of, or a default under, any of the Company Benefit
Plans, (iv) result in any payment that would be an excess parachute payment to a disqualified individual as those terms are defined in Section 280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future, (v) limit or restrict the right of Company or Company Bank or, after the consummation of the transactions contemplated hereby, Buyer or any of its Subsidiaries, to
merge, amend or terminate any of the Company Benefit Plans, or (vi) result in payments under any of the Company Benefit Plans for which a deduction would be disallowed by reason of Section 280G of the Code.
(i) Each Company Benefit Plan that is a deferred compensation plan or arrangement is in compliance with Section 409A of the Code, to the
extent applicable. All elections made with respect to compensation deferred under an arrangement subject to Section 409A of the Code have been made in accordance with the requirements of Section 409A(a)(4) of the Code, to the extent
applicable. Neither Company nor any of its Subsidiaries or Controlled Group Members (i) has taken any action, or has failed to take any action, that has resulted or could reasonably be expected to result in the interest and tax penalties
specified in Section 409A(a)(1)(B) of the Code being owed by any participant in a Company Benefit Plan or (ii) has agreed to reimburse or indemnify any participant in a Company Benefit Plan for any of the interest and the penalties
specified in Section 409A(a)(1)(B) of the Code that may be currently due or triggered in the future.
(j) Disclosure Schedule
Section 3.16(j) contains a schedule showing the present value of the monetary amounts payable as of the date specified in such schedule, whether individually or in the aggregate (including good faith estimates of all amounts not subject to
precise quantification as of the date of this Agreement, such as tax indemnification payments in respect of income or excise taxes), under any employment, change-in-control, severance or similar contract, plan or arrangement with or which covers any
present or former director, officer or employee of Company, any of its Subsidiaries or Controlled Group Members who may be entitled to any such amount and identifying the types and estimated amounts of the in-kind benefits due under any Company
Benefit Plans (other than a plan qualified under Section 401(a) of the Code) for each such person, specifying the assumptions in such schedule and providing estimates of other required contributions to any trusts for any related fees or
expenses.
(k) Company and its Subsidiaries have correctly classified all individuals who directly or indirectly perform services for the
Company, any of its Subsidiaries or Controlled Group Members for purposes of each Company Benefit Plan, ERISA, the Code, unemployment compensation Laws, workers compensation Laws and all other applicable Laws.
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Section 3.17 Labor Matters. Neither Company nor any of its Subsidiaries is a party to
or bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is there any proceeding pending or, to Companys Knowledge threatened, asserting that Company or any of
its Subsidiaries has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel Company or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment,
nor is there any strike or other labor dispute involving it pending or, to Companys Knowledge, threatened, nor is Company or Company Bank aware of any activity involving Company Employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
Section 3.18 Environmental Matters.
(a) To Companys Knowledge, there has been no release of Hazardous Substances at, on, or under any Company Loan Property, real property
currently owned, operated or leased by Company or any of its Subsidiaries (including buildings or other structures) or, to Companys Knowledge, formerly owned, operated or leased by Company or any of its Subsidiaries or any predecessor, that
has formed or that could reasonably be expected to form the basis of any Environmental Claim against Company or any of its Subsidiaries.
(b) To Companys Knowledge, neither Company nor any of its Subsidiaries has acquired, nor is any of them now in the process of acquiring,
any real property through foreclosure or deed in lieu of foreclosure which has been contaminated with, or has had any release of, any Hazardous Substance in a manner that violates Environmental Law or requires reporting, investigation, remediation
or monitoring under Environmental Law.
(c) Neither Company nor any of its Subsidiaries has previously been nor is any of them now in
violation of or noncompliant with applicable Environmental Law.
(d) To Companys Knowledge, neither Company nor any of its
Subsidiaries could be deemed the owner or operator of, or to have participated in the management of, any Company Loan Property which has been contaminated with, or has had any release of, any Hazardous Substance in a manner that violates
Environmental Law or requires reporting, investigation, remediation or monitoring under Environmental Law.
(e) Neither Company nor any of
its Subsidiaries has received (i) any written notice, demand letter, or claim alleging any violation of, or liability under, any Environmental Law or (ii) any written request for information reasonably indicating an investigation or other
inquiry by any Governmental Authority concerning a possible violation of, or liability under, any Environmental Law.
(f) Neither Company
nor any of its Subsidiaries has received notice of any Lien or encumbrance having been imposed on any Company Loan Property or any property owned, operated or leased by Company or its Subsidiaries in connection with any liability or potential
liability arising from or related to Environmental Law, and there is no action, proceeding, writ,
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injunction or claim pending or, to Companys Knowledge, threatened which could result in the imposition or any such Lien or encumbrance on any Company Loan Property or property owned,
operated or leased by Company or any of its Subsidiaries.
(g) Neither Company nor any of its Subsidiaries is, or has been, subject to any
order, decree or injunction relating to a violation of or allegation of liability under any Environmental Law.
(h) There are no
circumstances or conditions (including the presence of asbestos, underground storage tanks, lead products, polychlorinated biphenyls, prior manufacturing operations, dry-cleaning, or automotive services) involving Company, any of its Subsidiaries,
or any currently or, to Companys Knowledge, formerly owned, operated or leased property, or any Company Loan Property that could reasonably be expected pursuant to applicable Environmental Law to (i) result in any claim, liability or
investigation against Company or any of its Subsidiaries, or (ii) result in any restriction on the ownership, use, or transfer of any such property.
(i) Company has delivered to Buyer copies of all environmental reports, studies, sampling data, correspondence, filings and other information
known to Company or Company Bank and in their possession or reasonably available to them relating to environmental conditions at or on any real property (including buildings or other structures) currently or formerly owned, operated or leased by
Company or any of its Subsidiaries.
(j) There is no litigation pending or, to Companys Knowledge, threatened against Company or any
of its Subsidiaries, or affecting any property now owned or, to Companys Knowledge, formerly owned, used or leased by Company or any of its Subsidiaries or any predecessor, before any court, or Governmental Authority (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii) relating to the presence or release into the environment of any Hazardous Substance.
(k) There are no underground storage tanks on, in or under any property currently owned, operated or leased by Company or any of its
Subsidiaries.
(l) This Section 3.18 constitutes the sole and exclusive representations and warranties with respect to the
compliance of Company, its Subsidiaries, any Company Loan Property, or any real property currently owned, operated or leased by Company, or any of its Subsidiaries with Environmental Law.
Section 3.19 Tax Matters.
(a) Each of Company and its Subsidiaries has filed all material Tax Returns that it was required to file under applicable Laws, other than Tax
Returns that are not yet due or for which a request for extension was timely filed consistent with requirements of applicable Law. All such Tax Returns were correct and complete in all material respects and have been prepared in substantial
compliance with all applicable Laws. Except as set forth in Disclosure Schedule Section 3.19(a), all material Taxes due and owing by Company or any of its Subsidiaries (whether or not shown on any Tax Return) have been paid other than
Taxes that have been reserved or accrued on the balance sheet of Company and which Company is contesting in good
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faith. Except as set forth in Disclosure Schedule Section 3.19(a), Company is not currently the beneficiary of any extension of time within which to file any Tax Return and neither
Company nor any of its Subsidiaries currently has any open tax years. Since January 1, 2010, no written claim has been made by any Governmental Authority in a jurisdiction where Company does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Company or any of its Subsidiaries.
(b) Company and each of its Subsidiaries, as applicable, have withheld and paid all material Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party.
(c) No
foreign, federal, state, or local Tax audits or administrative or judicial Tax proceedings are currently being conducted or, to the Companys Knowledge, pending with respect to Company or any of its Subsidiaries. Other than with respect to
audits that have already been completed and resolved, neither Company nor any of its Subsidiaries has received from any foreign, federal, state, or local taxing authority (including jurisdictions where Company and or any of its Subsidiaries have not
filed Tax Returns) any written (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed,
asserted, or assessed by any taxing authority against Company or any of its Subsidiaries.
(d) Company has made available to Buyer true
and complete copies of the United States federal, state, local, and foreign consolidated income Tax Returns filed with respect to Company for taxable periods ended December 31, 2013, 2012, 2011 and 2010. Company has delivered to Buyer correct
and complete copies of all examination reports and statements of deficiencies assessed against or agreed to by Company with respect to income Taxes filed for the years ended December 31, 2013, 2012, 2011 and 2010. Company has timely and
properly taken such actions in response to and in compliance with notices that Company has received from the IRS in respect of information reporting and backup and nonresident withholding as are required by Law.
(e) Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency, which such waiver or extension is still valid and in effect.
(f) Company has not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). Company has disclosed on its federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. Except as set forth in Disclosure Schedule Section 3.19(f), neither Company nor Company Bank is a party to or bound by any Tax
allocation or sharing agreement. Company (i) has not been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was Company), and (ii) has no liability for the Taxes
of any individual, bank, corporation, partnership, association, joint stock company, business trust, limited liability company, or unincorporated organization (other than Company and its Subsidiaries) under Regulations Section 1.1502-6 (or any
similar provision of state, local, or foreign Law), as a transferee or successor, by contract, or otherwise.
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(g) The unpaid Taxes of Company (i) do not exceed the reserve for Tax liability (which
reserve is distinct and different from any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the most recent financial statements included in the Company SEC Documents (rather
than in any notes thereto), and (ii) do not exceed that reserve as adjusted for the passage of time in accordance with the past custom and practice of Company in filing its Tax Returns. Since December 31, 2014, Company has not incurred any
liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the Ordinary Course of Business.
(h) Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the date of the Effective Time as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) closing agreement as described in
Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax Law) executed on or prior to the Closing Date; (iii) intercompany transactions or any excess loss account described in Regulations under
Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax Law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or (v) prepaid amount received on or
prior to the Closing Date.
(i) Company has not distributed stock of another Person nor had its stock distributed by another Person in a
transaction that was purported or intended to be nontaxable and governed in whole or in part by Section 355 or Section 361 of the Code.
Section 3.20 Investment Securities. Disclosure Schedule Section 3.20 sets forth as of February 28, 2015, the
investment securities of Company and its Subsidiaries, as well as any purchases or sales of investment securities between February 28, 2015 to and including the date hereof, reflecting with respect to all such securities, whenever purchased or
sold, descriptions thereof, CUSIP numbers, designations as securities available for sale or securities held to maturity, as those terms are used in ASC 320, book values, fair values and coupon rates, and any gain or loss
with respect to any investment securities sold during such time period after February 28, 2015. Except as set forth in Disclosure Schedule Section 3.20, neither Company nor any of its Subsidiaries has purchased or sold any such
securities listed and described thereon. Neither Company nor any of its Subsidiaries owns any of the outstanding equity of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company,
insurance company, mortgage or loan broker or any other financial institution other than Company Bank.
Section 3.21 Derivative
Transactions. Since January 1, 2010, neither Company nor any of its Subsidiaries has entered into any Derivative Transactions.
Section 3.22 Regulatory Capitalization. As of December 31, 2014, Company Bank meets the quantitative thresholds of 12 CFR
Part 325.103(b)(1)(i)-(iii). As of December 31, 2014, Company meets the quantitative thresholds of 12 CFR Part 225.2(r)(i)-(ii).
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Section 3.23 Loans; Nonperforming and Classified Assets.
(a) Disclosure Schedule Section 3.23(a) identifies any written or oral loan, loan agreement, note or borrowing arrangement
(including, without limitation, leases, credit enhancements, commitments, guarantees and interest-bearing assets) to which the Company or any of its Subsidiaries is a party (collectively, Loans), under the terms of which
the obligor was over sixty (60) days delinquent in payment of principal or interest as of February 28, 2015 and as of the date hereof.
(b) Disclosure Schedule Section 3.23(b) identifies each Loan that as of February 28, 2015 and as of the date hereof was
classified as Special Mention, Substandard, Doubtful, Loss, Classified, Criticized, Credit Risk Assets, Concerned Loans, Watch List or words
of similar import by Company, Company Bank or any bank examiner, together with the principal amount of and accrued and unpaid interest on each such Loan and the identity of the borrower thereunder.
(c) Disclosure Schedule Section 3.23(c) identifies each asset of Company or any of its Subsidiaries that as of February 28,
2015 was classified as other real estate owned (OREO) and the book value thereof as of the date of this Agreement as well as any assets classified as OREO since February 28, 2015 and any sales of OREO between
February 28, 2015 and the date hereof, reflecting any gain or loss with respect to any OREO sold.
(d) Each Loan held in Company
Banks loan portfolio (Company Loan) (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (ii) to the extent secured, is and has been
secured by valid Liens which have been perfected and (iii) to Companys and Company Banks Knowledge, is a legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other Laws of general applicability relating to or affecting creditors rights and to general equity principles.
(e) All currently outstanding Company Loans were solicited, originated and, currently exist in material compliance with all applicable
requirements of Law and Company Banks lending policies at the time of origination of such Company Loans, and the loan documents with respect to each such Company Loan are complete and correct. There are no oral modifications or amendments or
additional agreements related to the Company Loans that are not reflected in the written records of Company Bank. Except as set forth in Disclosure Schedule Section 3.23(e), all such Company Loans are owned by Company Bank free and clear
of any Liens. No claims of defense as to the enforcement of any Company Loan have been asserted in writing against Company Bank for which there is a reasonable possibility of an adverse determination, and neither Company nor Company Bank has any
Knowledge of any acts or omissions which would give rise to any claim or right of rescission, set-off, counterclaim or defense for which there is a reasonable possibility of an adverse determination to Company Bank. Except as set forth in
Disclosure Schedule Section 3.23(e), none of the Company Loans are presently serviced by third parties, and there is no obligation which could result in any Company Loan becoming subject to any third party servicing.
(f) Neither Company nor any of its Subsidiaries is a party to any agreement or arrangement with (or otherwise obligated to) any Person which
obligates Company or any of its Subsidiaries to repurchase from any such Person any Loan or other asset of Company or any of its Subsidiaries, unless there is a material breach of a representation or covenant by Company or any of its Subsidiaries.
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Section 3.24 Allowance for Loan and Lease Losses. Companys allowance for loan
and lease losses as reflected in each of (i) the latest balance sheet included in the Company 2014 Form 10-K and (ii) in the latest balance sheet included in the Company SEC Documents, were, in the opinion of management, as of each of the
dates thereof, in compliance with Companys and Company Banks existing methodology for determining the adequacy of its allowance for loan and lease losses as well as the standards established by applicable Governmental Authority, the
Financial Accounting Standards Board and GAAP.
Section 3.25 Trust Business; Administration of Fiduciary Accounts. Company and
each of its Subsidiaries has properly administered all accounts for which it acts as a fiduciary, including, but not limited to, accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents and applicable Laws and regulations. Neither Company nor Company Bank, nor to Companys or Company Banks Knowledge, any of their respective directors, officers or
employees, committed any breach of trust with respect to any fiduciary account and the records for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account.
Section 3.26 Investment Management and Related Activities. None of Company, any Company Subsidiary or any of their respective
directors, officers or employees is required to be registered, licensed or authorized under the Laws of any Governmental Authority as an investment adviser, a broker or dealer, an insurance agency or company, a commodity trading adviser, a commodity
pool operator, a futures commission merchant, an introducing broker, a registered representative or associated person, investment adviser, representative or solicitor, a counseling officer, an insurance agent, a sales person or in any similar
capacity with a Governmental Authority.
Section 3.27 Repurchase Agreements. With respect to all agreements pursuant to which
Company or any of its Subsidiaries has purchased securities subject to an agreement to resell, if any, Company or any of its Subsidiaries, as the case may be, has a valid, perfected first lien or security interest in the government securities or
other collateral securing the repurchase agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby.
Section 3.28 Deposit Insurance. The deposits of Company Bank are insured by the FDIC in accordance with the Federal Deposit
Insurance Act (FDIA) to the full extent permitted by Law, and Company Bank has paid all premiums and assessments and filed all reports required by the FDIA. No proceedings for the revocation or termination of such deposit
insurance are pending or, to Companys and Company Banks Knowledge, threatened.
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Section 3.29 CRA, Anti-money Laundering and Customer Information Security. Neither
Company nor any of its Subsidiaries is a party to any agreement with any individual or group regarding Community Reinvestment Act matters and neither Company nor any of its Subsidiaries is aware of or has Knowledge (because of Company Banks
Home Mortgage Disclosure Act data for the year ended December 31, 2014, filed with the FDIC, or otherwise), that any facts or circumstances exist, which would cause Company or Company Bank: (i) to be deemed not to be in satisfactory
compliance with the Community Reinvestment Act, and the regulations promulgated thereunder, or to be assigned a rating for Community Reinvestment Act purposes by federal or state bank regulators of lower than satisfactory; or
(ii) to be deemed to be operating in violation of the Bank Secrecy Act and its implementing regulations (31 C.F.R. Part 103), the USA PATRIOT Act, any order issued with respect to anti-money laundering by the U.S. Department of the
Treasurys Office of Foreign Assets Control, or any other applicable anti-money laundering statute, rule or regulation; or (iii) to be deemed not to be in satisfactory compliance with the applicable privacy of customer information
requirements contained in any federal and state privacy Laws and regulations, including, without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder, as well as the provisions of the information
security program adopted by Company Bank pursuant to 12 C.F.R. Part 364. Furthermore, the board of directors of Company Bank has adopted and Company Bank has implemented an anti-money laundering program that contains adequate and appropriate
customer identification verification procedures that has not been deemed ineffective by any Governmental Authority and that meets the requirements of Sections 352 and 326 of the USA PATRIOT Act.
Section 3.30 Transactions with Affiliates. Except as set forth in Disclosure Schedule Section 3.30, there are no
outstanding amounts payable to or receivable from, or advances by Company or any of its Subsidiaries to, and neither Company nor any of its Subsidiaries is otherwise a creditor or debtor to, any director, Executive Officer, five percent (5%) or
greater shareholder or other Affiliate of Company or any of its Subsidiaries, or to Companys or Company Banks Knowledge, any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing,
other than part of the normal and customary terms of such persons employment or service as a director with Company or any of its Subsidiaries and other than deposits held by Company Bank in the Ordinary Course of Business. Except as set forth
in Disclosure Schedule Section 3.30, neither Company nor any of its Subsidiaries is a party to any transaction or agreement with any of its respective directors, Executive Officers or other Affiliates. All agreements between Company or
any of Companys Subsidiaries and any of their respective Affiliates comply, to the extent applicable, with Regulation W of the FRB.
Section 3.31 Tangible Properties and Assets.
(a) Disclosure Schedule Section 3.31(a) sets forth a true, correct and complete list of all real property owned by Company and
each of its Subsidiaries. Except as set forth in Disclosure Schedule Section 3.31(a), and except for properties and assets disposed of in the Ordinary Course of Business or as permitted by this Agreement, Company or its Subsidiaries has
good, valid and marketable title to, valid leasehold interests in or otherwise legally enforceable rights to use all of the real property, personal property and other assets (tangible or intangible), used, occupied and operated or held for use by it
in connection with its business as presently
26
conducted in each case, free and clear of any Lien, except for statutory Liens for amounts not yet delinquent. Except as set forth on Disclosure Schedule Section 3.31(a), there is no
pending or, to Companys Knowledge, threatened legal, administrative, arbitral or other proceeding, claim, action or governmental or regulatory investigation of any nature with respect to the real property that Company or any of its
Subsidiaries owns, uses or occupies or has the right to use or occupy, now or in the future, including without limitation a pending or threatened taking of any of such real property by eminent domain.
(b) Disclosure Schedule Section 3.31(b) sets forth a true, correct and complete schedule of all leases, subleases, licenses and
other agreements under which Company or any of its Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, real property (the Leases). Each of the Leases is valid, binding and in full force
and effect and neither Company nor any of its Subsidiaries has received a written notice of, and otherwise has no Knowledge of any, default or termination with respect to any Lease. There has not occurred any event and no condition exists that would
constitute a termination event or a material breach by Company or any of its Subsidiaries of, or material default by Company or any of its Subsidiaries in, the performance of any covenant, agreement or condition contained in any Lease. To
Companys and Company Banks Knowledge, no lessor under a Lease is in material breach or default in the performance of any material covenant, agreement or condition contained in such Lease. Company and each of its Subsidiaries have paid
all rents and other charges to the extent due under the Leases.
(c) Except as set forth on Disclosure Schedule
Section 3.31(c), all buildings, structures, fixtures, building systems and equipment, and all components thereof, including the roof, foundation, load-bearing walls and other structural elements thereof, heating, ventilation, air
conditioning, mechanical, electrical, plumbing and other building systems, environmental control, remediation and abatement systems, sewer, storm and waste water systems, irrigation and other water distribution systems, parking facilities, fire
protection, security and surveillance systems, and telecommunications, computer, wiring and cable installations, included in the owned real property or the subject of the Leases are, in all material respects, in good condition and repair (normal
wear and tear excepted) and sufficient for the operation of the business of Company and its Subsidiaries.
Section 3.32
Intellectual Property. Disclosure Schedule Section 3.32 sets forth a true, complete and correct list of all Company Intellectual Property. Company or its Subsidiaries owns or has a valid license to use all Company Intellectual
Property, free and clear of all Liens, royalty or other payment obligations (except for royalties or payments with respect to off-the-shelf Software at standard commercial rates). The Company Intellectual Property constitutes all of the Intellectual
Property necessary to carry on the business of Company and its Subsidiaries as currently conducted. The Company Intellectual Property is valid and enforceable and has not been cancelled, forfeited, expired or abandoned, and neither Company nor any
of its Subsidiaries has received notice challenging the validity or enforceability of Company Intellectual Property. The conduct of the business of Company or any of its Subsidiaries does not violate, misappropriate or infringe upon the intellectual
property rights of any third party. The consummation of the transactions contemplated hereby will not result in any material loss or impairment of the right of Company or any of its Subsidiaries to own or use any of Company Intellectual Property.
27
Section 3.33 Insurance.
(a) Disclosure Schedule Section 3.33(a) identifies all of the material insurance policies, binders, or bonds currently maintained
by Company and its Subsidiaries (the Insurance Policies), including the insurer, policy numbers, amount of coverage, effective and termination dates and any pending claims thereunder involving more than $10,000. Company and
each of its Subsidiaries is insured with reputable insurers against such risks and in such amounts as the management of Company and Company Bank reasonably have determined to be prudent in accordance with industry practices. All the Insurance
Policies are in full force and effect, neither Company nor any Subsidiary has received notice of cancellation of any of the Insurance Policies or is otherwise aware that any insurer under any of the Insurance Policies has expressed an intent to
cancel any such Insurance Policies, and neither Company nor any of its Subsidiaries is in default thereunder and all claims thereunder have been filed in due and timely fashion.
(b) Disclosure Schedule Section 3.33(b) sets forth a true, correct and complete description of all bank owned life insurance
(BOLI) owned by Company or its Subsidiaries, including the value of its BOLI as of the end of the month prior to the date hereof. The value of such BOLI is and has been fairly and accurately reflected in the most recent
balance sheet included in the Financial Statements in accordance with GAAP. All BOLI is owned solely by Company Bank, no other Person has any ownership claims with respect to such BOLI or proceeds of insurance derived therefrom and there is no split
dollar or similar benefit under Companys BOLI. Neither Company nor any of Companys Subsidiaries has any outstanding borrowings secured in whole or part by its BOLI.
Section 3.34 Antitakeover Provisions. No control share acquisition, business combination moratorium,
fair price or other form of antitakeover statute or regulation is applicable to this Agreement and the transactions contemplated hereby.
Section 3.35 Company Information. The information relating to Company and its Subsidiaries that is provided by or on behalf of
Company for inclusion in the Proxy Statement-Prospectus and the Registration Statement, or incorporation by reference therein, or for inclusion in any Regulatory Approval or other application, notification or document filed with any other
Governmental Authority in connection with the merger transactions, will not (with respect to the Proxy Statement-Prospectus, as of the date the Proxy Statement-Prospectus is first mailed to Companys shareholders, and with respect to the
Registration Statement, as of the time the Registration Statement or any amendment or supplement thereto is declared effective under the Securities Act) contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances in which they are made, not misleading. The portions of the Proxy Statement-Prospectus relating to Company and Companys Subsidiaries and other portions thereof within the reasonable
control of Company and its Subsidiaries will comply in all material respects with the provisions of the Exchange Act, and the rules and regulations thereunder.
Section 3.36 Transaction Costs. Disclosure Schedule Section 3.36 sets forth attorneys fees, investment banking
fees, accounting fees and other costs or fees of Company and its Subsidiaries that, based upon reasonable inquiry, are expected to be paid or accrued through the Closing Date in connection with the merger transaction contemplated by this Agreement.
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Section 3.37 No Knowledge of Breach. Neither Company nor any of its Subsidiaries has
any Knowledge of any facts or circumstances that would result in Buyer or Buyer Bank being in breach on the date of execution of this Agreement of any representations and warranties of Buyer or Buyer Bank set forth in ARTICLE IV.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER BANK
Section 4.01 Making of Representations and Warranties. Buyer and Buyer Bank hereby represent and warrant, jointly and severally,
to Company that the statements contained in this ARTICLE IV are correct as of the date of this Agreement and will be correct as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement
throughout this ARTICLE IV), except as to any representation or warranty which specifically relates to an earlier date, which only need be correct as of such earlier date.
Section 4.02 Organization, Standing and Authority.
(a) Buyer is an Arkansas corporation duly organized, validly existing and in good standing under the Laws of the State of Arkansas, and is
duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. True, complete and correct copies of the Articles of Incorporation, as amended (the Buyer Articles) and Bylaws of Buyer, as
amended (the Buyer Bylaws), as in effect as of the date of this Agreement, have previously been made available to Company. Buyer is duly licensed or qualified to do business in the State of Arkansas and each jurisdiction
where its ownership or leasing of property or the conduct of its business requires such qualification, except where the failure to be so licensed or qualified has not had, and is not reasonably likely to have, a Material Adverse Effect on Buyer.
(b) Buyer Bank is an Arkansas state banking corporation duly organized, validly existing and in good standing under the Laws of the State
of Arkansas. Buyer Bank is duly licensed or qualified to do business in the State of Arkansas and each other jurisdiction where its ownership or leasing of property or the conduct of its business requires such qualification, except where the failure
to be so licensed or qualified has not had, and is not reasonably likely to have, a Material Adverse Effect on Buyer Bank. Buyer Banks deposits are insured by the FDIC in the manner and to the full extent provided by applicable Law, and all
premiums and assessments required to be paid in connection therewith have been paid by Buyer Bank when due. Buyer Bank is a member in good standing of the Federal Home Loan Bank of Dallas.
Section 4.03 Capital Stock. The authorized capital stock of Buyer consists of (a) 1,000,000 shares of preferred stock, $0.01
par value per share, of which, as of March 31, 2015 no shares were outstanding and (b) 125,000,000 shares of Buyer Common Stock, of which, as of March 31, 2015, 86,758,375 shares were issued and outstanding. The outstanding shares of
Buyer Common Stock have been duly authorized and validly issued and are fully paid and non-assessable and have not been issued in violation of nor are they subject to preemptive rights of
29
any Buyer shareholder. The shares of Buyer Common Stock to be issued pursuant to this Agreement, when issued in accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable and will not be subject to preemptive rights.
Section 4.04 Corporate Power. Buyer and
Buyer Bank have the corporate power and authority to carry on their business as it is now being conducted and to own all their properties and assets; and each of Buyer and Buyer Bank has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions contemplated hereby, subject to receipt of all necessary approvals of Governmental Authorities.
Section 4.05 Corporate Authority. This Agreement and the transactions contemplated hereby have been authorized by all necessary
corporate action of Buyer and Buyer Bank on or prior to the date hereof. No vote of the shareholders of Buyer is required by Law, the Buyer Articles, or the Buyer Bylaws to approve this Agreement and the transactions contemplated hereby. Buyer and
Buyer Bank have duly executed and delivered this Agreement and, assuming due authorization, execution and delivery by Company and Company Bank, this Agreement is a valid and legally binding obligation of Buyer and Buyer Bank, enforceable in
accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting creditors rights or by
general equity principles).
Section 4.06 SEC Documents; Financial Statements.
(a) Buyer has filed all required reports, registration statements and other documents with the SEC that it has been required to file since
January 1, 2010 (the Buyer Reports), and has paid all fees and assessments due and payable in connection therewith. As of their respective dates of filing with the SEC (or, if amended or superseded by a subsequent
filing prior to the date hereof, as of the date of such subsequent filing), the Buyer Reports complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Buyer Reports, and none of the Buyer Reports when filed with the SEC, or if amended prior to the date hereof, as of the date of such amendment, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. There are no outstanding comments from or unresolved issues raised
by the SEC, as applicable, with respect to any of the Buyer Reports. Except for those liabilities that are fully reflected or reserved against in the most recent audited consolidated balance sheet of Buyer and its Subsidiaries contained in
Buyers Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and except for liabilities reflected in Buyer Reports filed prior to the date hereof or incurred in the ordinary course of business of Buyer and its
Subsidiaries, consistent with past practices, or in connection with this Agreement, since December 31, 2014, neither Buyer nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on its consolidated balance sheet or in the notes thereto.
(b) The consolidated financial
statements of Buyer (including any related notes and schedules thereto) included in the Buyer Reports complied as to form, as of their respective dates
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of filing with the SEC (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of such subsequent filing), in all material respects, with all applicable
accounting requirements and with the published rules and regulations of the SEC with respect thereto (except, in the case of unaudited statements, as permitted by the rules of the SEC), have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be disclosed therein), and fairly present, in all material respects, the consolidated financial position of Buyer and its Subsidiaries and the consolidated results of operations, changes in
shareholders equity and cash flows of such companies as of the dates and for the periods shown.
(c) Buyer (x) has established
and maintained disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the
Exchange Act, and (y) has disclosed based on its most recent evaluations, to its outside auditors and the audit committee of the Buyers board of directors (A) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect the Buyers ability to record, process, summarize and report financial data and
(B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Buyers internal control over financial reporting.
Section 4.07 Regulatory Reports. Buyer and each of its Subsidiaries have timely filed all reports, schedules, forms,
registrations, statements and other documents, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 2010 with any Governmental Authority (other than Buyer Reports) and have paid
all fees and assessments due and payable in connection therewith. Except for normal examinations conducted by a Governmental Authority in the regular course of the business of Buyer and its Subsidiaries, no Governmental Authority has notified Buyer
that it has initiated any proceeding or, to the Knowledge of Buyer, threatened an investigation into the business or operations of Buyer or any of its Subsidiaries since January 1, 2010 which would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Buyer. There is no material unresolved violation or exception by any Governmental Authority with respect to any report, form, schedule, registration, statement or other document filed by, or relating
to any examinations by any such Governmental Authority of, Buyer or any of its Subsidiaries which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Buyer.
Section 4.08 Regulatory Approvals; No Defaults.
(a) No consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are
required to be made or obtained by Buyer or any of its Subsidiaries or affiliates in connection with the execution, delivery or performance by Buyer of this Agreement, or to consummate the transactions contemplated by this Agreement, except for
(i) filings of applications or notices with, and consents, approvals or waivers by, the FRB, the FDIC, the North Carolina Commissioner of Banks and the Arkansas State Bank Department; (ii) the filing and effectiveness of the Registration
Statement with the SEC; (iii) the approval of the listing on NASDAQ of the Buyer Common Stock to be issued in the Merger;
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(iv) the filing of the Articles of Bank Merger with the Arkansas State Bank Department; and (v) the filing of the Articles of Merger with the Arkansas Secretary of State and the North
Carolina Secretary of State. As of the date hereof, neither Buyer nor Buyer Bank is aware of any reason why the approvals set forth above and referred to in Section 6.01(b) will not be received in customary time frames from the
applicable Governmental Authorities having jurisdiction over the transactions contemplated by this Agreement or why any Burdensome Condition would be imposed.
(b) Subject to receipt, or the making, of the consents, approvals, waivers and filings referred to in Section 4.08(a) and
expiration of the related waiting periods, the execution, delivery and performance of this Agreement by Buyer, and the consummation of the transactions contemplated hereby do not and will not (i) constitute a breach or violation of, or a
default under, the Buyer Articles or Buyer Bylaws, (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Buyer or any of its Subsidiaries, or any of their respective properties or
assets or (iii) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Buyer or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, contract, agreement or other instrument or obligation to which Buyer or any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
Section 4.09 Buyer Information. As of the date of the Proxy
Statement-Prospectus and the date of the Company Meeting to which such Proxy Statement-Prospectus relates, none of the information supplied or to be supplied by Buyer for inclusion or incorporation by reference in the Proxy Statement-Prospectus and
the Registration Statement prepared pursuant to the Securities Act and the regulations thereunder, will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however, that any information contained in any Buyer Report as of a later date shall be deemed to modify information as of an earlier date.
Section 4.10 Absence of Certain Changes or Events. Except as reflected or disclosed in the Buyer Annual Report on Form 10-K for
the year ended December 31, 2014 or in the Buyer Reports since December 31, 2014, as filed with the SEC, there has been no change or development with respect to Buyer and its assets and business or combination of such changes or
developments which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect with respect to Buyer or its Subsidiaries.
Section 4.11 Compliance with Laws. Buyer and each of its Subsidiaries is and since January 1, 2010 has been in compliance in
all material respects with all applicable federal, state, local and foreign Laws, rules, judgments, orders or decrees applicable thereto or to the employees conducting such businesses, including, without limitation, Laws related to data protection
or privacy, the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Community
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Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and any other Law relating to discriminatory lending, financing or leasing practices, Sections 23A and 23B of the Federal
Reserve Act, the Sarbanes-Oxley Act, and the Dodd-Frank Act, except where the failure to be in such compliance would not have a Material Adverse Effect with respect to Buyer.
Section 4.12 Brokers. None of Buyer, Buyer Bank or any of their officers or directors has employed any broker or finder or
incurred any liability for any brokers fees, commissions or finders fees in connection with any of the transactions contemplated by this Agreement, for which Company will be liable or have any obligation with respect thereto.
Section 4.13 Tax Matters. Buyer and each of its Subsidiaries have filed all material Tax Returns that they were required to file
under applicable Laws and regulations, other than Tax Returns that are not yet due or for which a request for extension was filed consistent with requirements of applicable Law or regulation. All such Tax Returns were correct and complete in all
material respects and have been prepared in substantial compliance with all applicable Laws. All material Taxes due and owing by Buyer or any of its Subsidiaries (whether or not shown on any Tax Return) have been paid other than Taxes that have been
reserved or accrued on the balance sheet of Buyer and which Buyer is contesting in good faith. Neither Buyer nor any of its Subsidiaries currently has any open tax years prior to 2010. Since January 1, 2010, no claim has been made by an
authority in a jurisdiction where Buyer does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Buyer or any of its
Subsidiaries.
Section 4.14 Regulatory Capitalization. Buyer Bank is, and will be upon consummation of the transactions
contemplated by this Agreement, well-capitalized, as such term is defined in the rules and regulations promulgated by the FDIC. Buyer is, and will be upon consummation of the transactions contemplated by this Agreement,
well-capitalized as such term is defined in the rules and regulations promulgated by the FRB.
Section 4.15 No
Financing. Buyer has and will have as of the Effective Time, without having to resort to external sources, sufficient capital to effect the transactions contemplated by this Agreement.
Section 4.16 No Knowledge of Breach. Buyer and Buyer Bank have no Knowledge of any facts or circumstances that would result in
Company or Company Bank being in breach on the date of execution of this Agreement of any representations and warranties of Company or Company Bank set forth in ARTICLE III.
ARTICLE V
COVENANTS
Section 5.01 Covenants of Company. During the period from the date of this Agreement and continuing until the Effective
Time, except as expressly contemplated or permitted by this Agreement or with the prior written consent of Buyer (which consent shall not be unreasonably withheld or delayed), the Company shall carry on its business, including the business of each
of its Subsidiaries, only in the Ordinary Course of Business and consistent with
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prudent banking practice, and in compliance in all material respects with all applicable Laws. Without limiting the generality of the foregoing, Company and each of its Subsidiaries shall, in
respect of loan loss provisioning, securities portfolio management, compensation and other expense management and other operations which might impact Companys equity capital, operate only in the Ordinary Course of Business and in accordance
with the limitations set forth in this Section 5.01 unless otherwise consented to in writing by Buyer (which consent shall not be unreasonably withheld or delayed), which for purposes of giving any notices under, or requesting and giving
consent under Section 5.01(q), Section 5.01(r) and Section 5.01(s), Companys and Company Banks representative shall be Companys Executive Chairman, or such other person or persons designated in
writing by such Executive Chairman, and Buyers representative shall be Buyers Director of Mergers and Acquisitions, or such other person or persons designated in writing by such Director of Mergers and Acquisitions. Company and Company
Bank will use commercially reasonable efforts to (i) preserve its business organization intact, (ii) keep available to itself and Buyer the present services of the current officers and employees of Company and its Subsidiaries,
(iii) preserve for itself and Buyer the goodwill of the customers of Company Bank and others with whom business relationships exist, and (iv) continue diligent collection efforts with respect to any delinquent loans and, to the extent
within its control, not allow any material increase in delinquent loans. Without further limiting the generality of the foregoing provisions in this Section 5.01, and except as set forth in the Disclosure Schedule or as otherwise
expressly contemplated or permitted by this Agreement or consented to in writing by Buyer, neither Company nor any of its Subsidiaries shall, subsequent to the date of this Agreement:
(a) Stock. (i) Except as set forth in Disclosure Schedule Section 5.01(a), issue, sell, grant, or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of its stock, any Rights, any award or grant under the Company Stock Plans, or any other securities (including units of beneficial ownership interest in any partnership or
limited liability company), or enter into any agreement with respect to the foregoing, (ii) except as expressly permitted by this Agreement, accelerate the vesting of any existing Rights, or (iii) except as expressly permitted by this
Agreement, change (or establish a record date for changing) the number of, or provide for the exchange of, shares of its stock, any securities (including units of beneficial ownership interest in any partnership or limited liability company)
convertible into or exchangeable for any additional shares of stock, any Rights issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, recapitalization, reclassification, or similar transaction with respect
to its outstanding stock or any other such securities.
(b) Dividends; Other Distributions. Make, declare, pay or set aside for
payment of dividends payable in cash, stock or property on or in respect of, or declare or make any distribution on, any shares of its capital stock.
(c) Compensation; Employment Agreements, Etc. Enter into or amend or renew any employment, consulting, compensatory, severance or
similar agreements or arrangements with any director, officer or employee of Company or any of its Subsidiaries, or grant any salary, wage or fee increase or increase any employee benefit or pay any incentive or bonus payments, except
(i) normal increases in compensation to employees in the Ordinary Course of Business and pursuant to policies currently in effect, provided that, such increases shall not result in an annual adjustment in base compensation (which
includes base salary and any other compensation
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other than bonus payments) of more than 4% for any individual or 3% in the aggregate for all employees of Company or any of its Subsidiaries other than as disclosed on Disclosure Schedule
Section 5.01(c), (ii) as may be required by Law, (iii) to satisfy contractual obligations existing or contemplated as of the date hereof, as previously disclosed to Buyer and set forth on Disclosure Schedule
Section 5.01(c), and (iv) bonus payments in the Ordinary Course of Business and pursuant to policies currently in effect, provided that, such payments shall not exceed the aggregate amount set forth on Disclosure Schedule
Section 5.01(c) and shall not be paid to any individual for whom such payment would be an excess parachute payment as defined in Section 280G of the Code.
(d) Hiring; Promotions. (i) Hire any person as an employee of Company or any of its Subsidiaries, except for at-will employees at
an annual rate of salary not to exceed $50,000 to fill vacancies that may arise from time to time in the Ordinary Course of Business, or (ii) promote any employee, except to satisfy contractual obligations existing as of the date hereof and set
forth on Disclosure Schedule Section 5.01(d), if any (provided that any requisite consent of Buyer will not be unreasonably withheld or delayed).
(e) Benefit Plans. Enter into, establish, adopt, amend, modify or terminate (except (i) as may be required by or to make
consistent with applicable Law, subject to the provision of prior written notice to and consultation with respect thereto with Buyer, (ii) to satisfy contractual obligations existing as of the date hereof and set forth on Disclosure Schedule
Section 5.01(e), (iii) as previously disclosed to Buyer and set forth on Disclosure Schedule Section 5.01(e), or (iv) as may be required pursuant to the terms of this Agreement) any Company Benefit Plan or other
pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any current or former director, officer or employee of Company or any of its Subsidiaries.
(f) Transactions with Affiliates. Except pursuant to agreements or arrangements in effect on the date hereof and set forth on
Disclosure Schedule Section 5.01(f), pay, loan or advance any amount to, or sell, transfer or lease any properties or assets (real, personal or mixed, tangible or intangible) to, or enter into any agreement or arrangement with, any of
its officers or directors or any of their immediate family members or any Affiliates or associates (as such terms are defined under the Exchange Act) of any of its officers or directors other than compensation or business expense advancements or
reimbursements in the Ordinary Course of Business.
(g) Dispositions. Except in the Ordinary Course of Business, sell, transfer,
mortgage, pledge, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties or cancel or release any indebtedness owed to Company or any of its Subsidiaries.
(h) Acquisitions. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case in the Ordinary Course of Business) all or any portion of the assets, business, deposits or properties of any other entity, except for purchases specifically approved by Buyer
pursuant to any other applicable paragraph of this Section 5.01.
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(i) Capital Expenditures. Make any capital expenditures in amounts exceeding $25,000
individually, or $50,000 in the aggregate.
(j) Governing Documents. Amend the Companys Articles of Incorporation or Bylaws
or any equivalent documents of Companys Subsidiaries, or, subject to the terms of this Agreement, otherwise take any action to exempt any Person (other than Buyer or its Subsidiaries) or any action taken by any Person from the Tax Preservation
Agreement.
(k) Accounting Methods. Implement or adopt any change in its accounting principles, practices or methods, other than as
may be required by applicable Laws or GAAP.
(l) Contracts. Except as set forth on Disclosure Schedule Section 5.01(l),
enter into, amend, modify or terminate any Company Material Contract, Lease or Insurance Policy, except for any amendments, modifications or terminations requested by Buyer.
(m) Claims. Other than settlement of foreclosure actions in the Ordinary Course of Business, enter into any settlement or similar
agreement with respect to any action, suit, proceeding, order or investigation to which Company or any of its Subsidiaries is or becomes a party after the date of this Agreement, which settlement or agreement involves payment by Company or any of
its Subsidiaries of an amount which exceeds $10,000 individually or $50,000 in the aggregate and/or would impose any material restriction on the business of Company or any of its Subsidiaries.
(n) Banking Operations. Enter into any new material line of business; change in any material respect its lending, investment,
underwriting, risk and asset liability management and other banking and operating policies, except as required by applicable Law, regulation or policies imposed by any Governmental Authority; or file any application or make any contract or
commitment with respect to branching or site location or relocation.
(o) Derivative Transactions. Enter into any Derivative
Transaction.
(p) Indebtedness. Incur, modify, extend or renegotiate any indebtedness of Company or Company Bank or assume,
guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other Person (other than creation of deposit liabilities, purchases of federal funds and sales of certificates of deposit, which are in each case in
the Ordinary Course of Business) (provided that any consent requested of Buyer will not be unreasonably withheld or delayed).
(q)
Investment Securities. Acquire (other than (i) by way of foreclosures or acquisitions in a bona fide fiduciary capacity or (ii) in satisfaction of debts previously contracted in good faith), sell or otherwise dispose of any debt
security or equity investment or any certificates of deposits issued by other banks, unless Company has provided written notice to Buyer at least two (2) Business Days prior to making any such proposed acquisition, sale or disposal, nor
classify any security now held in or subsequently purchased for Company Banks investment portfolio as other than available for sale, as that term is used in ASC 320.
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(r) Deposits. Make any changes to deposit pricing (other than immaterial changes on an
individual customer basis, consistent with past practices) without first providing written notice to Buyer at least two (2) Business Days prior to making any such proposed changes.
(s) Loans. Except for loans or extensions of credit approved and/or committed as of the date hereof that are listed on Disclosure
Schedule Section 5.01(s), make, renew, renegotiate, increase, extend or modify any (i) unsecured loan, (ii) loan secured by other than a first lien, (iii) loan in excess of FFIEC regulatory guidelines relating to loan to
value ratios, (iv) secured loan over $100,000, (v) loan with a duration of more than sixty (60) months, or (vi) loan, whether secured or unsecured, if the amount of such loan, together with any other outstanding loans (without
regard to whether such other loans have been advanced or remain to be advanced), would result in the aggregate outstanding loans to any borrower of Company or any of its Subsidiaries (without regard to whether such other loans have been advanced or
remain to be advanced) to exceed $250,000, unless Company has provided written notice to Buyer at least two (2) Business Days prior to making any such proposed loan or extension of credit described in (i) through (vi) above, including
a summary of the proposed terms. The limits set forth in (i) through (vi) of this Section 5.01(s) may be increased upon mutual agreement of the parties, provided such adjustments shall be memorialized in writing by all parties
thereto.
(t) Investments or Developments in Real Estate. Make any investment or commitment to invest in real estate or in any real
estate development project other than by way of foreclosure or deed in lieu thereof or make any investment or commitment to develop, or otherwise take any actions to develop any real estate owned by Company or its Subsidiaries.
(u) Taxes. Except as required by applicable Law:
(i) make, in any manner different from Companys prior custom and practice, or change any material Tax election, file any
material amended Tax Return, enter into any material closing agreement, settle or compromise any material liability with respect to Taxes, agree to any material adjustment of any Tax attribute, file any claim for a material refund of Taxes, or
consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment, provided, that, for purposes of this subsection (u), material shall mean affecting or relating to $10,000 or more in taxes or
$25,000 or more of taxable income; or
(ii) knowingly take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(v) Compliance with Agreements. Commit any
act or omission which constitutes a material breach or default by Company or any of its Subsidiaries under any agreement with any Governmental Authority or under any Company Material Contract, Lease or other material agreement or material license to
which Company or any of its Subsidiaries is a party or by which any of them or their respective properties are bound or under which any of them or their respective assets, business, or operations receives benefits.
(w) Environmental Assessments. Foreclose on or take a deed or title to any real estate other than single-family residential properties
without first conducting an ASTM International
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(ASTM) 1527-13 Phase I Environmental Site Assessment (or any applicable successor standard) of the property that satisfies the requirements of 40 C.F.R. Part 312
(Phase I), or foreclose on or take a deed or title to any real estate other than single-family residential properties if such environmental assessment indicates the presence or likely presence of any Hazardous Substances
under conditions that indicate an existing release, a past release, or a material threat of a release of any Hazardous Substances into structures on the property or into the ground, ground water, or surface water of the property.
(x) Adverse Actions. Except as expressly contemplated or permitted by this Agreement, without the prior written consent of Buyer,
Company will not, and will cause each of its Subsidiaries not to take any action or knowingly fail to take any action not contemplated by this Agreement that is intended or is reasonably likely to (i) prevent or impair Companys ability to
consummate the Merger or the transactions contemplated by this Agreement, (ii) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code, or (iii) agree to take, make any commitment to
take, or adopt any resolutions of its board of directors in support of, any of the actions prohibited by this Section 5.01(x).
(y) Capital Stock Purchase. Except as specifically contemplated in this Agreement, directly or indirectly repurchase, redeem or
otherwise acquire any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock.
(z) Facilities. Except as set forth on Disclosure Schedule Section 5.01(z) or as required by Law, make application for the
opening, relocation or closing of any, or open, relocate or close any, branch office, loan production or servicing facility or automated banking facility, except for any change that may be requested by Buyer.
(aa) Commitments. Enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing.
Section 5.02 Covenants of Buyer.
(a) Affirmative Covenants. From the date hereof until the Effective Time, Buyer will carry on its business consistent with prudent
banking practices and in compliance in all material respects with all applicable Laws.
(b) Negative Covenants. From the date
hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement, without the prior written consent of Company, Buyer will not, and will cause each of its Subsidiaries not to take any action or knowingly fail to take
any action not contemplated by this Agreement that is intended or is reasonably likely to (i) prevent or impair Buyers ability to consummate the Merger or the transactions contemplated by this Agreement, (ii) prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code, or (iii) agree to take, make any commitment to take, or adopt any resolutions of its board of directors in support of, any of the actions prohibited by this
Section 5.02.
Section 5.03 Commercially Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties to the Agreement agrees to use commercially reasonable efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all
38
things necessary, proper or advisable under applicable Laws, so as to permit consummation of the transactions contemplated hereby as promptly as practicable, including the satisfaction of the
conditions set forth in ARTICLE VI hereof, and shall cooperate fully with the other parties hereto to that end.
Section 5.04
Shareholder Approval.
(a) Company agrees to take, in accordance with applicable Law and the Articles of Incorporation and Bylaws
of Company, all action necessary to convene a special meeting of its shareholders as promptly as practicable (and in any event within sixty (60) days following the time when the Registration Statement becomes effective, subject to extension
with the consent of Buyer) to consider and vote upon the approval of this Agreement and the transactions contemplated hereby and any other matters required to be approved by Companys shareholders in order to permit consummation of the
transactions contemplated hereby (including any adjournment or postponement, the Company Meeting) and shall take all lawful action to solicit such approval by such shareholders. The Company shall use its commercially
reasonable efforts to obtain the Requisite Company Shareholder Approval to consummate the Merger and the other transactions contemplated hereby, and shall ensure that the Company Meeting is called, noticed, convened, held and conducted, and that all
proxies solicited by the Company in connection with the Company Meeting are solicited in compliance with the NCBCA, the Articles of Incorporation and Bylaws of the Company, Regulation 14A under the Exchange Act and all other applicable legal
requirements. Except with the prior approval of Buyer, no other matters shall be submitted for the approval of Company shareholders at the Company Meeting other than a proposal relating to an advisory vote on executive compensation as may be
required under Rule 14a-21(c) under the Exchange Act.
(b) Except to the extent provided otherwise in Section 5.09, the
Company Board shall at all times prior to and during the Company Meeting recommend approval of this Agreement by the shareholders of Company and the transactions contemplated hereby (including the Merger) and any other matters required to be
approved by the Companys shareholders for consummation of the Merger and the transactions contemplated hereby (the Company Recommendation) and shall not withhold, withdraw, amend, modify, change or qualify such
recommendation in a manner adverse in any respect to the interests of Buyer or take any other action or make any other public statement inconsistent with such recommendation and the Proxy Statement-Prospectus shall include the Company
Recommendation. In the event that there is present at such meeting, in person or by proxy, sufficient favorable voting power to secure the Requisite Company Shareholder Approval, Company will not adjourn or postpone the Company Meeting unless
Company is advised by counsel that failure to do so would reasonably be expected to result in a breach of the fiduciary duties of Company Board. Company shall keep Buyer updated with respect to the proxy solicitation results in connection with the
Company Meeting as reasonably requested by Buyer.
Section 5.05 Registration Statement; Proxy Statement-Prospectus; NASDAQ
Listing; Deposit of Merger Consideration.
(a) Buyer and Company agree to cooperate in the preparation of the Registration Statement
to be filed by Buyer with the SEC in connection with the issuance of the Buyer
39
Common Stock in the Merger (including the Proxy Statement-Prospectus and all related documents). Each of Buyer and Company agree to use commercially reasonable efforts to cause the Registration
Statement to be declared effective by the SEC as promptly as reasonably practicable after the filing thereof. Buyer also agrees to use commercially reasonable efforts to obtain any necessary state securities Law or blue sky permits and
approvals required to carry out the transactions contemplated by this Agreement. Company agrees to cooperate with Buyer and Buyers counsel and accountants in requesting and obtaining appropriate opinions, consents and letters from
Companys independent auditors, including its current auditors and, to the extent required, its prior independent auditors, in connection with the Registration Statement and the Proxy Statement-Prospectus. After the Registration Statement is
declared effective under the Securities Act, Company, at its own expense, shall promptly mail or cause to be mailed the Proxy Statement-Prospectus to its shareholders.
(b) Buyer will advise Company, promptly after Buyer receives notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of Buyer Common Stock for offering or sale in any jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the Registration Statement or for additional information.
(c)
The Proxy Statement-Prospectus and the Registration Statement shall comply as to form in all material respects with the applicable provisions of the Securities Act and the Exchange Act and the rules and regulations thereunder. Each party will notify
the other party promptly upon the receipt of any comments (whether written or oral) from the SEC or its staff and of any request by the SEC or its staff or any government officials for amendments or supplements to the Registration Statement, the
Proxy Statement-Prospectus, or for any other filing or for additional information and will supply the other party with copies of all correspondence between such party or any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the Registration Statement, the Proxy Statement-Prospectus, the Merger or any other filing. If at any time prior to the Company Meeting there shall occur any event that should be
disclosed in an amendment or supplement to the Proxy Statement-Prospectus or the Registration Statement, Company and Buyer shall use their commercially reasonable efforts to promptly prepare, file with the SEC (if required under applicable Law) and
mail to Company shareholders such amendment or supplement.
(d) Buyer will provide Company and its counsel with (i) a reasonable
opportunity to review and comment on the Registration Statement and the Proxy Statement-Prospectus, and all responses to requests for additional information by and replies to comments of the SEC prior to filing such with, or sending such to, the
SEC, (ii) a reasonable opportunity to participate in any discussions or meetings with the SEC and its staff regarding the Proxy Statement-Prospectus and (iii) a copy of all such filings made with the SEC.
(e) Buyer agrees to use its commercially reasonable efforts to cause the shares of Buyer Common Stock to be issued in connection with the
Merger to be approved for listing on NASDAQ, subject to official notice of issuance, prior to the Effective Time.
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(f) Buyer shall deposit with the Exchange Agent prior to the Closing Date the Merger
Consideration (rounded to the nearest number of whole shares), together with cash representing the value of any fractional shares of Buyer Common Stock to be delivered to Company shareholders.
Section 5.06 Regulatory Filings; Consents.
(a) Each of Buyer and Company and their respective Subsidiaries shall cooperate and use their respective commercially reasonable efforts
(i) to prepare all documentation (including the Proxy Statement-Prospectus), to effect all filings, to obtain all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement, including, without limitation, the Regulatory Approvals and all other consents and approvals of a Governmental Authority required to consummate the Merger in the manner contemplated herein, (ii) to
comply with the terms and conditions of such permits, consents, approvals and authorizations and (iii) to cause the transactions contemplated by this Agreement to be consummated as expeditiously as practicable; provided, however, that in no
event shall Buyer be required to agree to any prohibition, limitation, or other requirement which would prohibit or materially limit the ownership or operation by Company or any of its Subsidiaries, or by Buyer or any of its Subsidiaries, of all or
any material portion of the business or assets of Company or any of its Subsidiaries or Buyer or its Subsidiaries, or compel Buyer or any of its Subsidiaries to dispose of all or any material portion of the business or assets of Company or any of
its Subsidiaries or Buyer or any of its Subsidiaries or continue any portion of any Company Regulatory Agreement against Buyer after the Merger (together, the Burdensome Conditions). Buyer and Company will furnish each
other and each others counsel with all information concerning themselves, their Subsidiaries, directors, trustees, officers and shareholders and such other matters as may be necessary or advisable in connection with the Proxy
Statement-Prospectus and any application, petition or any other statement or application made by or on behalf of Buyer or Company to any Governmental Authority in connection with the transactions contemplated by this Agreement. Each party hereto
shall have the right to review and approve in advance all characterizations of the information relating to such party and any of its Subsidiaries that appear in any filing made in connection with the transactions contemplated by this Agreement with
any Governmental Authority. In addition, Buyer and Company shall each furnish to the other for review a copy of each such filing made in connection with the transactions contemplated by this Agreement with any Governmental Authority prior to its
filing.
(b) The Company will use its commercially reasonable efforts, and Buyer shall reasonably cooperate with the Company at the
Companys request, to obtain all consents, approvals, authorizations, waivers or similar affirmations described on Disclosure Schedule Section 3.13(c). Each party will notify the other party promptly and shall promptly furnish the
other party with copies of notices or other communications received by such party or any of its Subsidiaries of (i) any communication from any Person alleging that the consent of such Person (or another Person) is or may be required in
connection with the transactions contemplated by this Agreement (and the response thereto from such party, its Subsidiaries or its representatives), (ii) subject to applicable Laws and the instructions of any Governmental Authority, any
communication from any Governmental Authority in connection with the transactions contemplated by this Agreement (and the response thereto from such party, its Subsidiaries or its
41
representatives) and (iii) any legal actions threatened or commenced against or otherwise affecting such party or any of its Subsidiaries that are related to the merger transactions
contemplated by this Agreement (and the response thereto from such party, its Subsidiaries or its representatives). With respect to any of the foregoing, Company will consult with Buyer and its representatives as often as practicable under the
circumstances so as to permit Company and Buyer and their respective representatives to cooperate to take appropriate measures to avoid or mitigate any adverse consequences that may result from any of the foregoing.
Section 5.07 Publicity. Buyer and Company shall consult with each other before issuing any press release with respect to this
Agreement or the transactions contemplated hereby and shall not issue any such press release or make any such public statement without the prior consent of the other party, which shall not be unreasonably delayed or withheld; provided, however, that
a party may, without the prior consent of the other party (but after such consultation, to the extent practicable in the circumstances), issue such press release or make such public statements as may upon the advice of counsel be required by Law or
the rules and regulations of any stock exchanges. Without limiting the reach of the preceding sentence, Buyer and Company shall (i) cooperate to develop all public announcement materials; and (ii) make appropriate management available at
presentations related to the transactions contemplated by this Agreement as reasonably requested by the other. In addition, Company and its Subsidiaries shall coordinate with Buyer regarding all communications with customers, suppliers, employees,
shareholders, and the community in general related to the transactions contemplated hereby.
Section 5.08 Access; Information.
(a) Subject to applicable Laws relating to the exchange of information, Company agrees that upon reasonable notice Company shall afford
Buyer and its officers, employees, counsel, accountants and other authorized representatives such access during normal business hours at any time and from time to time throughout the period prior to the Effective Time to Companys and
Companys Subsidiaries books, records (including, without limitation, Tax Returns and work papers of independent auditors), properties and personnel and to such other information relating to them as the Buyer may reasonably request and
Company shall use commercially reasonable efforts to provide any appropriate notices to employees and/or customers in accordance with applicable Law and the Companys privacy policy and, during such period, shall from time to time furnish
promptly to the Buyer all information concerning the business, properties and personnel of Company and its Subsidiaries as the Buyer may reasonably request. The access granted by this Section 5.08(a) shall not extend to soil or
groundwater sampling on Companys properties without the Companys prior written consent (which consent shall not be unreasonably withheld or delayed).
(b) No investigation by Buyer or its representatives shall be deemed to modify or waive any representation, warranty, covenant or agreement of
Company or Company Bank set forth in this Agreement, or the conditions to the respective obligations of Buyer and Company to consummate the transactions contemplated hereby.
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Section 5.09 No Solicitation by Company; Superior Proposals.
(a) The Company shall not, and shall cause its Subsidiaries and each of their respective officers, directors and employees not to, and will
not authorize any investment bankers, financial advisors, attorneys, accountants, consultants, affiliates or other agents of the Company or any of the Companys Subsidiaries (collectively, the Company Representatives)
to, directly or indirectly, (i) initiate, solicit, induce or knowingly encourage, or take any action to facilitate the making of, any inquiry, offer or proposal which constitutes, or could reasonably be expected to lead to, an Acquisition
Proposal; (ii) participate in any discussions or negotiations regarding any Acquisition Proposal or furnish, or otherwise afford access, to any Person (other than Buyer) any information or data with respect to the Company or any of its
Subsidiaries or otherwise relating to an Acquisition Proposal; (iii) release any Person from, waive any provisions of, or fail to enforce any confidentiality agreement or standstill agreement to which the Company is a party; or (iv) enter
into any agreement, agreement in principle or letter of intent with respect to any Acquisition Proposal or approve or resolve to approve any Acquisition Proposal or any agreement, agreement in principle or letter of intent relating to an Acquisition
Proposal. Any violation of the foregoing restrictions by any of the Company Representatives, whether or not such Company Representative is so authorized and whether or not such Company Representative is purporting to act on behalf of the Company or
otherwise, shall be deemed to be a breach of this Agreement by the Company. The Company and its Subsidiaries shall, and shall cause each of the Company Representatives to, immediately cease and cause to be terminated any and all existing
discussions, negotiations, and communications with any Persons with respect to any existing or potential Acquisition Proposal.
For
purposes of this Agreement, Acquisition Proposal shall mean any inquiry, offer or proposal (other than an inquiry, offer or proposal from Buyer), whether or not in writing, contemplating, relating to, or that could
reasonably be expected to lead to, an Acquisition Transaction.
For purposes of this Agreement, Acquisition
Transaction shall mean (A) any transaction or series of transactions involving any merger, consolidation, recapitalization, share exchange, liquidation, dissolution or similar transaction involving the Company or any of its
Subsidiaries; (B) any transaction pursuant to which any third party or group acquires or would acquire (whether through sale, lease or other disposition), directly or indirectly, a significant portion of the assets of the Company or any of its
Subsidiaries; (C) any issuance, sale or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase or securities convertible into, such
securities) representing 20% or more of the votes attached to the outstanding securities of the Company or any of its Subsidiaries; (D) any tender offer or exchange offer that, if consummated, would result in any third party or group
beneficially owning 20% or more of any class of equity securities of the Company or any of its Subsidiaries; or (E) any transaction which is similar in form, substance or purpose to any of the foregoing transactions, or any combination of the
foregoing.
For purposes of this Agreement, Superior Proposal means a bona fide, unsolicited Acquisition
Proposal (i) that if consummated would result in a third party (or in the case of a direct merger between such third party and Company or Company Bank, the shareholders of
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such third party) acquiring, directly or indirectly, more than 50% of the outstanding Company Common Stock or more than 50% of the assets of Company and its Subsidiaries, taken as a whole, for
consideration consisting of cash and/or securities and (ii) that Company Board reasonably determines in good faith, after consultation with its outside financial advisor and outside legal counsel, (A) is reasonably capable of being
completed, taking into account all financial, legal, regulatory and other aspects of such proposal, including all conditions contained therein and the person making such Acquisition Proposal, and (B) taking into account any changes to this
Agreement proposed by Buyer in response to such Acquisition Proposal, as contemplated by paragraph (c) of this Section 5.09, and all financial, legal, regulatory and other aspects of such takeover proposal, including all conditions
contained therein and the person making such proposal, is more favorable to the shareholders of Company from a financial point of view than the Merger.
(b) Notwithstanding Section 5.09(a) or any other provision of this Agreement, prior to the date of the Company Meeting, the
Company may take any of the actions described in Section 5.09(a) if, but only if, (i) the Company has received a bona fide unsolicited written Acquisition Proposal that did not result from a breach of this Section 5.09;
(ii) the Company Board reasonably determines in good faith, after consultation with and having considered the advice of its outside financial advisor and outside legal counsel, that (A) such Acquisition Proposal constitutes or is
reasonably likely to lead to a Superior Proposal and (B) it is reasonably necessary to take such actions to comply with its fiduciary duties to the Companys shareholders under applicable Law; (iii) the Company has provided Buyer with
at least two (2) Business Days prior notice of such determination; and (iv) prior to furnishing or affording access to any information or data with respect to the Company or any of its Subsidiaries or otherwise relating to an
Acquisition Proposal, the Company receives from such Person a confidentiality agreement with terms no less favorable to the Company than those contained in the confidentiality agreement with Buyer. The Company shall promptly provide to Buyer any
non-public information regarding the Company or its Subsidiaries provided to any other Person which was not previously provided to Buyer, such additional information to be provided no later than the date of provision of such information to such
other party.
(c) The Company shall promptly (and in any event within 24 hours) notify Buyer in writing if any proposals or offers are
received by, any information is requested from, or any negotiations or discussions are sought to be initiated or continued with, the Company or the Company Representatives, in each case in connection with any Acquisition Proposal, and such notice
shall indicate the name of the Person initiating such discussions or negotiations or making such proposal, offer or information request and the material terms and conditions of any proposals or offers (and, in the case of written materials relating
to such proposal, offer, information request, negotiations or discussion, providing copies of such materials (including e-mails or other electronic communications) except to the extent that such materials constitute confidential information of the
party making such offer or proposal under an effective confidentiality agreement). The Company agrees that it shall keep Buyer informed, on a reasonably current basis, of the status and terms of any such proposal, offer, information request,
negotiations or discussions (including any amendments or modifications to such proposal, offer or request).
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(d) Neither the Company Board nor any committee thereof shall (i) withdraw, qualify, amend
or modify, or propose to withdraw, qualify, amend or modify, in a manner adverse to Buyer in connection with the transactions contemplated by this Agreement (including the Merger), the Company Recommendation, fail to reaffirm the Company
Recommendation within three (3) Business Days following a request by Buyer, or make any statement, filing or release, in connection with the Company Meeting or otherwise, inconsistent with the Company Recommendation (it being understood that
taking a neutral position or no position with respect to an Acquisition Proposal shall be considered an adverse modification of the Company Recommendation); (ii) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal; or (iii) enter into (or cause the Company or any of its Subsidiaries to enter into) any letter of intent, agreement in principle, acquisition agreement or other agreement (A) related to any Acquisition Transaction (other than a
confidentiality agreement entered into in accordance with the provisions of Section 5.09(b)) or (B) requiring the Company to abandon, terminate or fail to consummate the Merger or any other transaction contemplated by this
Agreement.
(e) Notwithstanding Section 5.09(d), prior to the date of the Company Meeting, the Company Board may withdraw,
qualify, amend or modify the Company Recommendation (a Company Subsequent Determination) after the third (3rd) Business Day following Buyers receipt of a notice (the Notice of Superior
Proposal) from the Company advising Buyer that the Company Board has decided that a bona fide unsolicited written Acquisition Proposal that it received (that did not result from a breach of this Section 5.09) constitutes a
Superior Proposal if, but only if, (i) the Company Board has determined in good faith, after consultation with and having considered the advice of outside legal counsel and its financial advisor, that it is reasonably necessary to take such
actions to comply with its fiduciary duties to the Companys shareholders under applicable Law, (ii) during the three (3) Business Day period after receipt of the Notice of Superior Proposal by Buyer (the Notice
Period), the Company and the Company Board shall have cooperated and negotiated in good faith with Buyer to make such adjustments, modifications or amendments to the terms and conditions of this Agreement as would enable the Company to
proceed with the Company Recommendation without a Company Subsequent Determination; provided, however, that Buyer shall not have any obligation to propose any adjustments, modifications or amendments to the terms and conditions of this Agreement and
(iii) at the end of the Notice Period, after taking into account any such adjusted, modified or amended terms as may have been proposed by Buyer since its receipt of such Notice of Superior Proposal, the Company Board has again in good faith
made the determination (A) in clause (i) of this Section 5.09(e) and (B) that such Acquisition Proposal constitutes a Superior Proposal. In the event of any material revisions to the Superior Proposal, the Company shall be
required to deliver a new Notice of Superior Proposal to Buyer and again comply with the requirements of this Section 5.09(e), except that the Notice Period shall be reduced to two (2) Business Days.
(f) Notwithstanding any Company Subsequent Determination, this Agreement shall be submitted to the Companys shareholders at the Company
Meeting for the purpose of voting on the approval of this Agreement and the transactions contemplated hereby (including the Merger) and nothing contained herein shall be deemed to relieve the Company of such obligation; provided, however, that if
the Company Board shall have made a Company Subsequent Determination with respect to a Superior Proposal, then the Company Board may recommend approval of such Superior Proposal by the shareholders of Company and may submit
45
this Agreement to the Companys shareholders without recommendation, in which event the Company Board shall communicate the basis for its recommendation of such Superior Proposal and the
basis for its lack of a recommendation with respect to this Agreement and the transactions contemplated hereby to the Companys shareholders in the Proxy Statement-Prospectus or an appropriate amendment or supplement thereto.
(g) Nothing contained in this Section 5.09 shall prohibit the Company or the Company Board from complying with the Companys
obligations required under Rule 14e-2(a) promulgated under the Exchange Act; provided, however, that any such disclosure relating to an Acquisition Proposal (other than a stop, look and listen or similar communication of the type
contemplated by Rule 14d-9(f) under the Exchange Act) shall be deemed a change in the Company Recommendation unless the Company Board reaffirms the Company Recommendation in such disclosure.
Section 5.10 Indemnification.
(a) For a period of six (6) years from and after the Effective Time, and in any event subject to the provisions of
Section 5.10(b)(iv), Buyer shall indemnify and hold harmless the present and former directors and officers of Company and Company Bank (the Indemnified Parties), against all costs or expenses (including
reasonable attorneys fees), judgments, fines, losses, claims, damages, or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative arising out of
actions or omissions of such persons in the course of performing their duties for Company or Company Bank occurring at or before the Effective Time (including the transactions contemplated by this Agreement) (each a Claim),
to the same extent as such persons have the right to be indemnified pursuant to the Articles of Incorporation and Bylaws of Company or Company Bank, in effect on the date of this Agreement, to the extent permitted by applicable Law.
(b) Any Indemnified Party wishing to claim indemnification under this Section 5.10 shall promptly notify Buyer upon learning of
any Claim, provided that failure to so notify shall not affect the obligation of Buyer under this Section 5.10, unless, and only to the extent that, Buyer is materially prejudiced in the defense of such Claim as a consequence. In the
event of any such Claim (whether asserted or claimed prior to, at or after the Effective Time), (i) Buyer shall have the right to assume the defense thereof and Buyer shall not be liable to such Indemnified Parties for any legal expenses or
other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, (ii) the Indemnified Parties will cooperate in the defense of any such matter, (iii) Buyer shall not be liable
for any settlement effected without its prior written consent and (iv) Buyer shall have no obligation hereunder to any Indemnified Party if such indemnification would be in violation of any applicable federal or state banking Laws or
regulations, or in the event that a federal or state banking agency or a court of competent jurisdiction shall determine that indemnification of an Indemnified Party in the manner contemplated hereby is prohibited by applicable Laws and regulations,
whether or not related to banking Laws.
(c) For a period of six (6) years following the Effective Time, Buyer will use its
commercially reasonable efforts to provide directors and officers liability insurance (herein,
46
D&O Insurance) that serves to reimburse the present and former officers and directors of Company or its Subsidiaries (determined as of the Effective Time) with
respect to claims against such directors and officers arising from facts or events occurring before the Effective Time (including the transactions contemplated hereby), which insurance will contain at least the same coverage and amounts, and contain
terms and conditions no less advantageous to the Indemnified Party, as that coverage currently provided by Company; provided that if Buyer is unable to maintain or obtain the insurance called for by this Section 5.10, Buyer will
provide as much comparable insurance as is reasonably available (subject to the limitations described below in this Section 5.10(c)); and provided, further, that officers and directors of Company or its Subsidiaries may be
required to make application and provide customary representations and warranties to the carrier of the D&O Insurance for the purpose of obtaining such insurance. In no event shall Buyer be required to expend for such tail insurance a premium
amount in excess of an amount equal to 200% of the annual premiums paid by the Company for D&O Insurance in effect as of the date of this Agreement (the Maximum D&O Tail Premium). If the cost of such tail insurance
exceeds the Maximum D&O Tail Premium, Buyer shall obtain tail insurance coverage or a separate tail insurance policy with the greatest coverage available for a cost not exceeding the Maximum D&O Tail Premium.
(d) If Buyer or any of its successors and assigns (i) shall consolidate with or merge into any other corporation or entity and shall not
be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) shall transfer all or substantially all of its property and assets to any individual, corporation or other entity, then, in each such case, proper
provision shall be made so that the successors and assigns of Buyer and its Subsidiaries shall assume the obligations set forth in this Section 5.10.
Section 5.11 Employees; Benefit Plans.
(a) All Company Employees to whom Buyer in its sole discretion offers employment at or prior to the Effective Time shall be retained as
at will employees after the Effective Time as employees of Buyer Bank so long as such Company Employees accept the terms and conditions of employment specified by Buyer; provided, that continued retention by Buyer Bank of such employees
subsequent to the Effective Time shall be subject to Buyer Banks normal and customary employment procedures and practices, including customary background screening and evaluation procedures, and satisfactory employment performance. In
addition, Company and Company Bank agree, upon Buyers reasonable request, to facilitate discussions between Buyer and Company Employees a reasonable time in advance of the Closing Date regarding employment, consulting or other arrangements to
be effective prior to or following the Effective Time. Prior to the Effective Time, any interaction between Buyer and Company Employees shall be coordinated by Company or Company Bank.
(b) Company Employees (other than those listed on Disclosure Schedule Section 5.11(b) who are parties to an employment, change of
control or other type of agreement which provides for severance) as of the date of the Agreement who remain employed by Company or any of its Subsidiaries as of the Effective Time and whose employment is terminated by Buyer or Buyer Bank (absent
termination for cause as determined by the employer) within one hundred eighty (180) days after the Effective Time shall receive severance pay in accordance with Buyers standard practices (which may include a severance agreement and
general release of
47
claims to be provided by the terminated employee) equal to one (1) week of base weekly pay for each completed year of employment service commencing with any such employees most recent
hire date with Company or any of its Subsidiaries and ending with such employees termination date with Buyer, with a minimum payment equal to two (2) weeks of base pay and a maximum payment equal to twelve (12) weeks of base pay.
Subject to the terms and execution of the severance agreement and general release of claims by such employee, such severance payment will be made in accordance with the terms stated in the severance document and such severance payments will be in
lieu of any severance pay plans that may be in effect at Company or any of its Subsidiaries prior to the Effective Time. No officer or employee of Company or any of its Subsidiaries is, or shall be, entitled to receive duplicative severance payments
and benefits under (i) an employment or severance agreement; (ii) a severance or change of control plan; (iii) this Section 5.11; or (iv) any other program or arrangement.
(c) Except as otherwise provided in this Agreement, not later than ten (10) Business Days prior to the Closing Date, Company shall take
all action required to (i) cause any Company Benefit Plan that has liabilities in respect of its participants, to be fully funded to the extent necessary to pay out all required benefits, (ii) terminate all such plans effective immediately
prior to Closing and (iii) commence the process to pay out any vested benefits thereunder to participating and eligible Company Employees in such form or forms as Company or Company Bank elects and as permitted or required under applicable Law.
Distributions of benefits under any profit sharing plan of the Company or Company Bank shall occur in accordance with such plans terms, and a participant in such plan will be allowed to take, at the participants option: (x) a direct
distribution from such plan, (y) a rollover to an Individual Retirement Account, or (z) a rollover to a tax qualified retirement plan of Buyer or Buyer Bank to the extent the plan sponsored by Buyer or Buyer Bank accepts rollover
contributions, if such participant is employed by Buyer or Buyer Bank.
(d) Company Employees who are retained by Buyer or Buyer Bank
shall be entitled to participate in Buyer Benefit Plans to the same extent as similarly-situated employees of Buyer or Buyer Bank (it being understood that inclusion of Company Employees in the Buyer Benefit Plans may occur at different times with
respect to different plans). To the extent allowable under any of such plans, Company Employees shall be given credit for prior service or employment with Company or Company Bank and eligible for any increased benefits under such plans that would
apply to such employees as if they had been eligible for such benefits as of the Effective Time, based on the length of service or employment with Company or Company Bank. With regard to insured Buyer Benefit Plans, applicable waiting periods may
apply. Notwithstanding the foregoing, Buyer may amend or terminate any Buyer Benefit Plan at any time in its sole discretion.
(e) If
employees of Company or any of its Subsidiaries become eligible to participate in a medical, dental or health plan of Buyer or Buyer Bank upon termination of such plan of Company or any of its Subsidiaries, Buyer shall use commercially reasonable
efforts to cause each such plan to (i) waive any pre-existing condition limitations to the extent such conditions are covered under the applicable medical, health, or dental plans of Buyer or Buyer Bank, (ii) subject to approval from
Buyers insurance carrier, provide full credit under such plans for any deductible incurred by the employees and their beneficiaries during the portion of the calendar year prior to such participation, and (iii) waive any waiting period
limitation or evidence of
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insurability requirement which would otherwise be applicable to such employee on or after the Effective Time, in each case to the extent such employee had satisfied any similar limitation or
requirement under an analogous plan prior to the Effective Time for the plan year in which the Effective Time occurs.
(f) Except to the
extent otherwise expressly provided in this Section 5.11, Buyer shall honor, and Buyer shall be obligated to perform, all employment, severance, deferred compensation, retirement or change-in-control agreements, plans or
policies of Company or Company Bank, but only if such obligations, rights, agreements, plans or policies are set forth in Disclosure Schedule Section 5.11(f). Buyer acknowledges that the consummation of the Merger and Bank Merger will
constitute a change-in-control of Company and Company Bank for purposes of any benefit plans, agreements and arrangements of Company and Company Bank. Nothing herein shall limit the ability of Buyer or Buyer Bank to amend or terminate
any of the Company Benefit Plans or Buyer Benefit Plans in accordance with their terms at any time, subject to vested rights of employees and directors that may not be terminated pursuant to the terms of such Company Benefit Plans.
(g) Nothing in this Section 5.11, express or implied, is intended to confer upon any other Person any rights or remedies of any
nature whatsoever under or by reason of this Section 5.11. Without limiting the foregoing, no provision of this Section 5.11 will create any third party beneficiary rights in any current or former employee, director or
consultant of Company or its Subsidiaries in respect of continued employment (or resumed employment) or any other matter. Nothing in this Section 5.11 is intended (i) to amend any Company Benefit Plan or any Buyer Benefit Plan,
(ii) interfere with Buyers right from and after the Closing Date to amend or terminate any Company Benefit Plan that is not terminated prior to the Effective Time or Buyer Benefit Plan, (iii) interfere with Buyers right from
and after the Effective Time to terminate the employment or provision of services by any director, employee, independent contractor or consultant or (iv) interfere with Buyers indemnification obligations set forth in
Section 5.10.
(h) Prior to the Effective Time, all unvested Company Restricted Shares, if any, granted under the Company
Stock Plans shall vest in full so as to no longer be subject to any forfeiture or vesting requirements pursuant to the terms of the Company Stock Plans, and all such Company Restricted Shares shall be considered outstanding shares of Company Common
Stock for all purposes of this Agreement, including, without limitation, for purposes of the right to receive the Merger Consideration with respect thereto and the Company Board (or, if appropriate, any committee thereof) shall adopt such
resolutions or take such other actions as may be required to effect the foregoing prior to the Effective Time.
(i) On or before the
Business Day immediately preceding the Closing Date, the Company shall terminate and cancel each issued and outstanding Company Stock Option. No consideration shall be payable to the holder of a Company Stock Option that is cancelled if the Company
Stock Option is out-of-the-money. Company shall take all requisite action so that, prior to the Effective Time, each Company Stock Option and any other Right, contingent or accrued, to acquire or receive Company Common Stock or any other Company
securities or benefits measured by the value of such securities, and each award of any kind consisting of Company Common Stock that may be held, awarded, outstanding, payable or reserved for issuance under the Company Stock Plans, or otherwise, will
be terminated and cancelled. Prior to
49
the Effective Time, the Company Board (or, if appropriate, any committee thereof) shall adopt any resolutions and take any actions (including obtaining any consents) that may be necessary to
effectuate the foregoing prior to the Effective Time.
Section 5.12 Notification of Certain Changes. Buyer and Company shall
promptly advise the other party of any change or event having, or which could reasonably be expected to have, a Material Adverse Effect or which it believes would, or which could reasonably be expected to, cause or constitute a material breach of
any of its or its respective Subsidiaries representations, warranties or covenants contained herein. From time to time prior to the Effective Time (and on the date prior to the Closing Date), Company will supplement or amend its Disclosure
Schedules delivered in connection with the execution of this Agreement to reflect any matter which, if existing, occurring or known at the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or
which is necessary to correct any information in such Disclosure Schedule which has been rendered materially inaccurate thereby. No supplement or amendment to any Disclosure Schedule or provision of information relating to the subject matter of any
Disclosure Schedule after the date of this Agreement shall operate to cure any breach of a representation or warranty made herein or have any effect for the purpose of determining satisfaction of the conditions set forth in
Section 6.02(a) or Section 6.03(b) hereof, as the case may be, or compliance by Buyer or Company with the respective covenants and agreements of such parties set forth herein.
Section 5.13 Current Information. During the period from the date of this Agreement to the Effective Time, each of Company and
Buyer will cause one or more of its designated representatives to confer on a regular and frequent basis (not less than weekly) with representatives of the other party and to report the general status of the ongoing operations of Company and its
Subsidiaries and Buyer and its Subsidiaries, respectively. Without limiting the foregoing, Company agrees to provide to Buyer (i) a copy of each report filed by Company or any of its Subsidiaries with a Governmental Authority within two
(2) Business Days following the filing thereof and (ii) a copy of Companys monthly statement of condition and profit and loss statement within five (5) Business Days of the end of the month and, if requested by Buyer, a copy of
Companys daily statement of condition and daily profit and loss statement, which shall be provided within two (2) Business Days of such request.
Section 5.14 Board Packages. Company shall distribute a copy of any Company or Company Bank board package, including the agenda
and any draft minutes, to Buyer via secure email or similar electronic means at the same time in which it distributes a copy of such package to the board of directors of Company or Company Bank; provided, however, that Company shall not be required
to copy Buyer on any documents that disclose confidential discussions of this Agreement or the transactions contemplated hereby or any other matter that Companys or Company Banks board of directors has been advised by counsel that such
distribution to Buyer may violate a confidentiality obligation or fiduciary duty or any Law or regulation, or may result in a waiver of the Companys attorney-client privilege.
Section 5.15 Transition; Informational Systems Conversion. From and after the date hereof, Buyer and Company shall use their
commercially reasonable efforts to facilitate the integration of Company with the business of Buyer following consummation of the transactions contemplated hereby, and shall meet on a regular basis to discuss and plan for the conversion of
50
the data processing and related electronic informational systems of Company and each of its Subsidiaries (the Informational Systems Conversion) to those used by Buyer,
which planning shall include, but not be limited to, (a) discussion of third-party service provider arrangements of Company and each of its Subsidiaries; (b) non-renewal or changeover, after the Effective Time, of personal property leases
and software licenses used by Company and each of its Subsidiaries in connection with the systems operations; (c) retention of outside consultants and additional employees to assist with the conversion; (d) outsourcing, as appropriate
after the Effective Time, of proprietary or self-provided system services; and (e) any other actions necessary and appropriate to facilitate the conversion, as soon as practicable following the Effective Time. Buyer shall promptly reimburse
Company on request for any reasonable out-of-pocket fees, expenses or charges that Company may incur as a result of taking, at the request of Buyer, any action prior to the Effective Time to facilitate the Informational Systems Conversion.
Section 5.16 Access to Customers and Suppliers. From and after the date hereof, Company shall, upon Buyers reasonable
request, introduce Buyer and its representatives to suppliers of Company and its Subsidiaries for the purpose of facilitating the integration of Company and its business into that of Buyer. In addition, after satisfaction of the conditions set forth
in Section 6.01(a) and Section 6.01(b), the Company shall, upon Buyers reasonable request, introduce Buyer and its representatives to customers of Company and its Subsidiaries for the purpose of facilitating the
integration of Company and its business into that of Buyer. Any interaction between Buyer and Companys and any of its Subsidiaries customers and suppliers shall be coordinated by Company. Company shall have the right to participate in
any discussions between Buyer and Companys customers and suppliers.
Section 5.17 Environmental Assessments.
(a) Upon Buyers request, and to the extent that Company or any of its Subsidiaries does not have reasonably current Phase I reports
meeting the standards described below already in its possession, Company shall cooperate with and grant access to an environmental consulting firm selected and paid for by Company and reasonably acceptable to Buyer (the Environmental
Consultant), during normal business hours (or at such other times as may be agreed to by Company), to any property set forth on Disclosure Schedule Section 3.31(a), for the purpose of conducting an ASTM Phase I and an
asbestos and lead base paint survey, as it relates to providing an environmental site assessment to determine whether any such property may be impacted by a recognized environmental condition, as that term is defined by ASTM. Each Phase
I (including the asbestos and lead base paint surveys) shall be delivered in counterpart copies to Buyer and Company, and will include customary language allowing both Buyer and Company to rely upon its findings and conclusions. The Environmental
Consultant will provide a draft of any Phase I to Company and Buyer for review and comment prior to the finalization of such report.
(b)
To the extent the final version of any Phase I identifies any recognized environmental condition, Company shall cooperate with and grant access to the Environmental Consultant, during normal business hours (or at such other times as may
be agreed by Company), to the property covered by such Phase I for the purpose of conducting a Phase II limited site assessment, including subsurface investigation of soil, soil vapor, and groundwater, designed to further investigate and evaluate
any recognized environmental condition identified in the Phase I, the cost of which shall be shared equally between Buyer and Company.
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(c) Where any Phase I, asbestos or lead base paint survey identifies the presence or potential
presence of radon, asbestos containing materials, mold, microbial matter, or polychlorinated biphenyls (Non-scope Issues), Company shall cooperate with and grant access to the Environmental Consultant, during normal
business hours (or at such other times as may be agreed by Company) to the property covered by such Phase I, for the purpose of conducting surveys and sampling of indoor air and building materials designed to investigate such identified Non-scope
Issue, paid for by Company.
(d) Any work conducted by the Environmental Consultant pursuant to subsections (b) and
(c) (Additional Environmental Assessment) will be pursuant to a scope of work prepared by the Environmental Consultant and reasonably acceptable to Company and Buyer. The reports of any Additional Environmental
Assessment will be given directly to Buyer and to Company by the Environmental Consultant.
(e) To the extent that Buyer identified any
past or present events, conditions or circumstances that would require further investigation, remedial or cleanup action under Environmental Laws, the Company shall use commercially reasonable efforts to take and complete any such reporting,
remediation or other response actions prior to Closing; provided, however, that, to the extent any such response actions have not been completed prior to Closing (Unresolved Response Action), the Company shall include the
after-tax amount of the costs expected to be incurred by the Surviving Entity on or after the Closing Date, as determined by an independent third party with recognized expertise in environmental clean-up matters, to fully complete all Unresolved
Response Actions in determining its Closing Consolidated Net Book Value.
Section 5.18 Certain Litigation. In the event that
any shareholder litigation related to this Agreement or the Merger and the other transactions contemplated by this Agreement is brought, or, to Companys Knowledge, threatened, against Company and/or the members of the Company Board prior to
the Effective Time, Company shall give Buyer the opportunity to participate, at its own cost and expense, in the defense or settlement of such litigation, and no such settlement shall be agreed to without Buyers prior written consent (not to
be unreasonably withheld). Company shall promptly notify Buyer of any such shareholder litigation brought, or threatened, against Company and/or members of the Company Board within two (2) Business Days after Company receives notice of any such
claim or threat, and shall keep Buyer reasonably informed with respect to the status thereof.
Section 5.19 Director
Resignations. Company shall use commercially reasonable efforts to cause to be delivered to Buyer resignations of all the directors of Company and its Subsidiaries, such resignations to be effective as of the Effective Time.
Section 5.20 Coordination.
(a) Prior to the Effective Time, Company and its Subsidiaries shall take any actions Buyer may reasonably request from time to time to better
prepare the parties for integration of
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the operations of Company and Company Bank with Buyer and Buyer Bank, respectively. Without limiting the foregoing, senior officers of Company and Buyer shall meet from time to time as Buyer may
reasonably request, and in any event not less frequently than monthly, to review the financial and operational affairs of Company and its Subsidiaries, and Company shall give due consideration to Buyers input on such matters, with the
understanding that, notwithstanding any other provision contained in this Agreement, neither Buyer nor Buyer Bank shall under any circumstance be permitted to exercise control of Company or any of its Subsidiaries prior to the Effective Time.
Company shall permit representatives of Buyer Bank to be onsite at Company to facilitate integration of operations and assist with any other coordination efforts as necessary.
(b) Upon Buyers reasonable request, prior to the Effective Time and consistent with GAAP, the rules and regulations of the SEC and
applicable banking Laws and regulations, each of Company and its Subsidiaries shall modify or change its loan, OREO, accrual, reserve, tax, litigation and real estate valuation policies and practices (including loan classifications and levels of
reserves) so as to be applied, on a basis that is consistent with that of Buyer. In order to promote a more efficient and orderly integration of operation of Company Bank with Buyer Bank, from the date of execution of this Agreement and prior to the
Effective Time, as more particularly set forth in and subject to the provisions of Section 5.01(q), Company shall use commercially reasonable efforts to cause Company Bank to sell or otherwise divest itself of such investment securities
and loans as are identified by Buyer and agreed to in writing between Company and Buyer from time to time prior to the Closing Date, such identification to include a statement as to Buyers business reasons for such divestitures.
Notwithstanding the foregoing, no such modifications, changes or divestitures of the type described in this Section 5.20(b) need be made prior to the satisfaction of the conditions set forth in Section 6.01(a) and
Section 6.01(b).
(c) Company shall, consistent with GAAP and regulatory accounting principles, use its commercially
reasonable efforts to adjust, at Buyers reasonable request, internal control procedures which are consistent with Buyers and Buyer Banks current internal control procedures to allow Buyer to fulfill its reporting requirement under
Section 404 of the Sarbanes-Oxley Act, provided, however, that no such adjustments need be made prior to the satisfaction of the conditions set forth in Section 6.01(a) and Section 6.01(b).
(d) Prior to the Effective Time, Company and its Subsidiaries shall take any actions Buyer may reasonably request in connection with
negotiating any amendments, modifications or terminations of any Leases or Company Material Contracts that Buyer may request, including but not limited to, actions necessary to cause any such amendments, modifications or terminations to become
effective prior to, or immediately upon, the Closing, and shall cooperate with Buyer and use commercially reasonable efforts to negotiate specific provisions that may be requested by Buyer in connection with any such amendment, modification or
termination.
(e) Subject to Section 5.20(b), Buyer and Company shall cooperate (i) to minimize any potential adverse
impact to Buyer under Financial Accounting Standards Board Accounting Standards Codification Topic 805 (Business Combinations), and (ii) to maximize potential benefits to the Buyer and its Subsidiaries under Code Section 382 in connection
with the transactions contemplated by this Agreement, in each case consistent with GAAP, the rules and regulations of the SEC and applicable banking Laws and regulations.
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(f) Company shall use its commercially reasonable efforts to cause the Non-Compete Agreement to
be executed and delivered at the Closing by Harvey Glick.
(g) Buyer and Company agree to take all action necessary and appropriate to
cause Company Bank to merge with Buyer Bank in accordance with applicable Laws and the terms of the Plan of Bank Merger immediately following the Effective Time or as promptly as practicable thereafter.
Section 5.21 Transactional Expenses. Company has provided in Disclosure Schedule Section 3.36 a reasonable good faith
estimate of costs and fees that Company and its Subsidiaries expect to pay to retained representatives in connection with the transactions contemplated by this Agreement (collectively, Company Expenses). Company shall use
its commercially reasonable efforts to cause the aggregate amount of all Company Expenses to not exceed the total expenses disclosed in Disclosure Schedule Section 3.36. Company shall promptly notify Buyer if or when it determines that
it expects to exceed its budget for Company Expenses. Notwithstanding anything to the contrary in this Section 5.21, Company shall not incur any investment banking, brokerage, finders or other similar financial advisory fees in
connection with the transactions contemplated by this Agreement other than those expressly set forth in Disclosure Schedule Section 3.36.
Section 5.22 Assumption by Buyer of Certain Obligations. At or before the Closing, Buyer shall deliver agreements or supplemental
indentures as required and in a form reasonably satisfactory to Company, as of the Effective Time, in order to assume expressly the due and punctual performance and observance of each and every covenant, agreement and condition (insofar as such
covenant, agreement or condition is to be performed and observed by the Company or any of its Subsidiaries) of the indentures, trust agreements and guarantee agreements entered into by Company or any of its Subsidiaries.
Section 5.23 Confidentiality.
(a) Prior to the execution of this Agreement and prior to the consummation of the Merger, each of the Company and Buyer, and their respective
subsidiaries, affiliates, officers, directors, agents, employees, consultants and advisors (collectively, the Representatives) have provided and will provide one another with information which may be deemed by the party
providing the information (the Disclosing Party) to be non-public, proprietary and/or confidential, including but not limited to trade secrets (collectively, Confidential Information) of the
Disclosing Party. Each of the Company and Buyer agrees that as the party receiving the Confidential Information (the Receiving Party), it will hold confidential and protect all Confidential Information provided to it by the
Disclosing Party or its Representatives, except that the obligations contained in this Section 5.23(a) shall not in any way restrict the rights of either the Company or Buyer to use information that: (i) is or becomes available to
the public other than by breach of this Agreement by the Receiving Party or its Representatives; (ii) becomes lawfully available to the Receiving Party on a non-confidential basis from a third party who is not under an obligation of
confidentiality to the Disclosing Party or subject to a legal or fiduciary
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obligation with respect to such information; (iii) has been independently developed by the Receiving Party without violating any of its obligations under this Agreement; or (iv) is
provided by either the Company or Buyer for disclosure concerning such party in the Proxy Statement/Prospectus or the Registration Statement. If this Agreement is terminated prior to the Closing, each party hereto agrees to return all documents,
statements and other written materials, whether or not confidential, and all copies thereof, provided to it by or on behalf of the other party to this Agreement. The provisions of this Section 5.23(a) shall survive termination, for any
reason whatsoever, of this Agreement, and, without limiting the remedies of the parties hereto in the event of any breach of this Section 5.23(a), each of the parties will be entitled to seek injunctive relief against the other party in
the event of a breach or threatened breach of this Section 5.23(a).
(b) Notwithstanding anything herein or any other
agreement between the parties to the contrary, any party to this Agreement (and any Representative of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure; provided, however, that neither party nor any of its Representatives
shall disclose any information relating to such tax treatment or tax structure to the extent nondisclosure is necessary in order to comply with applicable securities or tax laws.
(c) To the extent that any Confidential Information includes materials subject to the attorney-client privilege, the Disclosing Party is not
waiving, and shall not be deemed to have waived or diminished, its attorney work-product protections, attorney-client privileges or similar protections and privileges as a result of disclosing any Confidential Information (including any Confidential
Information relating to pending or threatened litigation) to the Receiving Party or any of its Representatives.
(d) For the avoidance of
doubt, no investigation by either of the parties or their respective Representatives shall affect the representations, warranties, covenants or agreements of the other set forth in this Agreement.
(e) To the extent that the provisions of this Section 5.23 are in conflict with any of the terms of either that certain
Confidentiality Agreement between the Company and Buyer dated March 13, 2015 or that certain Confidentiality and Nondisclosure Agreement between Buyer and the Company dated April 8, 2015, the terms and provisions set forth in this
Section 5.23 shall prevail to the extent of such conflict.
Section 5.24 Section 16 Matters. Prior to the
Effective Time, the Company shall approve in accordance with the procedures set forth in Rule 16b-3 promulgated under the Exchange Act any disposition of equity securities of the Company (including derivative securities) resulting from the
transactions contemplated by this Agreement by each officer and director of the Company who is subject to Section 16 of the Exchange Act in order to exempt such dispositions under Rule 16b-3.
Section 5.25 Exchange Act Deregistration. Prior to the Closing Date, Company shall cooperate with Buyer and use commercially
reasonable efforts to take, or cause to be taken, all
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actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws, including, if applicable, the timely provision of any required notice,
to enable the deregistration of the shares of Company Common Stock under the Exchange Act as promptly as practicable after the Effective Time.
Section 5.26 Tax Matters.
(a) The parties intend that the Merger qualify as a reorganization within the meaning of Section 368(a) of the Code and that this
Agreement constitute a plan of reorganization within the meaning of Section 1.368-2(g) of the Regulations. From and after the date of this Agreement and until the Effective Time, each of Buyer and Company shall use commercially
reasonable efforts to cause the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to
be taken which action or failure to act could prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(b) As of the date of this Agreement it is the present intention, and as of the day of the Effective Time it will be the present intention, of
Buyer to continue, either through Buyer or through a member of Buyers qualified group within the meaning of Regulations Section 1.368-1(d)(4)(ii) (the Qualified Group), at least one significant
historic business line of Company, or to use at least a significant portion of Companys historic business assets in a business, in each case within the meaning of Regulations Section 1.368-1(d). As of the date of this Agreement and as of
the date of the Effective Time, neither Buyer nor any related person (as defined in Regulations Section 1.368-1(e)(4)) to Buyer has or will have any plan or intention to redeem or reacquire, either directly or indirectly, any of the
Buyer Common Stock issued to the holders of Company Common Stock in connection with the Merger. As of the date of this Agreement and as of the date of the Effective Time, Buyer does not have and will not have any plan or intention to sell or
otherwise dispose of any of the assets of Company acquired in the Merger, except for dispositions made in the ordinary course of business or transfers described in Section 368(a)(2)(C) of the Code or described and permitted in Regulations
Section 1.368-2(k).
Section 5.27 Rights under Tax Preservation Agreement. Prior to the Effective Time, the Company Board
shall take all necessary action to cause the Rights issued pursuant to the Tax Preservation Agreement to cease to be outstanding as of the Effective Time and to terminate the Tax Preservation Agreement, effective immediately as of the Effective
Time, without payment of any consideration in respect thereof.
Section 5.28 Trust Preferred Securities. Prior to the
Effective Time, Company and any of its Subsidiaries shall have taken all necessary action to cause the outstanding trust preferred securities issued by Bank of the Carolinas Trust I ($5 million principal amount) and the associated Junior
Subordinated Debt Securities due 2038, to be cancelled, redeemed, or otherwise terminated, such that, as of the Effective Time, all such securities will not be issued or outstanding, and Company shall use commercially reasonable efforts to terminate
all related trust documents, indentures and guarantee agreements and dissolve Bank of the Carolinas Trust I.
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ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.01 Conditions to Obligations of the Parties to Effect the Merger. The respective obligations of Buyer and Company to
consummate the Merger are subject to the fulfillment or, to the extent permitted by applicable Law, written waiver by the parties hereto prior to the Closing Date of each of the following conditions:
(a) Shareholder Vote. This Agreement and the transactions contemplated hereby shall have received the Requisite Company Shareholder
Approval at the Company Meeting.
(b) Regulatory Approvals; No Burdensome Condition. All Regulatory Approvals required to
consummate the Merger and the Bank Merger in the manner contemplated herein shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof, if any, shall have expired or been terminated. None
of such Regulatory Approvals shall impose any term, condition or restriction upon Buyer or any of its Subsidiaries that Buyer reasonably determines is a Burdensome Condition.
(c) No Injunctions or Restraints; Illegality. No judgment, order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation of any of the transactions contemplated hereby shall be in effect. No statute, rule, regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Authority that prohibits or makes illegal the consummation of any of the transactions contemplated hereby.
(d) Effective Registration Statement. The Registration Statement shall have become effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC or any other Governmental Authority.
(e) Tax Opinions Relating to the Merger. Buyer and Company, respectively, shall have received opinions from Kutak Rock LLP and Wyrick
Robbins Yates & Ponton LLP, respectively, each dated as of the Closing Date, in substance and form reasonably satisfactory to Company and Buyer to the effect that, on the basis of the facts, representations and assumptions set forth in such
opinion, the Merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. In rendering their opinions, Kutak Rock LLP and Wyrick Robbins Yates & Ponton LLP may
require and rely upon representations as to certain factual matters contained in certificates of officers of each of Company and Buyer, in form and substance reasonably acceptable to such counsel.
Section 6.02 Conditions to Obligations of Company. The obligations of Company to consummate the Merger also are subject to the
fulfillment or written waiver by Company prior to the Closing Date of each of the following conditions:
(a) Representations and
Warranties. The representations and warranties of Buyer set forth in this Agreement shall be true and correct in all material respects at and as of the Closing Date, except to the extent that such representations and warranties are qualified by
the term
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material, or contain terms such as Material Adverse Effect in which case such representations and warranties (as so written, including the term material or
Material) shall be true and correct in all respects at and as of the Closing Date. Company shall have received a certificate dated as of the Closing Date, signed on behalf of Buyer by its Chief Executive Officer and Chief Financial
Officer to such effect.
(b) Performance of Obligations of Buyer. Buyer shall have performed and complied with all of its
obligations under this Agreement in all material respects at or prior to the Closing Date except where the failure of the performance of, or compliance with, such obligation has not had and does not have a Material Adverse Effect on Buyer, and
Company shall have received a certificate, dated the Closing Date, signed on behalf of Buyer by its Chief Executive Officer and the Chief Financial Officer to such effect.
(c) Other Actions. Buyer shall have furnished Company with such certificates of its officers and such other documents to evidence
fulfillment of the conditions set forth in Section 6.01 and this Section 6.02 as Company may reasonably request.
(d) No Material Adverse Effect. Since the date of this Agreement (i) no change or event has occurred which has resulted in Buyer
being subject to a Material Adverse Effect and (ii) no condition, event, fact, circumstance or other occurrence has occurred that may reasonably be expected to have or result in such parties being subject to a Material Adverse Effect.
Section 6.03 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the Merger also are subject to the
fulfillment or written waiver by Buyer prior to the Closing Date of each of the following conditions:
(a) Company Common Stock.
The number of shares of Company Common Stock outstanding as of the Closing Date of this Agreement shall not exceed 462,028,831 shares.
(b) Representations and Warranties. The representations and warranties of Company and its Subsidiaries set forth in this Agreement
shall be true and correct in all material respects at and as of the Closing Date, except to the extent that such representations and warranties are qualified by the term material, or contain terms such as Material Adverse
Effect in which case such representations and warranties (as so written, including the term material or Material) shall be true and correct in all respects at and as of the Closing Date. Buyer shall have received a
certificate dated as of the Closing Date, signed on behalf of Company and its Subsidiaries by Companys Chief Executive Officer and Chief Financial Officer, or equivalent officer performing the duties of a chief financial officer, to such
effect.
(c) Performance of Obligations of Company. Company and Company Bank shall have performed and complied with all of their
respective obligations under this Agreement in all material respects at or prior to the Closing Date, and Buyer shall have received a certificate, dated the Closing Date, signed on behalf of Company by Companys Chief Executive Officer and
Chief Financial Officer and signed on behalf of Company Bank by the Chief Executive Officer, Chief Financial Officer and the President of Company Bank, to such effect.
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(d) Plan of Bank Merger. The Plan of Bank Merger shall have been executed and delivered
concurrently with or immediately following approval of the Merger by Companys shareholders at the Company Meeting.
(e) Other
Actions. Companys and Company Banks board of directors shall have approved this Agreement and the transactions contemplated herein and shall not have (i) withheld, withdrawn or modified (or publicly proposed to withhold,
withdraw or modify), in a manner adverse to Buyer, the Company Recommendation referred to in Section 5.04, (ii) approved or recommended (or publicly proposed to approve or recommend) any Acquisition Proposal, or (iii) allowed
Company or any Company Representative to, enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other agreement relating to any Acquisition Proposal. Company and Company Bank
shall have furnished Buyer with such certificates of its officers or others and such other documents to evidence fulfillment of the conditions set forth in Section 6.01 and this Section 6.03 as Buyer may reasonably request.
(f) No Material Adverse Effect. Since the date of this Agreement (i) no change or event has occurred which has resulted in
Company being subject to a Material Adverse Effect and (ii) no condition, event, fact, circumstance or other occurrence has occurred that may reasonably be expected to have or result in such parties being subject to a Material Adverse Effect.
(g) Agreements with Certain Individuals. The Non-Compete Agreement shall have been executed and delivered at the Closing by Harvey
Glick.
(h) Rights under Tax Preservation Agreement. Since the date of this Agreement there has not been a Distribution
Date or any Shares Acquisition Date as those terms are defined in the Tax Preservation Agreement and the Company Board has taken all necessary action to cause the Rights issued pursuant to the Tax Preservation Agreement to cease to
be outstanding as of the Effective Time and to terminate the Tax Preservation Agreement, effective immediately as of the Effective Time, without payment of any consideration in respect thereof.
Section 6.04 Frustration of Closing Conditions. Neither Buyer nor Company may rely on the failure of any condition set forth in
Section 6.01, Section 6.02 or Section 6.03, as the case may be, to be satisfied if such failure was caused by such partys failure to use commercially reasonable efforts to consummate any of the transactions
contemplated hereby, as required by and subject to Section 5.03.
ARTICLE VII
TERMINATION
Section 7.01 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the mutual consent, in writing, of Buyer and Company if the board of
directors of Buyer and the board of directors of Company each so determines by vote of a majority of the members of its entire board.
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(b) No Regulatory Approval. By Buyer or Company, if either of their respective boards of
directors so determines by a vote of a majority of the members of its entire board, in the event any Regulatory Approval required for consummation of the transactions contemplated by this Agreement shall have been denied by final, non-appealable
action by such Governmental Authority or an application therefor shall have been permanently withdrawn at the request of a Governmental Authority.
(c) No Shareholder Approval. By either Buyer or Company (provided in the case of Company that it shall not be in breach of any of its
obligations under Section 5.04), if the Requisite Company Shareholder Approval shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of such shareholders or at any adjournment or
postponement thereof.
(d) Breach of Representations and Warranties. By either Buyer or Company (provided that the terminating
party is not then in material breach of any representation, warranty, covenant or other agreement contained herein in a manner that would entitle the other party to not consummate this Agreement) if there shall have been (i) with respect to
representations and warranties set forth in this Agreement that are not qualified by the term material or do not contain terms such as Material Adverse Effect, a material breach of any of such representations or warranties by
the other party and (ii) with respect to representations and warranties set forth in this Agreement that are qualified by the term material or contain terms such as Material Adverse Effect, any breach of any of such
representations or warranties by the other party; which breach is not cured prior to the earlier of (y) thirty (30) days following written notice to the party committing such breach from the other party hereto or (z) two
(2) Business Days prior to the Expiration Date, or which breach, by its nature, cannot be cured prior to the Closing.
(e) Breach
of Covenants. By either Buyer or Company (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained herein in a manner that would entitle the other party not to
consummate the agreement) if there shall have been a material breach of any of the covenants or agreements set forth in this Agreement on the part of the other party, which breach shall not have been cured prior to the earlier of (i) thirty
(30) days following written notice to the party committing such breach from the other party hereto or (ii) two (2) Business Days prior to the Expiration Date, or which breach, by its nature, cannot be cured prior to the Closing.
(f) Delay. It being understood that the parties shall use good faith efforts to submit regulatory filings and obtain the Requisite
Company Shareholder Approval in a timely manner, by either Buyer or Company if the Merger shall not have been consummated on or before October 31, 2015 (the Expiration Date), unless the failure of the Closing to occur
by such date shall be due to a material breach of this Agreement by the party seeking to terminate this Agreement.
(g) Failure to
Recommend; Etc. In addition to and not in limitation of Buyers termination rights under Section 7.01(e), by Buyer if (i) there shall have been a material breach of Section 5.09, or (ii) the Company Board
(A) withdraws, qualifies, amends, modifies or withholds the Company Recommendation, or makes any statement, filing or release, in
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connection with the Company Meeting or otherwise, inconsistent with the Company Recommendation (it being understood that taking a neutral position or no position with respect to an Acquisition
Proposal shall be considered an adverse modification of the Company Recommendation), (B) materially breaches its obligation to call, give notice of and commence the Company Meeting under Section 5.04, (C) approves or recommends
an Acquisition Proposal, (D) fails to publicly recommend against a publicly announced Acquisition Proposal within five (5) Business Days of being requested to do so by Buyer, (E) fails to publicly reconfirm the Company Recommendation
within five (5) Business Days of being requested to do so by Buyer, or (F) resolves or otherwise determines to take, or announces an intention to take, any of the foregoing actions.
(h) Failure to Terminate Tax Preservation Agreement. In addition to and not in limitation of Buyers termination rights under
Section 7.01(e), by Buyer if a Distribution Date or a Shares Acquisition Date has occurred (as those terms are defined in the Tax Preservation Agreement) or if the Tax Preservation Agreement will remain in effect
after the Effective Time or if any of the Rights issued thereunder shall remain outstanding after the Effective Time.
Section 7.02
Termination Fee; Liquidated Damages.
(a) In recognition of the efforts, expenses and other opportunities foregone by Buyer while
structuring and pursuing the Merger, in the event Buyer terminates this Agreement pursuant to Section 7.01(g), Company shall pay to Buyer a termination fee equal to $2,264,500 by wire transfer of immediately available funds within two
(2) Business Days after receipt of Buyers notification of such termination.
(b) The parties hereto agree and acknowledge that
if Buyer terminates this Agreement pursuant to Section 7.01(d) or Section 7.01(e) by reason of Companys or Company Banks breach of the provisions of this Agreement contemplated by Section 7.01(d) or
Section 7.01(e) that is not timely cured as provided in such sections, or if Buyer terminates this Agreement pursuant to Section 7.01(h), the actual damages sustained by Buyer, including the expenses incurred by Buyer
preparatory to entering into this Agreement and in connection with the performance of its obligations under this Agreement, would be significant and difficult to ascertain, gauged by the circumstances existing at the time this Agreement is executed,
and that in lieu of Buyer being required to pursue its damage claims in costly litigation proceedings in such event, the parties agree that Company shall pay a reasonable estimate of the amount of such damages, which the parties agree is the sum of
$500,000 (the Liquidated Damages Payment), as liquidated damages to Buyer, which payment is not intended as a penalty, within two (2) Business Days after Buyers notification of such termination.
(c) Company and Buyer each agree that the agreements contained in this Section 7.02 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Buyer would not enter into this Agreement; accordingly, if Company fails promptly to pay any amounts due under this Section 7.02, Company shall pay interest on such
amounts from the date payment of such amounts were due to the date of actual payment at the rate of interest equal to the sum of (i) the rate of interest published from time to time in The Wall Street Journal, Eastern Edition (or any successor
publication thereto), designated therein as the prime rate on the date such payment was due, plus (ii) 200 basis points, together with the costs and expenses of Buyer (including reasonable legal fees and expenses) in connection with such suit.
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(d) Notwithstanding anything to the contrary set forth in this Agreement, the parties agree that
if this Agreement is terminated by Buyer pursuant to Section 7.01(d), Section 7.01(e), Section 7.01(g) or Section 7.01(h) and if Company pays or causes to be paid to Buyer or to Buyer Bank the
termination fee in accordance with Section 7.02(a), or, if applicable, the Liquidated Damages Payment in accordance with Section 7.02(b), Company (or any successor in interest of Company) will not have any further obligations
or liabilities to Buyer or Buyer Bank with respect to this Agreement or the transactions contemplated by this Agreement.
Section 7.03 Effect of Termination. Except as set forth in Section 7.02(d), termination of this Agreement will not
relieve a breaching party from liability for any breach of any covenant, agreement, representation or warranty of this Agreement giving rise to such termination.
ARTICLE VIII
DEFINITIONS
Section 8.01 Definitions. The following terms are used in this Agreement with the meanings set forth below:
ABCA means the Arkansas Business Corporation Act of 1987, as amended.
Acquisition Proposal has the meaning set forth in Section 5.09(a).
Acquisition Transaction has the meaning set forth in Section 5.09(a).
Additional Environmental Assessment has the meaning set forth in Section 5.17(d).
Affiliate means, with respect to any Person, any other Person controlling, controlled by or under common control
with such Person. As used in this definition, control (including, with its correlative meanings, controlled by and under common control with) means the possession, directly or indirectly, of power to direct or
cause the direction of the management and policies of a Person whether through the ownership of voting securities, by contract or otherwise.
Agreement has the meaning set forth in the preamble to this Agreement.
Articles of Bank Merger has the meaning set forth in Section 1.05(b).
Articles of Merger has the meaning set forth in Section 1.05(a).
ASC 320 means GAAP Accounting Standards Codification Topic 320.
ASTM has the meaning set forth in Section 5.01(w).
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Bank Merger has the meaning set forth in the recitals.
Bank Secrecy Act means the Bank Secrecy Act of 1970, as amended.
BOLI has the meaning set forth in Section 3.33(b).
Book-Entry Shares means any non-certificated shares which immediately prior to the Effective Time represent shares
of Company Common Stock.
Burdensome Conditions has the meaning set forth in Section 5.06(a).
Business Day means Monday through Friday of each week, except a legal holiday recognized as such by the U.S.
government or any day on which banking institutions in the State of North Carolina are authorized or obligated to close.
Buyer has the meaning set forth in the preamble to this Agreement.
Buyer Articles has the meaning set forth in Section 4.02(a).
Buyer Average Stock Price means the average closing sale price of a share of Buyer Common Stock on NASDAQ, as
reported by Bloomberg L.P. for the ten (10) consecutive trading days ending on the second (2nd) Business Day prior to the Closing Date, rounded to the nearest tenth of a cent;
provided, that the Buyer Average Stock Price shall be not less than $29.28 nor greater than $48.80, in either of which case the Exchange Ratio shall be fixed based upon such upper or lower level, as the case may be.
Buyer Bank has the meaning set forth in the preamble to this Agreement.
Buyer Benefit Plans means all benefit and compensation plans, contracts, policies or arrangements (i) covering
current or former employees of Buyer or any of its Subsidiaries, (ii) covering current or former directors of Buyer or any of its Subsidiaries, or (iii) with respect to which Buyer or any Subsidiary has or may have any liability or
contingent liability (including liability arising from affiliation under Section 414 of the Code or Section 4001 of ERISA) including, but not limited to, employee benefit plans within the meaning of Section 3(3) of ERISA,
and deferred compensation, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans.
Buyer Bylaws has the meaning set forth in Section 4.02(a).
Buyer Common Stock means the common stock, $0.01 par value per share, of Buyer.
Buyer Reports has the meaning set forth in Section 4.06(a).
Certificate means any certificate which immediately prior to the Effective Time represents shares of Company Common
Stock.
Claim has the meaning set forth in Section 5.10(a).
Closing and Closing Date have the meanings set forth in Section 1.05(c).
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Closing Consolidated Net Book Value means the unaudited consolidated
net shareholders equity of Company as of the Determination Date, determined in accordance with GAAP, but without giving effect to the after tax impact of the following items: (i) any negative provision for loan and lease losses for the
period between February 28, 2015 and the Determination Date, which provision would otherwise have the effect of decreasing the allowance for loan and lease losses; provided, however, any negative provision resulting from the resolution
of a loan for which a specific allowance for loan and lease losses has been calculated as of February 28, 2015 and which specific allowance is set forth on Disclosure Schedule Section 8.01(a) hereto, where the resolution creates a
reduction of such specific calculated allowance in excess of the loss actually incurred on the loan, shall be reflected in the Closing Consolidated Net Book Value; (ii) any of the actions or changes taken only to comply with coordination
procedures pursuant to Section 5.20 which would otherwise not have been taken or required to be taken; or (iii) any increase in the net deferred tax assets between February 28, 2015 and the Determination Date, all as mutually
agreed between Company and Buyer. For purposes of calculating the Closing Consolidated Net Book Value, the Company shall include, without duplication, deductions made for the extraordinary items related to the Merger, this Agreement and the
transactions contemplated hereby, including, but not limited to reductions for: (i) the after-tax amount of any fees and commissions payable to any broker, finder, financial advisor or investment banking firm in connection with this Agreement
and the transactions contemplated hereby; (ii) the after-tax amount of any legal and accounting fees incurred in connection with the Merger, this Agreement, the Bank Merger and the transactions contemplated hereby and any related SEC and
regulatory filings, including any printing expenses and SEC filing fees; (iii) the after-tax amount of the costs expected to be incurred by the Surviving Entity on or after the Closing Date to fully complete all Unresolved Response Actions (as
defined in Section 5.17(e)) in accordance with Section 5.17(e); (iv) the after tax amount of any compensation, bonus, severance, or payments triggered in connection with the change-of-control or Merger, or other similar
payment(s) payable by the Company or any Company Subsidiary; and (v) the after-tax amount of all costs and expenses associated with the defense or settlement of any shareholder challenges or litigation arising out of or in connection with the
Merger, this Agreement, the Bank Merger or the transactions contemplated hereby in excess of $500,000 in the aggregate. The Closing Consolidated Net Book Value may be further adjusted upon the mutual agreement of the parties, provided such
adjustment shall be memorialized in a writing signed by all of the parties thereto.
Code has the meaning set
forth in Section 2.05.
Community Reinvestment Act means the Community Reinvestment Act of 1977, as
amended.
Company has the meaning set forth in the preamble to this Agreement.
Company 2014 Form 10-K has the meaning set forth in Section 3.08(a).
Company 401(a) Plan has the meaning set forth in Section 3.16(c).
Company Bank has the meaning set forth in the preamble to this Agreement.
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Company Benefit Plans has the meaning set forth in
Section 3.16(a).
Company Board has the meaning set forth in Section 2.02(a).
Company Common Stock means the voting common stock, no par value per share, of Company.
Company Employees has the meaning set forth in Section 3.16(a).
Company Expenses has the meaning set forth in Section 5.21.
Company Financial Advisor has the meaning set forth in Section 3.15.
Company Intellectual Property means the Intellectual Property used in or held for use in the conduct of the business
of Company and its Subsidiaries.
Company Loan has the meaning set forth in Section 3.23(c).
Company Loan Property means any real property (including buildings or other structures) in which Company or any of
its Subsidiaries holds a security interest, Lien or a fiduciary or management role.
Company Material Contracts
has the meaning set forth in Section 3.13(a).
Company Meeting has the meaning set forth in
Section 5.04(a).
Company Recommendation has the meaning set forth in Section 5.04(b).
Company Regulatory Agreement has the meaning set forth in Section 3.14.
Company Representatives has the meaning set forth in Section 5.09(a).
Company Restricted Shares means restricted shares of Company Common Stock granted under the Company Stock Plans.
Company SEC Documents has the meaning set forth in Section 3.08(a).
Company Stock Option means an option to purchase shares of Company Common Stock pursuant to the Company Stock Plans.
Company Stock Plans means all equity plans of the Company, including the Bank of the Carolinas Corporation 2014
Omnibus Stock Incentive Plan and the Bank of the Carolinas Corporation 2007 Omnibus Equity Plan, each as amended to date, and any sub-plans adopted thereunder.
Company Stock Price means a cash value, rounded to the nearest tenth of a cent, equal to the quotient of
(i) the Purchase Price, divided by (ii) the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time.
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Company Subsequent Determination has the meaning set forth in
Section 5.09(e).
Confidential Information has the meaning set forth in Section 5.23(a).
Controlled Group Members has the meaning set forth in Section 3.16(a).
D&O Insurance has the meaning set forth in Section 5.10(c).
Derivative Transaction means any swap transaction, option, warrant, forward purchase or sale transaction, futures
transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions
or any indexes, or any other similar transaction (including any option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or
equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to any such transaction or transactions.
Determination Date means the first (1st) Business Day
after the date of the Company Meeting or the tenth (10th) Business Day before the Closing Date, whichever is later.
Disclosing Party has the meaning set forth in Section 5.23(a).
Disclosure Schedule has the meaning set forth in Section 3.01(a).
Dissenting Shareholder has the meaning set forth in Section 2.01(d).
Dissenting Shares has the meaning set forth in Section 2.01(d).
Dodd-Frank Act means the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Effective Time has the meaning set forth in Section 1.05(a).
Environmental Claim means any written complaint, summons, action, citation, notice of violation, directive, order,
claim, litigation, investigation, judicial or administrative proceeding or action, judgment, lien, demand, letter or communication alleging non-compliance with any Environmental Law relating to any actual or threatened release of a Hazardous
Substance.
Environmental Consultant has the meaning set forth in Section 5.17(a).
Environmental Law means any federal, state or local Law, regulation, order, decree, permit, authorization, opinion
or agency requirement relating to: (a) pollution, the protection or restoration of the indoor or outdoor environment, human health and safety, or natural resources, (b) the handling, use, presence, disposal, release or threatened release
of any Hazardous Substance, or (c) any injury or threat of injury to persons or property in connection with any Hazardous Substance. The term Environmental Law includes, but is not limited to, the following statutes, as amended, any successor
thereto, and any regulations promulgated pursuant thereto,
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and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: (a) Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act of 1986, as amended, 42 U.S.C. § 9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901, et seq.; the Clean Air Act, as amended, 42 U.S.C. § 7401, et
seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. § 2601, et seq.; the Emergency Planning and Community Right to Know Act, 42 U.S.C. § 1101,
et seq.; the Safe Drinking Water Act; 42 U.S.C. § 300f, et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651, et seq.; (b) common Law that may impose liability (including without limitation strict liability) or obligations
for injuries or damages due to the presence of or exposure to any Hazardous Substance.
Equal Credit Opportunity
Act means the Equal Credit Opportunity Act, as amended.
ERISA means the Employee Retirement
Income Security Act of 1974, as amended.
ERISA Affiliate has the meaning set forth in
Section 3.16(d).
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
Exchange Agent means such exchange agent as may be designated by Buyer
(which shall be Buyers transfer agent), and reasonably acceptable to Company, to act as agent for purposes of conducting the exchange procedures described in ARTICLE II.
Exchange Fund has the meaning set forth in Section 2.07(a).
Exchange Ratio means the quotient (rounded to the fourth decimal place) of the Company Stock Price divided by the
Buyer Average Stock Price.
Executive Officer means the President, Chief Executive Officer, Chairman and Vice
Chairman, Chief Financial Officer, President, Controller, Chief Lending Officer, Chief Operating Officer, Chief Credit Officer, Chief Banking Officer, and each other officer with significant policy-making authority of Company, Company Bank, Buyer,
or Buyer Bank, as applicable.
Expiration Date has the meaning set forth in Section 7.01(f).
Fair Credit Reporting Act means the Fair Credit Reporting Act, as amended.
Fair Housing Act means the Fair Housing Act, as amended.
FDIA has the meaning set forth in Section 3.28.
FDIC means the Federal Deposit Insurance Corporation.
FFIEC means the Federal Financial Institutions Examination Council.
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FRB means the Board of Governors of the Federal Reserve System.
GAAP means generally accepted accounting principles in the United States of America, applied consistently with past
practice, including with respect to quantity and frequency.
Governmental Authority means any U.S. or foreign
federal, state or local governmental commission, board, body, bureau or other regulatory authority or agency, including, without limitation, courts and other judicial bodies, bank regulators, insurance regulators, applicable state securities
authorities, the SEC, the IRS or any self-regulatory body or authority, including any instrumentality or entity designed to act for or on behalf of the foregoing.
Hazardous Substance means any and all substances (whether solid, liquid or gas) defined, listed, or otherwise
regulated as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, flammable or explosive materials, radioactive materials or words of similar meaning or regulatory effect under any present or future
Environmental Law or that may have a negative impact on human health or the environment, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radioactive
materials, flammables and explosives. Hazardous Substance does not include substances of kinds and in amounts ordinarily and customarily used or stored for the purposes of cleaning or other maintenance or operations.
Holder has the meaning set forth in Section 2.06.
Home Mortgage Disclosure Act means Home Mortgage Disclosure Act of 1975, as amended.
Indemnified Parties and Indemnifying Party have the meanings set forth in
Section 5.10(a).
Informational Systems Conversion has the meaning set forth in
Section 5.15.
Insurance Policies has the meaning set forth in Section 3.33(a).
Intellectual Property means (a) trademarks, service marks, trade names, Internet domain names, designs, logos,
slogans, and general intangibles of like nature, together with all goodwill, registrations and applications related to the foregoing; (b) patents and industrial designs (including any continuations, divisionals, continuations-in-part, renewals,
reissues, and applications for any of the foregoing); (c) copyrights (including any registrations and applications for any of the foregoing); (d) Software; and (e) technology, trade secrets and other confidential information,
know-how, proprietary processes, formulae, algorithms, models, and methodologies.
IRS means the United States
Internal Revenue Service.
Knowledge of any Person (including references to such Person being aware of a
particular matter), as used with respect to Company and its Subsidiaries, means those facts,
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reports, allegations or other information that are actually known by any Executive Officer of Company or Company Bank, including for this purpose and without limitation, the Chairman, the
President, Vice Chairman, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, and the Chief Credit Officer and any Person that directly reports to any of the foregoing individuals. Knowledge, as used with respect
to Buyer and its Subsidiaries, means those facts, reports, allegations or other information that are actually known, after reasonable inquiry, by any Executive Officer of Buyer or Buyer Bank, including for this purpose and without limitation, the
Chairman and Chief Executive Officer of each of Buyer and Buyer Bank. Without limiting the scope of the preceding sentences, the term Knowledge includes any fact, matter or circumstance set forth in any written notice received by Company
or Company Bank, or by Buyer or Buyer Bank, from any Governmental Authority.
Law means any federal, state,
local or foreign Law, statute, ordinance, rule, regulation, judgment, order, injunction, decree, arbitration award, agency requirement, license or permit of any Governmental Authority that is applicable to the referenced Person.
Leases has the meaning set forth in Section 3.31(b).
Letter of Transmittal has the meaning set forth in Section 2.06.
Liens means any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance, conditional
and installment sale agreement, charge or other claim of third parties of any kind.
Liquidated Damages Payment
has the meaning set forth in Section 7.02(b).
Loans has the meaning set forth in
Section 3.23(a).
Material Adverse Change or Material Adverse Effect with
respect to any party means (i) any change, development or effect that individually or in the aggregate is, or is reasonably likely to be, material and adverse to the condition (financial or otherwise), results of operations, liquidity, assets
or deposit liabilities, properties, or business of such party and its Subsidiaries, taken as a whole, (ii) any change, development or effect that individually or in the aggregate would, or would be reasonably likely to, materially impair the
ability of such party to perform its obligations under this Agreement or otherwise materially impairs, or is reasonably likely to materially impair, the ability of such party to consummate the Merger and the transactions contemplated hereby or
(iii) any action taken or changes made by Company or Company Bank with respect to investment securities, deposits or loans under Section 5.01(q), Section 5.01(r) or Section 5.01(s), respectively, that has, or
is reasonably likely to have, a material negative impact on the Companys risk profile (except that no actions taken by Company pursuant to Section 5.01(q), Section 5.01(r) or Section 5.01(s) shall be deemed
to negatively impact the Companys risk profile if Buyer provided prior written consent to any such actions after receiving appropriate notice in accordance with such sections); provided, however, that, in the case of clause
(i) only, a Material Adverse Effect shall not be deemed to include the impact of (A) changes after the date of this Agreement in banking and similar Laws of general applicability or interpretations thereof by Governmental Authorities
(except to the extent that such change disproportionately adversely affects Company and its Subsidiaries or Buyer and its
69
Subsidiaries, as the case may be, compared to other companies of similar size operating in the same industry in which Company and Buyer operate, in which case only the disproportionate effect
will be taken into account), (B) changes after the date of this Agreement in GAAP or regulatory accounting requirements applicable to banks or bank holding companies generally (except to the extent that such change disproportionately adversely
affects Company and its Subsidiaries or Buyer and its Subsidiaries, as the case may be, compared to other companies of similar size operating in the same industry in which Company and Buyer operate, in which case only the disproportionate effect
will be taken into account), (C) changes after the date of this Agreement in general economic or capital market conditions affecting financial institutions, including, but not limited to, changes in levels of interest rates generally (except to
the extent that such change disproportionately adversely affects Company and its Subsidiaries or Buyer and its Subsidiaries, as the case may be, compared to other companies of similar size operating in the same industry in which Company and Buyer
operate, in which case only the disproportionate effect will be taken into account), (D) the effects of any action or omission taken by Company with the prior consent of Buyer, and vice versa, or as otherwise expressly permitted or contemplated
by this Agreement, (E) any failure by Company or Buyer to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period (it being understood and agreed that the facts and
circumstances giving rise to such failure that are not otherwise excluded from the definition of Material Adverse Effect may be taken into account in determining whether there has been a Material Adverse Effect), (F) changes in the trading
price or trading volume of Buyer Common Stock, (G) the impact of the Agreement and the transactions contemplated hereby on relationships with customers or employees (including the loss of personnel subsequent to the date of this Agreement), and
(H) the outbreak or escalation of hostilities or acts of war or terrorism (except to the extent that such change disproportionately adversely affects Company and its Subsidiaries or Buyer and its Subsidiaries, as the case may be, compared to
other companies of similar size operating in the same industry in which Company and Buyer operate, in which case only the disproportionate effect will be taken into account).
Maximum D&O Tail Premium has the meaning set forth in Section 5.10(c).
Merger has the meaning set forth in the recitals.
Merger Consideration means the number of shares of Buyer Common Stock to be issued in the Merger in respect of each
share of Company Common Stock held by a holder of Company Common Stock of record immediately prior to the Effective Time, determined on the basis of the Exchange Ratio.
NASDAQ means The NASDAQ Global Select Market.
National Labor Relations Act means the National Labor Relations Act, as amended.
NCBCA means the North Carolina Business Corporation Act, as amended.
Non-Compete Agreement means that certain non-competition agreement to be entered into at the Closing between Buyer
Bank and Harvey Glick, in substantially the form attached as Exhibit C to this Agreement.
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Non-scope Issues has the meaning set forth in
Section 5.17(c).
Notice of Superior Proposal has the meaning set forth in
Section 5.09(e).
Notice Period has the meaning set forth in Section 5.09(e).
Ordinary Course of Business means the ordinary, usual and customary course of business of Company, Company Bank and
the Companys Subsidiaries consistent with past practice, including with respect to frequency and amount.
OREO has the meaning set forth in Section 3.23(b).
Person means any individual, bank, corporation, partnership, association, joint-stock company, business trust,
limited liability company, unincorporated organization or other organization or firm of any kind or nature.
Phase
I has the meaning set forth in Section 5.01(w).
Plan of Bank Merger means that
certain plan of bank merger between Company Bank and Buyer Bank pursuant to which Company Bank will be merged with and into Buyer Bank in accordance with the provisions of and with the effect provided in N.C. Gen. Stat. § 53C-7-201 et seq., as
well as Arkansas Code Annotated §§ 23-48-503, 23-48-901 et seq. and Subchapter 11 of the Arkansas Business Corporation Act, with the effect provided in Arkansas Code Annotated § 4-27-1110.
Proxy Statement-Prospectus means the Companys proxy statement and the Buyers prospectus and other proxy
solicitation materials constituting a part thereof, together with any amendments and supplements thereto, to be delivered to holders of Company Common Stock in connection with the solicitation of their approval of this Agreement.
Purchase Price means $64,700,000, subject to a decrease, in the event that the Closing Consolidated Net Book Value
of Company, determined in accordance with this Agreement, is less than $45,500,000, on a dollar-for-dollar basis, by the amount by which the Closing Consolidated Net Book Value of Company is less than $45,500,000.
Receiving Party has the meaning set forth in Section 5.23(a).
Registration Statement means the Registration Statement on Form S-4 to be filed with the SEC by Buyer in connection
with the issuance of shares of Buyer Common Stock in the Merger (including the Proxy Statement-Prospectus).
Regulations means the final and temporary regulations promulgated under the Code by the United States Department of
the Treasury.
Regulatory Approval shall mean any consent, approval, authorization or non-objection from any
Governmental Authority necessary to consummate the Merger, Bank Merger and the other transactions contemplated by this Agreement.
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Representatives has the meaning set forth in
Section 5.23(a).
Requisite Company Shareholder Approval means the adoption of this Agreement by a
vote of the majority of the outstanding shares of Company Common Stock entitled to vote thereon at the Company Meeting.
Rights means, with respect to any Person, warrants, options, rights, convertible securities and other arrangements
or commitments which obligate the Person to issue or dispose of any of its capital stock or other ownership interests.
Sarbanes-Oxley Act means the Sarbanes-Oxley Act of 2002, as amended.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Software means computer programs, whether in source code or object code form (including any and all software
implementation of algorithms, models and methodologies), databases and compilations (including any and all data and collections of data), and all documentation (including user manuals and training materials) related to the foregoing.
Subsidiary means, with respect to any party, any corporation or other entity of which a majority of the capital
stock or other ownership interest having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such party. Any reference in this Agreement to
a Subsidiary of the Company means, unless the context otherwise requires, any current or former Subsidiary of Company.
Superior Proposal has the meaning set forth in Section 5.09(a).
Surviving Entity has the meaning set forth in Section 1.01.
Tax and Taxes mean all federal, state, local or foreign income, gross income, gains, gross
receipts, sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance, stamp, occupation, property,
environmental, custom duties, unemployment or other taxes of any kind whatsoever imposed, directly or indirectly, by a Governmental Authority, together with any interest, additions or penalties thereto and any interest in respect of such interest
and penalties.
Tax Preservation Agreement has the meaning set forth in Section 3.03(b).
Tax Returns means any return, amended return, declaration or other report (including elections, declarations,
schedules, estimates and information returns) required to be filed with any taxing authority with respect to any Taxes.
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The date hereof or the date of this Agreement
shall mean the date first set forth above in the preamble to this Agreement.
Truth in Lending Act means the
Truth in Lending Act of 1968, as amended.
Unresolved Response Action has the meaning set forth in
Section 5.17(e).
USA PATRIOT Act means the USA PATRIOT Act of 2001, Public Law 107-56, and the
regulations promulgated thereunder.
Voting Agreement or Voting Agreements shall have
the meaning set forth in the recitals to this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Survival. No representations, warranties, agreements or covenants contained in this Agreement shall survive the
Effective Time other than this Section 9.01 and any other agreements or covenants contained herein that by their express terms are to be performed after the Effective Time, including, without limitation, Section 5.10 of this
Agreement.
Section 9.02 Waiver; Amendment. Prior to the Effective Time and to the extent permitted by applicable Law, any
provision of this Agreement may be (a) waived by the party benefited by the provision or (b) amended or modified at any time, by an agreement in writing among the parties hereto executed in the same manner as this Agreement, except that
after the Company Meeting no amendment shall be made which by Law requires further approval by the shareholders of Buyer or Company without obtaining such approval.
Section 9.03 Governing Law; Waiver of Right to Trial by Jury.
(a) This Agreement shall be governed by, and interpreted and enforced in accordance with, the internal, substantive laws of the State of
Arkansas, without regard for conflict of law provisions.
(b) Each party acknowledges and agrees that any controversy which may arise
under this Agreement is likely to involve complicated and difficult issues, and therefore each such party hereby irrevocably and unconditionally waives any right such party may have to a trial by jury in respect of any litigation directly or
indirectly arising out of or relating to this Agreement, or the transactions contemplated by this Agreement. Each party certifies and acknowledges that (i) no representative, agent or attorney of any other party has represented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each party understands and has considered the implications of this waiver, (iii) each party makes this waiver voluntarily,
and (iv) each party has been induced to enter into this agreement by, among other things, the mutual waivers and certifications in this Section 9.03.
Section 9.04 Expenses. Except as otherwise provided in Section 7.02, each party hereto will bear all expenses incurred
by it in connection with this Agreement and the transactions
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contemplated hereby, including fees and expenses of its own financial consultants, accountants and counsel. Nothing contained herein shall limit either partys rights to recover any
liabilities or damages arising out of the other partys willful breach of any provision of this Agreement.
Section 9.05
Notices. All notices, requests and other communications hereunder to a party, shall be in writing and shall be deemed properly given if delivered (a) personally, (b) by registered or certified mail (return receipt requested), with
adequate postage prepaid thereon, (c) by properly addressed electronic mail delivery (with confirmation of delivery receipt), or (d) by reputable courier service to such party at its address set forth below, or at such other address or
addresses as such party may specify from time to time by notice in like manner to the parties hereto. All notices shall be deemed effective upon delivery.
|
|
|
If to Buyer or Buyer Bank: |
|
With a copy (which shall not constitute notice) to: |
|
|
Bank of the Ozarks, Inc.
17901 Chenal Parkway
Little Rock, Arkansas 72223
Attn: Executive Vice President and
Director of Mergers and Acquisitions |
|
Kutak Rock LLP
124 W. Capitol Ave., Suite 2000
Little Rock, Arkansas 72201
Attn: H. Watt Gregory, III |
|
|
|
If to Company or Company Bank: |
|
With a copy (which shall not constitute notice) to: |
|
|
Bank of the Carolinas Corporation
135 Boxwood Village Drive
Mocksville, North Carolina 27028
Attn: Harvey Glick |
|
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
Attn: Todd H. Eveson |
Section 9.06 Entire Understanding; No Third Party Beneficiaries. This Agreement represents the
entire understanding of the parties hereto and thereto with reference to the transactions contemplated hereby, and this Agreement supersedes any and all other oral or written agreements heretofore made. Except for the Indemnified Parties
rights under Section 5.10, Buyer and Company hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other party hereto, in accordance with and subject to the terms
of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person (including any person or employees who might be affected by Section 5.11), other than the parties hereto, any rights or remedies hereunder,
including, the right to rely upon the representations and warranties set forth herein.
Section 9.07 Severability. In the
event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement and the parties shall use their commercially reasonable efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purposes and intents of this Agreement.
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Section 9.08 Enforcement of the Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction without having to show or prove economic damages and without the
requirement of posting a bond, this being in addition to any other remedy to which they are entitled at law or in equity.
Section 9.09 Interpretation.
(a) When a reference is made in this Agreement to sections, exhibits or schedules, such reference shall be to a section of, or exhibit or
schedule to, this Agreement unless otherwise indicated. The table of contents and captions and headings contained in this Agreement are included solely for convenience of reference; if there is any conflict between a caption or heading and the text
of this Agreement, the text shall control. Whenever the words include, includes or including are used in this Agreement, they shall be deemed to be followed by the words without limitation.
(b) The parties hereto have participated jointly in the negotiation and drafting of this Agreement and the other agreements and documents
contemplated herein. In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement or any other agreement or document contemplated herein, this Agreement and such other agreements or documents shall
be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorizing any of the provisions of this Agreement or any other agreements or documents
contemplated herein.
(c) Any reference contained in this Agreement to specific statutory or regulatory provisions or to any specific
Governmental Authority shall include any successor statute or regulation, or successor Governmental Authority, as the case may be. Unless the context clearly indicates otherwise, the masculine, feminine, and neuter genders will be deemed to be
interchangeable, and the singular includes the plural and vice versa.
(d) Unless otherwise specified, the references to
Section and ARTICLE in this Agreement are to the Sections and ARTICLES of this Agreement. When used in this Agreement, words such as herein, hereinafter, hereof, hereto, and
hereunder refer to this Agreement as a whole, unless the context clearly requires otherwise.
Section 9.10
Assignment. No party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other party, and any purported assignment in violation of this Section 9.10
shall be void. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
Section 9.11 Counterparts. This Agreement may be executed and delivered by facsimile or by electronic data file and in one or more
counterparts, all of which shall be
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considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that
all parties need not sign the same counterpart. Signatures delivered by facsimile or by electronic data file shall have the same effect as originals.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in counterparts
by their duly authorized officers, all as of the day and year first above written.
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BANK OF THE OZARKS, INC. |
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By: |
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/s/ Dennis James |
Name: |
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Dennis James |
Title: |
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Executive Vice President and Director of
Mergers and Acquisitions |
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BANK OF THE OZARKS |
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By: |
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/s/ Dennis James |
Name: |
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Dennis James |
Title: |
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Executive Vice President and Director of
Mergers and Acquisitions |
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BANK OF THE CAROLINAS CORPORATION |
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By: |
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/s/ Stephen R. Talbert |
Name: |
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Stephen R. Talbert |
Title: |
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President, Vice Chairman and Chief Executive
Officer |
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BANK OF THE CAROLINAS |
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By: |
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/s/ Stephen R. Talbert |
Name: |
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Stephen R. Talbert |
Title: |
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President, Vice Chairman and Chief Executive
Officer |
SIGNATURE PAGE TO AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
Exhibit A
FORM OF VOTING AGREEMENT
THIS VOTING AGREEMENT (this Agreement) is dated as of May 6, 2015, by and between the undersigned holder
(Shareholder) of Common Stock, no par value per share, of Bank of the Carolinas Corporation, a North Carolina corporation (Company), and Bank of the Ozarks, Inc., an Arkansas corporation (Buyer). All capitalized
terms used but not defined herein shall have the meanings assigned to them in the Merger Agreement (defined below).
WHEREAS,
concurrently with the execution of this Agreement, Buyer, Buyers wholly owned subsidiary, Bank of the Ozarks, an Arkansas state banking corporation (Buyer Bank), Company and Companys wholly owned subsidiary, Bank of the
Carolinas, a North Carolina chartered bank (Company Bank), are entering into an Agreement and Plan of Merger and Reorganization (as such agreement may be subsequently amended or modified, the Merger Agreement), pursuant to
which (i) Company will merge with and into Buyer, with Buyer as the surviving entity and (ii) Company Bank will merge with and into Buyer Bank, with Buyer Bank as the surviving entity (collectively, the Merger), and in
connection with the Merger, each outstanding share of Company Common Stock will be converted into the right to receive the Merger Consideration;
WHEREAS, Shareholder beneficially owns and has the power and authority to vote all of shares of Company Common Stock as indicated on
the signature page of this Agreement under the heading Total Number of Shares of Company Common Stock Subject to this Agreement (such shares, together with any additional shares of Company Common Stock subsequently acquired by
Shareholder during the term of this Agreement, including through the exercise of any stock option or other equity award, warrant or similar instrument, being referred to collectively as the Shares); and
WHEREAS, it is a material inducement to the willingness of Buyer to enter into the Merger Agreement that Shareholder execute and
deliver this Agreement.
NOW, THEREFORE, in consideration of, and as a material inducement to, Buyer entering into the Merger
Agreement and proceeding with the transactions contemplated thereby, and in consideration of the expenses incurred and to be incurred by Buyer in connection therewith, Shareholder and Buyer agree as follows:
Section 1. Agreement to Vote Shares. Shareholder agrees that, while this Agreement is in effect, at any meeting of
shareholders of Company, however called, or at any adjournment thereof, or in any other circumstances in which Shareholder is entitled to vote, consent or give any other approval, except as otherwise agreed to in writing in advance by Buyer,
Shareholder shall:
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(a) |
appear at each such meeting in person or by proxy; and |
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(b) |
vote (or cause to be voted), in person or by proxy, all the Shares that are beneficially owned by Shareholder or as to which Shareholder has, directly
or indirectly, the sole right to vote or direct the voting, (i) in favor of adoption and approval of the Merger Agreement and the transactions contemplated thereby |
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(including any amendments or modifications of the terms thereof approved by the board of directors of Company and adopted in accordance with the terms thereof); (ii) in favor of any proposal
to adjourn or postpone such meeting, if necessary, to solicit additional proxies to approve the Merger Agreement; (iii) in favor of any proposal relating to an advisory vote on executive compensation, as may be required under Rule 14a-21(c)
under the Exchange Act; (iv) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Company contained in the Merger Agreement or of Shareholder contained
in this Agreement; and (v) against any Acquisition Proposal or any other action, agreement or transaction that is intended, or could reasonably be expected, to impede, interfere or be inconsistent with, delay, postpone, discourage or materially
and adversely affect consummation of the transactions contemplated by the Merger Agreement or this Agreement. |
Shareholder further agrees
not to vote or execute any written consent to rescind or amend in any manner any prior vote or written consent, as a shareholder of Company, to approve or adopt the Merger Agreement unless this Agreement shall have been terminated in accordance with
its terms.
Section 2. No Transfers. While this Agreement is in effect, Shareholder agrees not to, directly or
indirectly, sell, transfer, pledge, assign or otherwise dispose of, or enter into any contract option, commitment or other arrangement or understanding with respect to the sale, transfer, pledge, assignment or other disposition of, any of the
Shares, except the following transfers shall be permitted: (a) transfers by will or operation of Law (as such term is defined in the Merger Agreement), in which case this Agreement shall bind the transferee, (b) transfers pursuant to any
pledge agreement, subject to the pledgee agreeing in writing, prior to such transfer, to be bound by the terms of this Agreement, (c) transfers in connection with estate and tax planning purposes, including transfers to relatives, trusts and
charitable organizations, subject to each transferee agreeing in writing, prior to such transfer, to be bound by the terms of this Agreement, and (d) such transfers as Buyer may otherwise permit in its sole discretion. Any transfer or other
disposition in violation of the terms of this Section 2 shall be null and void.
Section 3. Representations and
Warranties of Shareholder. Shareholder represents and warrants to and agrees with Buyer as follows:
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(a) |
Shareholder has all requisite capacity and authority to enter into and perform his, her or its obligations under this Agreement. |
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(b) |
This Agreement has been duly executed and delivered by Shareholder, and assuming the due authorization, execution and delivery by Buyer, constitutes the valid and legally binding obligation of Shareholder enforceable
against Shareholder in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors rights and to general equity
principles. |
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(c) |
The execution and delivery of this Agreement by Shareholder does not, and the performance by Shareholder of his, her or its obligations hereunder and the consummation by Shareholder of the transactions contemplated
hereby will not, violate or conflict with, or constitute a default under, any agreement, instrument, contract or other obligation or any order, arbitration award, judgment or decree to which Shareholder is a party or by which Shareholder is bound,
or any statute, rule or regulation to which Shareholder is subject or, in the event that Shareholder is a corporation, partnership, trust or other entity, any charter, bylaw or other organizational document of Shareholder. |
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(d) |
Shareholder is the record and beneficial owner of, or is the trustee that is the record holder of, and whose beneficiaries are the beneficial owners of, and has good title to all of the Shares, and the Shares are owned
free and clear of any liens, security interests, charges or other encumbrances. The Shares do not include shares over which Shareholder exercises control in a fiduciary capacity for any other person or entity that is not an Affiliate of Shareholder,
and no representation by Shareholder is made with respect thereto. Shareholder has the right to vote the Shares, and none of the Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of the
Shares, except as contemplated by this Agreement. |
Section 4. No Solicitation. From and after the date
hereof until the termination of this Agreement pursuant to Section 7 hereof, Shareholder, in his, her or its capacity as a shareholder of Company, shall not, nor shall such Shareholder authorize any partner, officer, director, advisor or
representative of, such Shareholder or any of his, her or its affiliates to (and, to the extent applicable to Shareholder, such Shareholder shall use commercially reasonable efforts to prohibit any of his, her or its representatives or affiliates
to), (a) initiate, solicit, induce or knowingly encourage, or knowingly take any action to facilitate the making of, any inquiry, offer or proposal which constitutes, or could reasonably be expected to lead to, an Acquisition Proposal,
(b) participate in any discussions or negotiations regarding any Acquisition Proposal, or furnish, or otherwise afford access, to any person (other than Buyer) any information or data with respect to Company or otherwise relating to an
Acquisition Proposal, (c) enter into any agreement, agreement in principle, letter of intent, memorandum of understanding or similar arrangement with respect to an Acquisition Proposal, (d) solicit proxies with respect to an Acquisition
Proposal (other than the Merger Agreement) or otherwise encourage or assist any party in taking or planning any action that would compete with, restrain or otherwise serve to interfere with or inhibit the timely consummation of the Merger in
accordance with the terms of the Merger Agreement, or (e) initiate a shareholders vote or action by consent of Companys shareholders with respect to an Acquisition Proposal.
Section 5. Irrevocable Proxy. Subject to the last sentence of this Section 5, by execution of this Agreement,
Shareholder does hereby appoint Buyer with full power of substitution and resubstitution, as Shareholders true and lawful attorney and irrevocable proxy, to the full extent of Shareholders rights with respect to the Shares, to vote, if
Shareholder is unable to perform his, her or its obligations under this Agreement, each of such Shares that Shareholder shall be entitled to so vote with respect to the matters set forth in Section 1 hereof at any meeting of the
shareholders of Company, and at any adjournment or postponement thereof,
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and in connection with any action of the shareholders of Company taken by written consent. Notwithstanding the foregoing, the holder of such proxy shall not exercise such irrevocable proxy on any
matter other than as set forth in Section 1. Shareholder intends this proxy to be irrevocable and coupled with an interest hereafter until the termination of this Agreement pursuant to the terms of Section 7 hereof, and
hereby revokes any proxy previously granted by Shareholder with respect to the Shares. This irrevocable proxy shall automatically terminate upon the termination of this Agreement.
Section 6. Specific Performance; Remedies; Attorneys Fees. Shareholder acknowledges that it is a condition to the
willingness of Buyer to enter into the Merger Agreement that Shareholder execute and deliver this Agreement and that it will be impossible to measure in money the damage to Buyer if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Buyer will not have an adequate remedy at law. Accordingly, Shareholder agrees that injunctive relief or other equitable remedy is the appropriate remedy for any such failure and will not oppose
the granting of such relief on the basis that Buyer has an adequate remedy at law. Shareholder further agrees that Shareholder will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with Buyers
seeking or obtaining such equitable relief. In addition, after discussing the matter with Shareholder, Buyer shall have the right to inform any third party that Buyer reasonably believes to be, or to be contemplating, participating with Shareholder
or receiving from Shareholder assistance in violation of this Agreement, of the terms of this Agreement and of the rights of Buyer hereunder, and that participation by any such persons with Shareholder in activities in violation of
Shareholders agreement with Buyer set forth in this Agreement may give rise to claims by Buyer against such third party.
Section 7. Term of Agreement; Termination. The term of this Agreement shall commence on the date hereof. This Agreement may
be terminated at any time prior to consummation of the transactions contemplated by the Merger Agreement by the mutual written agreement of the parties hereto, and shall be automatically terminated upon the earlier to occur of (i) the Effective
Time, or (ii) termination of the Merger Agreement. Upon such termination, no party shall have any further obligations or liabilities hereunder; provided, however, that such termination shall not relieve any party from liability for any breach
of this Agreement prior to such termination.
Section 8. Entire Agreement; Amendments. This Agreement supersedes all
prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and contains the entire agreement among the parties with respect to the subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an instrument in writing signed by each party hereto. No waiver of any provisions hereof by either party shall be deemed a waiver of any other provision hereof by any such
party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.
Section 9.
Severability. In the event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and the parties shall use their commercially reasonable efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purposes and
intents of this Agreement.
A-4
Section 10. Capacity as Shareholder. This Agreement shall apply to Shareholder
solely in his or her capacity as a shareholder of Company and it shall not apply in any manner to Shareholder in his or her capacity as a director of Company. Nothing contained in this Agreement shall be deemed to apply to, or limit in any manner,
the obligations of Shareholder to comply with his or her fiduciary duties as a director of Company, if applicable.
Section 11. Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the internal,
substantive laws of the State of Arkansas, without regard for the law or principles of conflict of laws.
Section 12.
WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT. EACH OF THE PARTIES HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.
Section 13. Waiver of Appraisal Rights; Further Assurances. Provided that the Merger is consummated in compliance with the
terms of the Merger Agreement, that the consideration offered pursuant to the Merger is not less than that specified in the Merger Agreement executed on or about the date hereof, and that this Agreement has not been terminated in accordance with its
terms, to the extent permitted by applicable law, Shareholder hereby waives any rights of appraisal or rights to dissent from the Merger or demand fair value for his or her Shares in connection with the Merger, in each case, that Shareholder may
have under applicable law. From time to time prior to the termination of this Agreement, at Buyers request and without further consideration, Shareholder shall execute and deliver such additional documents and take all such further action as
may be reasonably necessary or desirable to effect the actions and consummate the transactions contemplated by this Agreement. Shareholder further agrees not to commence or participate in, and to take all actions necessary to opt out of any class in
any class action with respect to, any claim, derivative or otherwise, against Buyer, Buyer Bank, Company, Company Bank or any of their respective successors relating to the negotiation, execution or delivery of this Agreement or the Merger Agreement
or the consummation of the Merger.
Section 14. Disclosure. Shareholder hereby authorizes Company and Buyer to publish
and disclose in any announcement or disclosure required by the Securities and Exchange Commission and in the Proxy Statement-Prospectus such Shareholders identity and ownership of the Shares and the nature of Shareholders obligations
under this Agreement.
A-5
Section 15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
[Signature Page
Follows.]
A-6
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of
the date first written above.
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BANK OF THE OZARKS, INC. |
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By: |
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Name: |
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Title: |
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SHAREHOLDER |
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Printed or Typed Name of Shareholder |
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By: |
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Name: |
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Title: |
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(NOTE: If Other than an Individual Shareholder, Print or Type Name of Individual Signing the Voting
Agreement and Representative Capacity)
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Total Number of Shares of Company Common Stock Subject to this Agreement: |
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A-7
Exhibit B
AGREEMENT AND PLAN OF MERGER BY AND BETWEEN
BANK OF THE CAROLINAS AND BANK OF THE OZARKS
THIS AGREEMENT AND PLAN OF MERGER (this Plan of Merger) is made and entered into as of the day of
, 2015, by and between Bank of the Ozarks (Buyer Bank) an Arkansas state banking corporation and wholly-owned subsidiary of Bank of the Ozarks, Inc.
(Buyer), and Bank of the Carolinas (Company Bank), a North Carolina chartered bank and wholly-owned subsidiary of Bank of the Carolinas Corporation (Company).
PREAMBLE
Each of the
Boards of Directors of Company Bank and Buyer Bank deems it advisable and in the best interest of each of their respective institutions and, subject to the merger of Company with and into Buyer (the Holding Company Merger) as
contemplated in that certain Agreement and Plan of Merger and Reorganization dated as of , 2015 by and among Buyer, Buyer Bank, Company and Company Bank
(the Holding Company Merger Agreement), for Company Bank to be merged with and into Buyer Bank (the Bank Merger) on the terms and conditions provided in this Plan of Merger. At the Effective Time of the Bank Merger, the
outstanding shares of common stock of Company Bank shall be cancelled, and Buyer Bank shall continue to conduct its business and operations as a wholly-owned, first-tier subsidiary of Buyer. It is intended that the Bank Merger for federal income tax
purposes shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE in consideration of the covenants and agreements contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Company Bank and Buyer Bank hereby make, adopt and approve this Plan of Merger in order to set forth the terms and conditions of the merger of Company Bank with and into Buyer Bank.
ARTICLE ONE
TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Plan of Merger, at the time the Bank Merger becomes effective under
applicable law (the Effective Time), Company Bank shall be merged with and into Buyer Bank in accordance with the provisions of and with the effect provided in North Carolina General Statute § 53C-7-201 et seq., as well as Arkansas
Code Annotated §§ 23-48-503, 23-48-901 et seq. and Subchapter 11 of the Arkansas Business Corporation Act, with the effect provided in Arkansas Code Annotated § 4-27-1110. Buyer Bank shall be the surviving bank resulting from the Bank
Merger (the Surviving Bank) and shall continue to be a state bank governed by the laws of the state of Arkansas. The Bank Merger shall be consummated pursuant to the terms of this Plan of Merger. The Bank Merger shall not be consummated
unless and until the Holding Company Merger has been consummated and all required regulatory approvals and shareholder approvals have been received.
B-1
1.2 Business of Surviving Bank. The business of the Surviving Bank from and after
the Effective Time shall be that of a state banking corporation organized under the laws of the state of Arkansas. The business of the Surviving Bank shall be conducted from its main office and at its legally established branches, which shall also
include all branches, whether in operation or approved but unopened, at the Effective Time.
1.3 Charter. The Articles of
Incorporation of Buyer Bank in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Bank immediately following the Effective Time, until otherwise amended or repealed.
1.4 Bylaws. The bylaws of Buyer Bank in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Bank
immediately following the Effective Time, until otherwise amended or repealed.
1.5 Directors and Officers.
(a) The directors of the Surviving Bank from and after the Effective Time shall consist of the incumbent directors of Buyer Bank, who shall
serve as directors of the Surviving Bank from and after the Effective Time in accordance with the bylaws of the Surviving Bank.
(b) The
principal officers of the Surviving Bank upon the Effective Time shall be the incumbent principal officers of Buyer Bank, who shall serve as officers of the Surviving Bank from and after the Effective Time in accordance with the bylaws and at the
pleasure of the board of directors of the Surviving Bank.
ARTICLE TWO
MANNER OF CONVERTING SHARES
2.1 Conversion of Shares. At the Effective Time, by virtue of the Bank Merger and without any action on the part of the holders
thereof, the shares of the constituent banks shall be converted as follows:
(a) Each share of Buyer Bank common stock issued and
outstanding at the Effective Time shall remain issued and outstanding from and after the Effective Time.
(b) Each share of Company Bank
common stock issued and outstanding at the Effective Time shall be cancelled upon the Effective Time, and no consideration shall be delivered in exchange therefor.
2.2 Exchange Procedures. Promptly after the Effective Time, the sole shareholder of Company Bank shall surrender the certificate
or certificates representing the common stock of Company Bank owned by it to the Surviving Bank.
B-2
ARTICLE THREE
TERMINATION
3.1
Termination. Notwithstanding any other provision of this Plan of Merger, and notwithstanding the approval of this Plan of Merger by the shareholders of Buyer Bank and Company Bank, this Plan of Merger shall be terminated and the Bank
Merger shall be abandoned automatically and without the necessity of any further action by any party in the event of the termination of the Holding Company Merger Agreement, and this Plan of Merger may be terminated and the Bank Merger abandoned at
any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Buyer Bank and the Board of Directors of Company
Bank; or
(b) By the Board of Directors of either Buyer Bank or Company Bank in the event that the Bank Merger shall not have been
consummated by October 31, 2015; or
(c) By the Board of Directors of either Buyer Bank or Company Bank in the event that any of the
conditions precedent to the consummation of the Bank Merger cannot, through no fault of the terminating party, be satisfied or fulfilled by October 31, 2015.
3.2 Effect of Termination. In the event of the termination and abandonment of this Plan of Merger pursuant to
Section 3.1 immediately preceding, this Plan of Merger shall become void and have no effect.
IN WITNESS WHEREOF, Company Bank
and Buyer Bank have entered into this Plan of Merger as of the date first set forth above.
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BANK OF THE CAROLINAS
a North Carolina chartered bank |
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BANK OF THE OZARKS
an Arkansas banking corporation |
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By: |
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By: |
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B-3
Exhibit C
FORM OF
NON-COMPETITION, NON-SOLICITATION, CONFIDENTIALITY AND
NON-DISPARAGEMENT AGREEMENT
THIS NON-COMPETITION, NON-SOLICITATION, CONFIDENTIALITY AND NON-DISPARAGEMENT AGREEMENT (this Agreement) is made as of
, 2015 (the Effective Date), by and among Bank of the Ozarks, Inc., an Arkansas corporation (Buyer), and
GLICK.BIZ, LLC (Selling Shareholder) and Harvey Glick, individually (Glick). Capitalized terms used herein that are not otherwise defined shall have the meanings assigned to them in that certain Agreement and
Plan of Merger and Reorganization, dated as of , 2015, by and among Buyer, Buyers wholly owned bank subsidiary, Bank of the Ozarks (Buyer
Bank), Bank of the Carolinas Corporation, a North Carolina corporation (Company), and Companys wholly owned bank subsidiary, Bank of the Carolinas (Company Bank) (the Merger
Agreement).
W I T N E S S E T H:
WHEREAS, the Merger Agreement provides for, among other things, the merger of Company with and into Buyer, with Buyer being the surviving
entity, and the merger of Company Bank with and into Buyer Bank, with Buyer Bank being the surviving entity, all for good and valuable consideration in the amount and on the terms and conditions provided therein; and
WHEREAS, Glick is the current Executive Chairman and beneficial owner of 5,000,000 shares, or approximately 1.082 % of the outstanding
common stock of Company held of record by the Selling Shareholder, and Glick is also the sole member of Selling Shareholder, and as a result of the transactions contemplated by the Merger Agreement and this Agreement, Selling Shareholder and, by
reason of his beneficial ownership of Selling Shareholder, Glick, are expected to receive significant consideration in exchange for the shares of Company common stock owned by Selling Shareholder, and significant consideration to be received by
Selling Shareholder and material benefit to be derived therefrom by Glick, pursuant to this Agreement; and
WHEREAS, the parties to this
Agreement acknowledge and agree that the banking business of the Company and Company Bank together, including counties where Company Banks banking offices currently exist and certain adjoining counties thereto, being more particularly
identified as the respective Counties of Cabarrus, Davidson, Davie, Forsyth, Guilford, Mecklenburg, Montgomery, Randolph, Rowan, Stanly, and Yadkin (all such counties being hereinafter collectively referred to as the Restricted
Area), constitute a valuable banking franchise within the state of North Carolina, attributable in part to the efforts and experience of Selling Shareholder and Glick, and that the banking business of Buyer and Buyer Bank together, in
areas adjoining or otherwise near certain of the counties in the Restricted Area, constitute a valuable banking franchise within the state of North Carolina; and
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WHEREAS, as a condition and inducement to Buyer and Buyer Bank to consummate the transactions
contemplated by the Merger Agreement, Selling Shareholder and Glick have agreed to enter into this Agreement with Buyer and Buyer Bank, in accordance with which Selling Shareholder and Glick will, among other things, agree during the Restricted
Term, as hereinafter defined, not to disclose Confidential Information, as hereinafter defined, of Company or Company Bank, not to compete, directly or indirectly, in the Restricted Area, with either Buyer or Buyer Bank, not to solicit employees of
Company, Company Bank, Buyer or Buyer Bank, and during and after the Restricted Term, not to make any false, defamatory or disparaging statements regarding or relating to any of Company, Company Bank, Buyer or Buyer Bank, all as more particularly
set forth below; and
WHEREAS, as a further condition and inducement to Selling Shareholder and Glick to enter into this Agreement, Buyer
and Buyer Bank will agree during and after the Restricted Term not to make any false, defamatory or disparaging statements regarding or relating to Selling Shareholder or Glick.
NOW, THEREFORE, the parties agree as follows:
Section 1. Consideration. In fair and appropriate consideration of the covenants, obligations and agreements of Selling
Shareholder and Glick in this Agreement, Buyer agrees to (i) enter into this Agreement and (ii) pay Selling Shareholder at the Closing of the transactions contemplated by the Merger Agreement the cash sum of Two Million Dollars
($2,000,000), payable to Selling Shareholder by wire transfer of immediately available funds.
Section 2. Covenant Not to
Compete. Selling Shareholder and Glick agree that for a period of three (3) years after the Closing Date (the Restricted Term), neither Selling Shareholder nor Glick will, within the Restricted Area, in one or a series of
transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in the business of commercial banking, whether as a proprietor, partner, stockholder, member, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, within the Restricted Area, in any commercial banking business or other venture which competes, directly or indirectly, with Buyer or Buyer Bank;
provided, however, that Selling Shareholder and Glick may, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to two percent (2%) of the capital stock of a company whose capital
stock is traded publicly. For purposes of this Agreement, commercial banking means the business of taking deposits, making secured or unsecured loans or engaging in any substantial activities in support of or related to such business.
Furthermore, each of Selling Shareholder and Glick represents, acknowledges and agrees that there are no other non-competition covenants, agreements and restrictions contained in any consulting or other agreements with Company or Company Bank that
will survive the Closing of the Merger Agreement.
Section 3. Non-Solicitation. Selling Shareholder and Glick agree that
during the Restricted Term neither of them will, nor will they cause any of their respective affiliates to, directly or indirectly, solicit, induce or attempt to induce, or cause any individual who, on the date of this Agreement or any time
thereafter and prior to the Closing, is an officer, manager or
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employee of Company, Company Bank or Buyer or Buyer Bank to leave the employ of Company, Company Bank, Buyer or Buyer Bank, or in any way materially interfere with the relationship between
Company, Company Bank, Buyer or Buyer Bank, on the one hand, and any such officer, manager or employee, on the other hand, provided, however, that the foregoing shall not prohibit the solicitation of any person for employment or other
affiliation by general advertisements for employment not specifically directed towards Buyer or Buyer Banks employees and the hiring of persons who respond to such advertisements. In addition, during the Restricted Term neither Selling
Shareholder nor Glick shall, to their Knowledge, directly or indirectly induce or attempt to induce any customer, supplier, licensee or other business relation of Company or Company Bank, or of Buyer or Buyer Bank, to cease doing business with Buyer
or Buyer Bank, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and Buyer or Buyer Bank. As used in this Section 3, Knowledge means, with respect to either
Selling Shareholder or Glick, that Glick has actual awareness or reasonably should have actual awareness of a relationship between Buyer or Buyer Bank and any such customer, supplier, licensee or business relation, including facts, statements and
reports, whether oral or written, or other information relating to such customer, supplier, licensee or business relation, all after reasonable inquiry under the circumstances.
Section 4. Confidentiality. Each of Selling Shareholder and Glick acknowledge that they and their affiliates and representatives
have or may have access to Confidential Information and that such Confidential Information does and will constitute valuable, special and unique property of Buyer from and after the Closing Date. Each of Selling Shareholder and Glick agree that
during the Restricted Term, neither of them will, directly or indirectly, and they will cause their affiliates and representatives not to, disclose, reveal, divulge or communicate to any Person other than Buyer and its affiliates and its and their
representatives, or use or otherwise exploit for their own benefit or for the benefit of anyone other than Buyer and its affiliates and its and their representatives any Confidential Information. For purposes of this Agreement, Confidential
Information shall mean any facts, data or information, whether oral or written, and in whatever medium, including electronic or digital format, (a) disclosed to Selling Stockholder or Glick or of which Selling Stockholder or Glick became
aware as a consequence of their relationship with Company or Company Bank; (b) having value to Company or Company Bank; and (c) not generally known to competitors of Company Bank or Buyer Bank, including but not limited to methods of
operation, prices, pricing strategies, costs, plans, designs, technology, inventions, trade secrets, know-how, software, marketing methods and strategies, policies, plans, personnel, suppliers, competitors, customers, customer data, market data and
other specialized information or proprietary information; provided, that Confidential Information does not include data or information that has been voluntarily disclosed to the public by Company or Company Bank prior to the date of the
Merger Agreement or with the express written consent of Buyer after such date, or has otherwise entered into the public domain through lawful means.
Section 5. Non-Disparagement.
(a) During and after the Restricted Term, Selling Shareholder and Glick agree that neither of them will, and they will cause their affiliates
not to, make any false, defamatory or disparaging statements about Buyer or Buyer Bank, any of their respective affiliates or the banking business of Buyer.
(b) During and after the Restricted Term, Buyer and Buyer Bank agree that neither of them will, and they will cause their affiliates not to,
make any false, defamatory or disparaging statements about Selling Shareholder or Glick or any of their respective affiliates.
C-3
Section 6. Amendment and Waiver. This Agreement may be amended and any provision of
this Agreement may be waived, provided that any such amendment or waiver shall be binding upon the parties hereto only if such amendment or waiver is set forth in a writing executed by Buyer, Selling Shareholder and Glick. No course of dealing
between or among any persons having any interest in this Agreement shall be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any party under or by reason of this Agreement.
Section 7. Notices. All notices, demands and other communications given or delivered under this Agreement shall be in writing and
shall be deemed to have been given when personally delivered, mailed by first class mail, return receipt requested, or delivered by express courier service or telecopy transmission, electronic delivery confirmed (with hard copy to follow). Notices,
demands and communications to Selling Shareholder, Glick and Buyer shall, unless another address is specified in writing, be sent to the address or facsimile number indicated below:
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Notices to Selling Shareholder or Glick:
Harvey Glick 6736 Lakeside Circle East
Worthington, Ohio 43085 |
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Notices to Buyer or Buyer Bank:
Bank of the Ozarks, Inc. 17901 Chenal Parkway
Little Rock, Arkansas 72223 |
Facsimile: |
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(206) 350-0407 |
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Attention: |
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Chief Executive Officer |
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Facsimile: |
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(501) 978-2205 |
With a copy (which shall not constitute notice) to:
Thompson Hine LLP
312 Walnut St., Suite 1400 Cincinnati, Ohio 45202 |
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Attention: |
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J. Shane Starkey, Esq. |
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Facsimile: |
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(513) 241-4771 |
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Section 8. Binding Agreement; Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, that, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by
Selling Shareholder or Glick without the prior written consent of Buyer. Without the prior written consent of Selling Shareholder or Glick, Buyer and its assigns may at any time, in its or their sole discretion, assign, in whole or in part its
rights and obligations pursuant to this Agreement to any other Person.
Section 9. Severability. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any
C-4
provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of this Agreement.
Section 10. Construction.
Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against either party, whether under any rule of construction or otherwise. No party to this Agreement shall be considered the draftsman. The parties
acknowledge and agree that this Agreement has been reviewed, negotiated, and accepted by all parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as fairly to accomplish the
purposes and intentions of all parties hereto.
Section 11. Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no
caption had been used in this Agreement.
Section 12. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.
Section 13.
Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by and construed in accordance with the internal, substantive laws of the State of Arkansas, without giving effect to
any choice of law or conflict of law provision (whether of the State of Arkansas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Arkansas. In the event of any dispute between the
parties regarding enforcement of this Agreement, Buyer, Selling Shareholder and Glick agree to the exclusive venue and jurisdiction in any state or federal court of record in Pulaski County, Arkansas, and agree and consent to the personal
jurisdiction of any such court over each of them.
Section 14. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER KNOWINGLY AND VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.
C-5
Section 15. Specific Performance. Each of Selling Shareholder and Glick acknowledges
that in the event of a breach by either of them of this Agreement, money damages may be inadequate and Buyer may have no adequate remedy at law. Accordingly, each of Selling Shareholder and Glick agree that Buyer shall have the right, in addition to
any other rights and remedies existing in its favor, to enforce its rights and Selling Shareholders and Glicks obligations under this Agreement not only by an action or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief (without the posting of bond or other security or any requirement to prove damages). If any such action is brought by Buyer to enforce this Agreement, each of Selling Shareholder and Glick hereby
waives the defense that there is an adequate remedy at law.
Section 16. Entire Agreement. This Agreement represents the
entire agreement between the parties relating to the subject matter covered hereby, and shall supersede any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter
hereof in any way and shall not be amended or waived except in a writing signed by the parties hereto.
[Signature Page Follows.]
C-6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
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BANK OF THE OZARKS, INC. |
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By: |
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Name: |
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Title: |
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GLICK.BIZ, LLC |
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By: |
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Name: |
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Title: |
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HARVEY GLICK, Individually |
[SIGNATURE PAGE TO
NON-COMPETITION, NON-SOLICITATION,
CONFIDENTIALITY
AND NON-DISPARAGEMENT AGREEMENT]
Exhibit 2.2
List of Schedules to Agreement and Plan of Merger and Reorganization
The following is a list of the subject matter of the schedules to the Agreement and Plan of Merger and Reorganization, which schedules were
omitted from Exhibit 2.1 pursuant to Item 6.01(b)(2) of Regulation S-K.
List of Subject Matters on Disclosure Schedules of Bank of the Carolinas
Corporation and its Subsidiaries:
Schedule 3.03 Capital Stock
Schedule 3.04 Subsidiaries
Schedule 3.07
Regulatory Approvals; No Defaults
Schedule 3.09 Regulatory Reports
Schedule 3.10 Absence of Certain Changes or Events
Schedule 3.11 Legal Proceedings
Schedule 3.12
Compliance with Laws
Schedule 3.13 Company Material Contracts; Defaults
Schedule 3.14 Agreements with Regulatory Agencies
Schedule 3.16 Employee Benefit Plans
Schedule 3.19
Tax Matters
Schedule 3.20 Investment Securities
Schedule 3.23 Loans; Nonperforming and Classified Assets
Schedule 3.30 Transactions with Affiliates
Schedule 3.31
Tangible Properties and Assets
Schedule 3.32 Intellectual Property
Schedule 3.33 Insurance
Schedule 3.36 Transaction
Costs
Schedule 5.01 Covenants of Company
Schedule
5.11 Employees; Benefit Plans
Schedule 8.01 Allowances
Exhibit 99.1
NEWS RELEASE
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Release Time: |
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3:05 p.m. CDT |
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Contact for Bank of the Ozarks: |
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Susan Blair (501) 978-2217 |
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Contact for Bank of the Carolinas: |
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Harvey Glick (614) 565-3200 |
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Date: |
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May 6, 2015 |
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Bank of the Ozarks, Inc. and Bank of the Carolinas Corporation
Enter into Definitive Merger Agreement
LITTLE ROCK, ARKANSAS/MOCKSVILLE, NORTH CAROLINA Bank of the Ozarks, Inc. (NASDAQ: OZRK) and Bank of the Carolinas Corporation (OTC
Pink: BCAR) jointly announced today the signing of a definitive agreement and plan of merger and reorganization (Agreement) whereby Bank of the Ozarks, Inc. (OZRK) will acquire Bank of the Carolinas Corporation
(BCAR) and its wholly-owned bank subsidiary, Bank of the Carolinas, in an all-stock transaction valued at approximately $64.7 million, or approximately $0.14 per BCAR share, subject to potential downward adjustments as described in the
Agreement. Closing of the transaction is expected to be immediately accretive to OZRKs book value per common share and its tangible book value per common share. The transaction is expected to be neutral to slightly accretive to OZRKs
diluted earnings per common share, excluding transaction costs, for the first twelve months after the transaction closes.
Bank of the
Carolinas operates eight offices in North Carolina between Charlotte and Winston-Salem. At March 31, 2015, BCAR had approximately $363 million of total assets, $279 million of loans and $314 million of deposits.
Harvey Glick, Chairman of the Board of Bank of the Carolinas Corporation stated, We are confident that the merger with Bank of the
Ozarks will be a great fit for our clients, employees and the communities we serve. Bank of the Ozarks larger loan limit and more robust products and services will have an immediate positive impact on our valued clients. We couldnt have
found a better merger partner.
George Gleason, Chairman and Chief Executive Officer of Bank of the Ozarks, Inc., commented,
We are pleased to announce the acquisition of Bank of the Carolinas, expanding our presence in the northern portion of the Charlotte MSA and providing our initial offices in the Piedmont Triad region of North Carolina. We opened our first
North Carolina office in Charlotte in 2001, and subsequently added North Carolina locations through the acquisitions of Woodlands Bank in 2010 and First National Bank of Shelby in 2013 and through de novo branches. This acquisition adds eight
North Carolina offices, bringing our North Carolina office count to 24. Customers of Bank of the Carolinas will continue to enjoy friendly hometown banking in addition to benefitting from a broader range of financial services.
Under the terms of the Agreement, which has been approved by the boards of directors of both companies, each holder of outstanding shares of
common stock of BCAR will receive shares of common stock of OZRK. The number of OZRK shares to be issued will be determined based on OZRKs ten day average closing stock price as of the second business day prior to the closing date, subject to
a minimum and maximum price of $29.28 and $48.80, respectively.
Upon the closing of the transaction, BCAR will merge into OZRK and Bank
of the Carolinas will merge into OZRKs wholly-owned bank subsidiary, Bank of the Ozarks. Completion of the transaction is subject to certain closing conditions, including customary regulatory approvals and approval by BCARs shareholders.
The transaction is expected to close in the third quarter of 2015, and will be OZRKs thirteenth acquisition since March, 2010.
In
addition to the information contained within this announcement, an Investor Presentation containing additional information regarding this transaction has been posted on OZRKs website www.bankozarks.com under Investor
Relations and on BCARs website at www.bankofthecarolinas.com under Investor Relations.
BCAR was advised by FIG Partners as financial advisor and Wyrick Robbins Yates & Ponton
LLP as legal counsel. OZRK was represented by the law firm of Kutak Rock LLP.
ABOUT BANK OF THE OZARKS, INC.
Bank of the Ozarks, Inc. is a bank holding company with $8.3 billion in total assets as of March 31, 2015 and trades on the NASDAQ Global
Select Market under the symbol OZRK. OZRK owns a state-chartered subsidiary bank that conducts banking operations through 165 offices in Arkansas, Georgia, North Carolina, Texas, Florida, Alabama, South Carolina, New York and California.
OZRK may be contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811. OZRKs website is: www.bankozarks.com.
ABOUT BANK OF THE CAROLINAS
Bank of the
Carolinas Corporation is the holding company for Bank of the Carolinas, a North Carolina chartered bank headquartered in Mocksville, NC with offices in Advance, Asheboro, Concord, Harrisburg, Landis, Lexington and Winston-Salem. The common stock of
Bank of the Carolinas Corporation is quoted under the symbol BCAR on the OTC Pink marketplace operated by OTC Markets Group Inc. BCAR may be contacted at (336) 751-5755 or at 135 Boxwood Village Drive, Mocksville, NC 27028.
BCARs website is www.bankofthecarolinas.com.
ADDITIONAL INFORMATION
This communication is being made in respect of the proposed merger transaction involving OZRK and BCAR. This communication does not constitute
an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. OZRK will file with the Securities and Exchange Commission (SEC) a registration statement on Form S-4 that will include a
prospectus of OZRK and a proxy statement of BCAR. OZRK also plans to file other documents with the SEC regarding the proposed merger transaction. BCAR will mail the final proxy statement/prospectus (the Merger Proxy Statement) to its
shareholders. The Merger Proxy Statement will contain important information about OZRK, BCAR, the proposed merger and related matters. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE MERGER PROXY STATEMENT AND ANY
OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The Merger Proxy Statement, as well other filings containing information about OZRK and BCAR will be available without
charge at the SECs Internet site (http://www.sec.gov). Copies of the Merger Proxy Statement and the filings that are incorporated by reference in the Merger Proxy Statement can also be obtained, when available, without charge from
OZRKs website (http://www.bankozarks.com) under the Investor Relations tab and on BCARs investor relations website (http://investor.bankofthecarolinas.com/).
OZRK and BCAR and their respective directors, executive officers and certain other members of
management and employees may be deemed participants in the solicitation of proxies from BCARs shareholders in connection with the merger transaction. You can find information about the directors and executive officers of OZRK in
its Annual Report on Form 10-K for the year ended December 31, 2014 and in its definitive proxy statement as filed with the SEC on February 27, 2015 and March 25, 2015, respectively. You can find information about the executive
officers and directors of BCAR in its Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the SEC on March 31, 2015.
CAUTION ABOUT FORWARD-LOOKING STATEMENTS
This communication contains certain forward-looking information about OZRK and BCAR that is intended to be covered by the safe harbor for
forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. In some cases, you can identify forward-looking
statements by words such as may, hope, will, should, expect, plan, anticipate, intend, believe, estimate, predict,
potential, continue, could, future or the negative of those terms or other words of similar meaning. These forward-looking statements include, without limitation, statements relating to the terms and
closing of the proposed transaction between OZRK and BCAR, the proposed impact of the merger on OZRKs financial results, including any expected increase in OZRKs book value and tangible book value per share and any expected impact on
diluted earnings per common share, acceptance by BCARs customers of OZRKs products and services, the opportunities to enhance market share in certain markets, market acceptance of OZRK generally in new markets, and the integration of
BCARs operations. You should carefully read forward-looking statements, including statements that contain these words, because they discuss the future expectations or state other forward-looking information about OZRK and BCAR. A
number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, many of which are beyond the parties control, including the parties ability to consummate the
transaction or satisfy the conditions to the completion of the transaction, including the receipt of shareholder approval, the receipt of regulatory approvals required for the transaction on the terms expected or on the anticipated schedule; the
parties ability to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction; the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be
realized within the expected time period; the risk that integration of BCARs operations with those of OZRK will be materially delayed or will be more costly or difficult than expected; the failure of the proposed merger to close for any other
reason; the effect of the announcement of the merger on employee and customer relationships and operating results (including, without limitation, difficulties in maintaining relationships with employees and customers); dilution caused by OZRKs
issuance of additional shares of its common stock in connection with the merger; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; general competitive,
economic, political and market
conditions and fluctuations; and the other factors described in OZRKs Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and in its most recent Quarterly Reports on
Form 10-Q filed with the SEC, or described in BCARs Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and in its most recent Quarterly Reports on Form 10-Q filed with the SEC. OZRK and BCAR assume no obligation to
update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
##
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Acquisition of Bank of the Carolinas Corporation
May 6, 2015
Exhibit 99.2 |
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Forward
Looking Information CAUTION ABOUT FORWARD-LOOKING STATEMENTS
This communication contains certain forward-looking information about Bank of the Ozarks,
Inc. (the Company) and Bank of the Carolinas Corporation (BCAR) that is intended to be covered by
the safe harbor for forward-looking statements provided by the Private
Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking
statements. In some cases, you can identify forward-looking statements by words such as
may, hope, will, should, expect, plan, anticipate, intend, believe, estimate, predict,
potential, continue, could, future or the
negative of those terms or other words of similar meaning. These forward-looking statements include, without limitation, statements relating to the
terms and closing of the proposed transaction between the Company and BCAR, the proposed
impact of the merger on the Companys financial results, including any expected increase in the
Companys book value and tangible book value per share and any expected impact on diluted
earnings per common share, acceptance by BCARs customers of the Companys products and services,
the opportunities to enhance market share in certain markets, market acceptance of the Company
generally in new markets, and the integration of BCARs operations. You should carefully read
forward-looking statements, including statements that contain these words, because they
discuss the future expectations or state other forward-looking information about the Company and BCAR.
A number of important factors could cause actual results or events to differ materially from
those indicated by such forward-looking statements, many of which are beyond the parties control,
including the parties ability to consummate the transaction or satisfy the conditions to
the completion of the transaction, including the receipt of shareholder approval, the receipt of regulatory
approvals required for the transaction on the terms expected or on the anticipated schedule;
the parties ability to meet expectations regarding the timing, completion and accounting and tax
treatments of the transaction; the possibility that any of the anticipated benefits of the
proposed merger will not be realized or will not be realized within the expected time period; the risk that
integration of BCARs operations with those of the Company will be materially delayed or
will be more costly or difficult than expected; the failure of the proposed merger to close for any other
reason; the effect of the announcement of the merger on employee and customer relationships
and operating results (including, without limitation, difficulties in maintaining relationships with
employees and customers); dilution caused by the Companys issuance of additional shares
of its common stock in connection with the merger; the possibility that the merger may be more expensive
to complete than anticipated, including as a result of unexpected factors or events; general
competitive, economic, political and market conditions and fluctuations; and the other factors described in
the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2014
and in its most recent Quarterly Reports on Form 10-Q filed with the SEC, or described in BCARs Annual
Report on Form 10-K for the fiscal year ended December 31, 2014 and in its most recent
Quarterly Reports on Form 10-Q filed with the SEC. The Company and BCAR assume no obligation to update
the information in this communication, except as otherwise required by law. Readers are
cautioned not to place undue reliance on these forward-looking statements that speak only as of the date
hereof.
ADDITIONAL
INFORMATION This communication is being made in respect of the
proposed merger transaction involving the Company and BCAR. This communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or approval. The Company will file
with the Securities and Exchange Commission (SEC) a registration statement on Form S-4 that will include a
prospectus of the Company and a proxy statement of BCAR. The Company also plans to file other
documents with the SEC regarding the proposed merger transaction. BCAR will mail the final proxy
statement/prospectus (the Merger Proxy Statement) to its shareholders. The Merger
Proxy Statement will contain important information about the Company, BCAR, the proposed merger and
related matters. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ
THE MERGER PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The Merger Proxy Statement, as well other filings containing information about the
Company and BCAR will be available without charge at the SECs Internet site (http://www.sec.gov). Copies of the Merger Proxy Statement and the filings that are incorporated by reference in the
Merger Proxy Statement can also be obtained, when available, without charge from the
Companys website (http://www.bankozarks.com) under the Investor Relations tab and on BCARs investor
relations website (http://www.investor.bankofthecarolinas.com). The Company and BCAR
and their respective directors, executive officers and certain other members of management and employees may be deemed participants in the solicitation of proxies from
BCARs shareholders in connection with the merger transaction. You can find information
about the directors and executive officers of the Company in its Annual Report on Form 10-K for the year
ended December 31, 2014 and in its definitive proxy statement as filed with the SEC on
February 27, 2015 and March 25, 2015, respectively. You can find information about the executive officers and
directors of BCAR in its Annual Report on Form 10-K for the year ended December 31, 2014
as filed with the SEC on March 31, 2015. |
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1
The purchase price may be adjusted downward to the extent, among other things, BCARs
consolidated net book value at closing (as adjusted) falls below
$45,500,000.
The
exchange
ratio
will
be
based
on
OZRKs
ten-day
average
closing
price
as
of
the
second
business
day
prior
to
closing
ranging
between
a
ceiling of $48.80 and a floor of $29.28.
2
Based on BCARs unaudited consolidated financial information as of March 31, 2015.
3
Adjusted for the estimated recapture of deferred tax asset and other estimated purchased
accounting entries. Transaction Overview |
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1
Amounts based on OZRKs unaudited consolidated financial information as of March 31,
2015. 2
Obtained from BCARs unaudited consolidated financial information as of March 31,
2015. Complementary Strategic Acquisition |
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Significant Expansion of North Carolina footprint
Addition of three metro-Charlotte area branches, eliminating the need for three
future de
novo
branches
Addition of five branches in the Piedmont Triad region
Expansion in these markets via acquisition is much more cost-effective than expansion
via de
novo
branches |
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Complements
our existing presence in North Carolina Increases our presence from 16 branches to 24
branches in North Carolina Efficient manner to expand in Charlotte MSA compared to
de novo
branching
OZRK had long-term plans to expand through de novo branching in the
Charlotte MSA
Majority of BCAR offices are in markets to support future growth
Expansion
into
Piedmont
Triad
region,
the
3
rd
largest
market
in
North Carolina
In recent quarters, BCAR has shown improving trends in asset
quality and financial performance putting OZRK in a strong
position to launch its business strategy in these new markets
Complementary Franchise |
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Pro
forma
total
assets
of
$8.6
billion
1
Immediately accretive to book value and tangible book value
Increases our presence in North Carolina, including addition of
several markets with significant growth potential
Thirteenth acquisition by OZRK since March 2010
OZRK continues to actively pursue additional acquisition
opportunities
1
Includes total unaudited consolidated assets of OZRK and BCAR as March 31, 2015; for
illustrative purposes only and does not indicate actual results of combined
company. Summary |
Exhibit 99.3
You have a
friend hereTM
Value-based strategy. People-centered approach.
Building meaningful relationships with our customers has made us the strong bank we are today.
-Chairman and CEO George Gleason
In 1979, George
Gleason had a vision to create a bank where people would genuinely want to do business. And today, that bank not only exists, its nationally recognized for providing safe, sound and secure banking solutions and customer service unmatched in
the market place.
From the beginning, Mr. Gleason has instilled a personal commitment to excellence, fair
dealing and exceptional customer service, and
has built his team with individuals having the same mindset. The
philosophy has always been to do whats best for the customer; first by listening to and understanding their needs, and then by helping them find the best financial solutions.
This values-based strategy influences all the Banks decisions and has kept Bank of the Ozarks strong throughout the
financial crisis of the mid- to late 2000s.
The Banks goal is not necessarily to be the largest
financial institution but to simply be the best one. Regardless of organizational size, we will always be deeply committed to developing friendships with our customers and relationships with the communities we serve. Our success is built upon
our exceptional service to every customer, large and small and we will keep that truth in focus as we build on our past.
1903
Newton County Bank chartered in Jasper,
Arkansas
1937
Bank of Ozark chartered in Ozark, Arkansas
1979
Gleason purchases Bank of Ozark
1983
Gleason purchases Newton County Bank;
assumes charter
1994
With five offices, launches de novo branching plan; changes name to Bank of the Ozarks
1995
Relocates headquarters to Little Rock,
Arkansas
1997
Bank of the Ozarks, Inc., holds initial public stock offering (OZRK)
1998
Begins Central Arkansas expansion
2002
Becomes $1 billion organization based on assets
2003
Celebrates 100th anniversary
2004
Pushes de novo expansion into Texas with three offices
2005
Becomes $2 billion organization based on assets
2006
Opens 11 new offices, a Company record
2008
Becomes $3 billion organization based on assets
Opens new headquarters in Little Rock, Arkansas
2009
Named second- and third-best performing bank
in America by ABA Banking Journal and U.S. Banker
2010
Named second-best performing bank in America by Bank Director magazine
George Gleason named Community Banker of the Year by American Banker magazine
2011 & 2012
Named best performing bank in America by ABA Banking Journal
2012
Named best performing regional bank in
America by SNL Financial
2013 & 2014
Named best performing bank in America by Bank Director
2015
Named best performing regional bank in America by SNL Financial
This
Transition Is All About PeopleA Powerful Union Of Two Community Bank Teams.
Carefully Considered
Well Thought-Out
Customer Friendly
Shareholder Friendly
Employee Friendly
A Union Of Two Companies Striving For Excellent Results And Excellent Growth
Hard Work
A Focus on Every Detail
A Consistent Pursuit of Excellence
The goal is not to be good; not even great; but truly excellent in every respect!
Disciplined and Smart Growth
Good enough is
never good enough
if we can do any better.
Getting it right is important to many people.
The Mission Statement
Our mission is to be the best banking organization in each of the markets we serve as determined by our customers, shareholders, employees and regulators.
We strive to be the best bank for customers by offering a broad array of banking products and services at competitive
prices and with the highest quality of personal service.
We strive to be the best bank for shareholders by
maximizing long-term value through strong year-to-year growth in assets, loans, deposits and net income while maintaining profit margins, asset quality and operating efficiency more favorable than industry averages.
We strive to be the best bank for our employees by providing favorable compensation and benefits, opportunities for growth
and advancement, a share in the success of the company, and a positive workplace and culture.
We strive to be
the best bank for regulators by adhering to safe, sound and prudent banking practices, striving to comply with all applicable laws and regulations, and giving appropriate attention to capital adequacy, asset quality, management, earnings, liquidity
and market sensitivity.
Excellence Recognized
Community Banker of the Year:
American Banker, December 2010
Ranked top
performing bank:
ABA Banking Journal, April 2011
Ranked top performing bank:
ABA Banking Journal, April 2012
Ranked top
performing Regional bank:
SNL Financial, April 2012
Ranked top performing bank:
Bank Director Magazine, August 2013
You have a
friend here®
Ranked top performing bank:
Bank Director Magazine, August 2014
Ranked top performing bank:
SNL Financial, April
2015
The Plan:
Together we will Enhance our Carolinas Franchise
What Happens Next
Its business as usual take great care of our customers
Cooperate with our teams who will help you prepare for the future
Filing for regulatory approvals
Anticipate closing in August or September 2015
Post closing we will operate as Bank of the Ozarks
Training on Bank of the Ozarks policies and culture
Systems conversions planned for November 2015.
You will receive outstanding support and training so you can confidently and
comfortably continue to deliver the highest levels of customer service
What Your Customers Need To Know
Its
business as usual Nothing will change for many months, and customers should not experience any negative impacts from the transaction
We are still going to be here for youBank of the Ozarks shares a commitment to exceptional customer service and no changes are planned for offices or any staff dealing
with customers
Bank of the Ozarks is one of Americas strongest banks bringing unparalleled safety,
soundness and security to our customers
After our systems are converted, our customers will have access to
approximately 173 offices and exciting new banking products and services
Bottom line: This combination
will be great for our customers
Refer to bankozarks.com for more information about Bank of the Ozarks
The
Ultimate Goal
A continued dual focus on these three disciplines plus building great customer relationships
should lead to achievement of our goals.
High Margins High Credit Quality
High Efficiency
Building on Your Great Customer Relationships
Loans
High Quality Growth
Deposits
These Goals Include:
Top decile net interest margin
Top decile net
charge-off ratio
Top decile efficiency ratio
Organic balance sheet growth approaching 25% per annum compounded
Answers to
Questions You May Have
Bank of the Ozarks, Inc., the holding company for Bank of the Ozarks, and Bank of the
Carolinas Corporation, the holding company for Bank of the Carolinas, announced on May 6, 2015 that
the
two companies entered into a definitive agreement and plan of merger and reorganization. The transaction is expected to close during the third quarter of 2015. The combined companies and banks will operate as Bank of the Ozarks, Inc. and Bank of the
Ozarks.
What should I know about this merger?
Bank of the Carolinas and Bank of the Ozarks are working closely to make this transition as seamless and smooth as
possible.
All deposit account types and account numbers will remain the same and customers will continue to
use their existing checks, ATM/debit cards and online and mobile banking/bill pay services and make loan payments as usual.
At this time, no changes to banking hours, policies, products, interest rates, staff, and, most importantly, the banking culture are expected. Its business as usual.
Bank of the Carolinas will retain its name until the transaction is officially completed, which is expected to be during
the third quarter of 2015. At that time all locations will operate under the Bank of the Ozarks name.
Bank of
the Carolinas employees and customers will still originate accounts using Bank of the Carolinas products and services until the Bank of the Carolinas and Bank of the Ozarks operating systems are combined, which is currently planned for Mid-November
2015. There will be a period of time from the closing of the transaction in the third
quarter of 2015 until
the operating systems are combined in Mid-November 2015, when the former Bank of the Carolinas offices will operate as Bank of the Ozarks, but continue to offer the former Bank of the Carolinas products and services.
Do customers need to do anything about their account(s)?
There is no need to do anything. Customers can continue banking exactly as they have been. Customers can continue to
access their money by writing checks, using ATM and debit cards and/or online and mobile banking. Checks drawn on Bank of the
Carolinas will continue to be accepted. Loan payments should also continue to be made as usual.
Customers of both banks can expect to have a high level of convenience and customer service and expanded banking locations once the transaction is officially completed and banking systems
are combined.
Advance notice will be given to customers prior to any material change to
their account(s).
Will customers checking/savings/CD account(s) number change?
All account numbers will remain the same at this time. If any changes to account numbers are required in the future, we will communicate such changes to any affected customers well in
advance of those changes.
What about
direct deposits/Social Security?
Current arrangements for direct deposit(s), including Social Security checks,
will continue as normal without interruption.
What about online banking access?
Bank of the Carolinas customers will continue to access online banking through bankofthecarolinas.com and no changes to
online services will occur until the banking systems are combined.
Are deposits still safe?
Yes! Deposits with Bank of the Carolinas and Bank of the Ozarks are safe, sound and readily accessible. All deposit
accounts, which include checking, savings, money market, CDs and retirement accounts, will become Bank of the Ozarks accounts, regardless of the amount, upon closing of the transaction, which is expected to be in the third quarter of 2015.
Why did Bank of the Carolinas and Bank of the Ozarks decide to merge?
The merger brings together two banks committed to excellence for their customers, shareholders and employees. The combined
banks increased lending capacity, expanded footprint and combined capabilities position it well to continue meeting the needs and growing expectations of customers, shareholders and employees.
How will the merger impact customers?
The combined banks increased lending capacity, expanded footprint and combined technology capabilities will allow us to give our customers better access to the financial resources
and the state-of-the-art technology they need to be successful.
What will be the name of the new bank?
Upon closing, Bank of the Carolinas will adopt the Bank of the Ozarks name and the holding company will be
Bank of the Ozarks, Inc.
When will the merger be official? How will customers be notified?
The transaction is expected to close in the third calendar quarter of 2015 following the receipt of all customary
regulatory approvals and the approval of Bank of the Carolinas Corporations shareholders. All customers will be notified in writing and online at closing.
Should customers expect any changes to the personalized customer service and banking experience they currently enjoy?
Bank of the Ozarks and Bank of the Carolinas share a commitment to serving customers with excellence, and customers can
expect this to continue.
Will there
be any new products or offerings as a result of the combined bank?
The combined banks create a stronger
organization with the capital, funding, infrastructure and leadership to support continued expansion of products and services, giving our customers access to excellent banking products and technology.
Will any banking offices be consolidated?
No, we do not plan to consolidate any banking offices.
Should we slow down our business development activities?
Bank of the Carolinas and Bank of the Ozarks have achieved outstanding growth. We have expectations for continued growth and expansion as we move forward together. The staff of both banks
will continue to strive to develop new business and customer relationships.
Whats the benefit to the
bank given our recent track record of strong growth?
The merger will expand our loan platform for continued
growth and increase our legal lending limit as well as expand our scale and footprint.
Can we expect any
changes to our culture?
Our culture will continue to flourish in the way we interact with customers, operate
in our communities and invest for the future. Both Bank of the Carolinas and Bank of the Ozarks share a focus on driving continued, meaningful growth and delivering excellent, personalized customer service that has been a hallmark of both companies
over the years.
What should I do if someone from the media contacts me?
Employees, officers and directors who are not authorized spokespersons should refer all requests to Susan Blair, Executive
Vice President, Bank of the Ozarks. Susan can be reached at (501) 978-2217 or sblair@bankozarks.com. If for any reason Susan is not
available, please take a message (name, publication, contact information) and forward it to her.
Who should I talk to with questions?
You should
direct any questions or concerns to your direct supervisor.
Where will our official bank headquarters be?
The combined banks official headquarters will be in Little Rock, Arkansas.
For more information about Bank of the Ozarks, please visit bankozarks.com.
Bank of
the Ozarks by the Numbers
With a solid record of long-term growth in loans, deposits and earnings, Bank of the
Ozarks has earned respect as a great place to do business and build successful relationships.
We are
successful because we always remain focused on strong fundamentals of banking: great customer service, prudent lending practices and sound management.
Ranked the top-performing bank by SNL Financial (2015, 2012)
Ranked the top-performing bank by Bank Director Magazine (2013, 2014)
Ranked the top-performing bank in the U.S. by ABA Banking Journal (2011 & 2012)
Rated as well capitalized the highest available regulatory rating
Publicly traded company on the NASDAQ Global Select Market, symbol OZRK
Headquartered in Little Rock, Arkansas
Chartered
in March 1903, a 112-year heritage
*As of March 31, 2015
OFFICES
165
Company Highlights
ATMS ASSET SIZE
163$8.3 billion*
2015 NET INCOME
$139.9 million*
DEPOSITS
$5.05 billion*
TOTAL LOANS & LEASES
$6.35 billion*
TOTAL COMMON EQUITY
$1.18 billion*
Current Communities
ADDITIONAL
INFORMATION
This communication is being made in respect of the proposed merger transaction involving Bank of
the Ozarks, Inc. (the Company) and Bank of the Carolinas Corporation (BCAR). This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or
approval. The Company will file with the Securities and Exchange Commission (SEC) a registration statement on Form S-4 that will include a prospectus of the Company and a proxy statement of BCAR. The Company also plans to file other
documents with
the SEC regarding the proposed merger transaction. BCAR will mail the final proxy
statement/prospectus (the Merger Proxy Statement) to its shareholders. The Merger Proxy Statement will contain important information about the Company, BCAR, the proposed merger and related matters. BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION, INVESTORS ARE URGED TO READ THE MERGER PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION. The Merger Proxy Statement, as well other filings containing information about the Company and BCAR will be available without charge at the SECs Internet
site (http://www.sec.gov). Copies of the Merger Proxy Statement and the filings that are incorporated by reference in the Merger Proxy Statement can also be obtained, when available, without charge from the Companys website
(http://www.bankozarks.com) under the Investor Relations tab and on BCARs investor relations website (http://www.investor.bankofthecarolinas.com).
The Company and BCAR and their respective directors, executive officers and certain other members of management and employees may be deemed participants in the solicitation of
proxies from BCARs shareholders in connection with the merger transaction. You can find information about the directors and executive officers of the Company in its Annual Report on Form 10-K for the year ended December 31, 2014 and in
its definitive proxy statement as filed with the SEC on February 27, 2015 and March 25, 2015, respectively. You can find information about the executive officers and directors of BCAR in its Annual Report on Form 10-K for the year ended
December 31, 2014 as filed with the SEC on March 31, 2015.
CAUTION ABOUT FORWARD-LOOKING STATEMENTS
This communication contains certain forward-looking information about the Company and BCAR that is intended to
be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. In some cases, you can
identify forward-looking statements by words such as may, hope, will, should, expect, plan, anticipate, intend, believe,
estimate, predict, potential, continue, could, future or the negative of those terms or other words of similar meaning. These forward-looking statements include, without
limitation, statements relating to the terms and closing of the proposed transaction between the Company and BCAR, the proposed impact of the merger on the Companys financial results, including any expected increase in the Companys book
value and tangible book value per share and any expected impact on diluted earnings per common share, acceptance by BCARs customers of the Companys products and services, the opportunities to enhance market share in certain markets,
market acceptance of the Company generally in new markets, and the integration of BCARs operations. You should carefully read forward- looking statements, including statements that contain these words,
because they discuss the future expectations or state other forward-looking information about the Company and BCAR. A number of important factors could cause actual results or events to differ
materially from those indicated by such forward-looking statements, many of which are beyond the parties control, including the parties ability to consummate the transaction or satisfy the conditions to the completion of the transaction,
including the receipt of shareholder approval, the receipt of regulatory approvals required for the transaction on the terms expected or on the anticipated schedule; the parties ability to meet expectations regarding the timing, completion and
accounting and tax treatments of the transaction; the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period; the risk that integration of BCARs
operations with those of the Company will be materially delayed or will be more costly or difficult than expected; the failure of the proposed merger to close for any other reason; the effect of the announcement of the merger on employee and
customer relationships and operating results (including, without limitation, difficulties in maintaining relationships with employees and customers); dilution caused by the Companys issuance of additional shares of its common stock in
connection with the merger; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; general competitive, economic, political and market conditions and fluctuations;
and the other factors described in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and in its most recent Quarterly Reports on Form 10-Q filed with the SEC, or described in BCARs Annual Report on
Form 10-K for the fiscal year ended December 31, 2014 and in its most recent Quarterly Reports on Form 10-Q filed with the SEC. The Company and BCAR assume no obligation to update the information in this communication, except as otherwise
required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
Member
FDIC. © Copyright 2014 Bank of the Ozarks
bankozarks.com