Registration No. 333-33802
As filed with the Securities and Exchange Commission on May 4, 2000
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
AMENDMENT NUMBER 1 TO
FORM S-3
Registration Statement
under
the Securities Act of 1933
-------------------------
UNITED COMMUNITY BANKS, INC.
(Exact name of Registrant as specified in its charter)
-------------------------
Georgia 6712 58-1807304
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
Post Office Box 398
63 Highway 515
Blairsville, Georgia 30512
(706) 745-2151
-------------------------------------------------------------
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Mr. Christopher J. Bledsoe
Chief Financial Officer
United Community Banks, Inc.
Post Office Box 398
63 Highway 515
Blairsville, Georgia 30512
(706) 745-2151
---------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
F. Sheffield Hale, Esq.
Kilpatrick Stockton LLP
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 30309
(404) 815-6500
Approximate date of commencement of the proposed sale to the public: AS
SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are being
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434 please check the following box. / /
CALCULATION OF REGISTRATION FEE
==================================================================================================================-
Proposed Proposed Amount
Title of Each Class of Proposed Maximum Minimum Maximum of
Securities to be Amount to be Offering Price Aggregate Aggregate Registration
Registered Registered Per Share Offering Price Offering Price Fee
- ----------------------- ----------------- ----------------- ----------------- ------------------ --------------
Common stock, par 450,000 $38.00 $13,300,000 $17,100,000
value $1.00 per share
======================= ================= ================= ================= ================== ===================
Estimated solely for the purpose of computing the registration fee
Previously paid in connection with this Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
UNITED COMMUNITY BANKS, INC.
A Minimum of 350,000 Shares and a Maximum of 450,000 Shares of Common Stock
----------
United Community Banks, Inc. hereby offers for sale a minimum of
350,000 shares and a maximum of 450,000 shares of our common stock at a price of
$38.00 per share. In the State of Georgia, the common stock offered hereby will
be sold by certain of our executive officers, and no commissions will be paid on
such sales. To comply with securities requirements of the State of North
Carolina, we have engaged Wachovia Securities, Inc. to act as a broker-dealer
for our account in effecting offers and sales of our common stock to investors
in North Carolina. Wachovia Securities will receive a fee of $40,000 for these
services. Subscription proceeds for 350,000 shares must be deposited in an
interest bearing account with SunTrust Bank by the date that is 30 days from the
date of this prospectus unless extended to the date that is up to 90 days from
the date of this prospectus, or the offering will terminate and subscription
funds will be returned to subscribers.
The shares of common stock are being offered first to existing
shareholders for a period commencing on the date of this prospectus and ending
on the close of business on May 22, 2000. We may, in our discretion, allow
shareholders to elect to have entities related to such shareholders, such as
qualified retirement plans, purchase our common stock if permitted by, and
subject to the terms and conditions of, such qualified retirement plans.
Thereafter, the common stock offered hereby that has not been subscribed will be
offered to members of the general public who are residents of the States of
Georgia, North Carolina, and Tennessee and to existing shareholders. See "The
Offering."
Our common stock is not traded on the Nasdaq National Market System or
any national securities exchange; therefore, there is no established public
market for the common stock. The offering price of $38.00 per share of common
stock was determined by our Board of Directors. For information relating to the
factors considered in determining the offering price to the public, see
"Determination of Offering Price."
----------
See "Risk Factors" for a discussion of certain factors
that should be considered in connection with an investment in
the securities offered hereby.
----------
These securities have not been approved or disapproved by the
Securities and Exchange Commission or any state securities commission, nor has
the Securities and Exchange Commission or any state securities commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
----------
The securities offered hereby are not savings or deposit accounts or
other obligations of a bank, and they are not insured by the Bank Insurance Fund
of the Federal Deposit Insurance Corporation or any other government agency.
==================================================================================================================================
Price to Public Underwriting Discounts and Proceeds to United
Commissions
- ----------------------------------------------------------------------------------------------------------------------------------
Per Share of Common Stock...................... $38.00 $38.00
Minimum........................................ Not applicable $13,260,000
Maximum........................................ Not applicable $17,060,000
==================================================================================================================================
Before deducting expenses payable by us, estimated at $80,250 but
including the $40,000 payable to Wachovia Securities as provided in
footnote 2.
Wachovia Securities, Inc. will receive a fee of $40,000 for effecting
sales of common stock on our behalf in the State of North Carolina.
The date of this prospectus is May 8, 2000.
Prospectus Summary
The following summary is qualified in its entirety by the more detailed
information and financial statements, and the notes related thereto, appearing
elsewhere in this prospectus.
The Company
United Community Banks, Inc. is a registered bank holding company based in
Blairsville, Georgia, which commenced operations in 1988 by acquiring 100% of
the outstanding stock of Union County Bank, now known as United Community Bank.
All of our activities are currently conducted by our wholly-owned subsidiaries:
o United Community Bank, Blairsville, Georgia, organized in
1950;
o Carolina Community Bank, Murphy, North Carolina, acquired in
1990
o Peoples Bank, Blue Ridge, Georgia, acquired in 1992;
o Towns County Bank, Hiawassee, Georgia, acquired in 1992;
o White County Bank, Cleveland, Georgia, acquired in 1995;
o First Clayton Bank and Trust, Clayton, Georgia, acquired in
1997;
o Bank of Adairsville, Adairsville, Georgia, acquired in 1999;
and
o 1st Floyd Bank, Rome, Georgia, acquired in 1999.
We operate two consumer finance companies: United Family Finance Co.,
which operates two offices in Georgia, and United Family Finance Co. of North
Carolina, which operates two offices in North Carolina. The Mortgage People
Company, a division of United Community Bank, is a full-service retail mortgage
lending operation approved as a seller/servicer for Federal National Mortgage
Association and Federal Home Mortgage Corporation. In addition, we own an
insurance agency, United Agencies, Inc.
At December 31, 1999, we had total consolidated assets of approximately
$2.1 billion, total loans of approximately $1.4 billion, total deposits of
approximately $1.6 billion, and shareholders' equity of approximately $96.3
million.
Recent Developments
On March 3, 2000, we entered into an agreement to acquire North Point
Bancshares, Inc., Dawsonville, Georgia, in exchange for 958,211 shares of our
common stock. As of December 31, 1999, North Point had $106.3 million in total
consolidated assets, $96.6 million of total deposits, and $9.2 million of total
shareholders' equity.
On March 3, 2000, we entered into an agreement to acquire Independent
Bancshares, Inc., Powder Springs, Georgia, in exchange for 870,598 shares of our
common stock. As of December 31, 1999, Independent had $145.1 million in total
assets, $123.4 million of total deposits, and $13.1 million of total
shareholders' equity.
At our shareholders' meeting to be held in the second quarter of 2000, our
shareholders will be asked to approve an increase in our authorized common stock
from 10,000,000 shares to 50,000,000 shares to provide sufficient shares to
issue in the North Point and Independent acquisitions. The closings of these
acquisitions are conditioned upon our shareholders' approval of the increase in
common stock. We have sufficient shares of common stock currently available to
issue to subscribers in this offering.
Our executive offices are located at 63 Highway 515, Blairsville, Georgia
30512, and our telephone number is (706) 745-2151.
The Offering
Common Stock
Common stock offered.................................... A minimum of 350,000 shares and a maximum of
450,000 shares.
Common stock deemed outstanding before the
offering .......................................... 8,442,990 shares as of May 1, 2000, including
140,000 shares deemed outstanding pursuant to our
debentures that are due December 31, 2006, and
presently exercisable options to acquire 267,122
shares issued pursuant to the our stock option
plan.
Common stock deemed outstanding after the
offering........................................... 8,892,990 shares (including shares underlying the
outstanding debentures and options and assuming
that 450,000 shares are sold in this offering).
Use of Proceeds............................................ To provide capital for our subsidiary banks and
for other corporate purposes. See "Use of
Proceeds."
How to Subscribe........................................... See page 6 for instructions on subscribing for
common stock.
2
United Community Banks, Inc.
Summary Consolidated Financial Information
(In thousands, except per share data)
December 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Balance Sheet Data
Total assets ................................. $2,131,440 $1,591,399 $1,216,693 $926,844 $738,651
Loans, gross ................................. 1,400,360 1,061,165 872,499 662,245 489,260
Deposits ..................................... 1,649,392 1,238,323 1,033,756 809,149 660,146
Trust preferred securities ................... 21,000 21,000 0 0 0
Convertible subordinated debentures .......... 3,500 3,500 3,500 3,500 3,500
Long term debt ............................... 222,255 143,771 31,575 33,515 15,810
Stockholders' equity ......................... $ 96,270 93,836 80,086 62,357 53,126
Income Statement Data
Net interest income .......................... $ 67,974 56,210 45,718 35,461 26,076
Provision for loan losses .................... 5,104 2,612 2,814 1,751 1,128
Non-interest income .......................... 10,836 9,129 7,200 5,866 4,698
Non-interest expense ......................... 54,165 43,964 34,063 26,341 20,165
Income taxes ................................. 5,893 5,990 4,987 4,180 2,634
Net income ................................... $ 13,648 12,773 11,054 9,055 6,847
Per Share Data
Book value................................ $ 11.98 11.72 10.15 8.21 7.13
Basic net income ............................. 1.70 1.60 1.42 1.22 0.99
Diluted net income ........................... 1.66 1.57 1.40 1.20 0.97
Cash dividends declared ...................... $ 0.20 0.15 0.10 0.10 0.08
Weighted average outstanding shares .......... 8,020 7,973 7,810 7,399 6,919
Ratios
Return on average assets ..................... 0.72% 0.94% 1.03% 1.11% 1.08%
Return on average stockholders' equity ....... 14.33% 14.84% 15.54% 15.64% 15.06%
Net interest margin, taxable equivalent ...... 3.98% 4.60% 4.66% 4.86% 4.65%
Average stockholders' equity to average assets 5.02% 6.35% 6.60% 7.08% 7.20%
Excluding merger-related charges
Net income ................................... $ 14,803 12,773 11,054 9,055 6,847
Basic net income per share ................... 1.85 1.60 1.42 1.22 0.99
Diluted net income per share.................. $ 1.80 1.57 1.40 1.20 0.97
Return on average assets ..................... 0.78% 0.94% 1.03% 1.11% 1.08%
Return on average stockholders' equity ....... 15.54% 14.84% 15.54% 15.64% 15.06%
- --------------
Represents shareholders' equity divided by the number of outstanding shares
at period end.
Amounts and ratios exclude the impact of merger-related charges recorded in
1999 totaling $1.2 million, net of tax, in connection with the merger of United
Community Banks, Inc. and 1st Floyd Bankshares, Inc.
3
Risk Factors
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, BEFORE
PURCHASING ANY OF THE SECURITIES OFFERED HEREBY.
ARBITRARILY DETERMINED PUBLIC OFFERING PRICE MAY BE HIGHER THAN THE MARKET PRICE
OF THE COMMON STOCK AFTER THE OFFERING
You may not be able to resell the common stock for the offering price
or for any other amount because we arbitrarily determined the offering price.
Our common stock is not traded on the Nasdaq Stock Market or a national
securities exchange; therefore, we could not set the public offering price with
reference to historical measures of our common stock's price performance in an
active trading market. We did not retain an independent investment banking firm
to assist in determining the offering price.
Please note that these securities are not bank accounts or deposits nor
are they insured by the FDIC or any other state or federal agency.
An active trading market may not develop
Your purchase of our common stock may not be a liquid investment
because no public trading market currently exists for our common stock. We are
currently considering listing our stock on the Nasdaq Stock Market. There can be
no assurance as to when, if ever, the stock will be listed. You should consider
carefully the limited liquidity of your investment before purchasing any shares
of our common stock. Wachovia Securities has not undertaken to, and will not,
make a market in our common stock following the offering and we are not aware of
anyone who intends to make a market in our common stock. Factors such as the
limited size of the offering and the fact that our common stock will not be
listed mean that an active and liquid market for our common stock probably will
not develop in the near future. If a trading market does develop, it may not
continue and you may not be able to sell your shares at or above the price at
which these shares are being offered to the public.
The shares of common stock offered hereby will not be subject to any
specific restrictions on transfer (with the exception of securities purchased by
our directors, officers, and other affiliates) and will be freely transferable
immediately upon issuance.
Changes in interest rates may adversely affect our business
Changes in net interest income. Our profitability is significantly
-------------------------------
dependent on net interest income, which is the difference between interest
income on interest-earning assets, such as loans, and interest expense on
interest-bearing liabilities, such as deposits. Therefore, any change in general
market interest rates, whether as a result of changes in monetary policies of
the Federal Reserve Board or otherwise, can have a significant effect on net
interest income. Our assets and liabilities may react differently to changes in
overall market rates or conditions because there may be mismatches between the
repricing or maturity characteristic of assets and liabilities. As a result,
changes in interest rates can affect net interest income in either a positive or
negative way.
4
Changes in the yield curve. Changes in the difference between short and
long-term interest rates, commonly known as the yield curve, may also harm our
business. For example, short-term deposits may be used to fund longer-term
loans. When differences between short-term and long-term interest rates shrink
or disappear, the spread between rates paid on deposits and received on loans
could narrow significantly, decreasing our net interest income.
Forward-Looking Statements
This prospectus contains statements about future events and
expectations which are characterized as forward-looking statements.
Forward-looking statements are based on management's beliefs, assumptions, and
expectations of our future economic performance, taking into account the
information currently available to them. These statements are not statements of
historical fact. Forward-looking statements involve risks and uncertainties that
may cause our actual results, performance, or financial condition to differ
materially from the expectations of future results, performance, or financial
condition we express or imply in any forward-looking statements. Factors that
could contribute to these differences include those discussed in "Risk Factors"
and in other sections of this prospectus. The words believe, may, will, should,
anticipate, estimate, expect, intend, objective, seek, strive, or similar words,
or the negatives of these words, identify forward-looking statements. We qualify
any forward-looking statements entirely by these cautionary factors.
5
The Offering
We are offering for sale to the public a minimum of 350,000 shares and
a maximum of 450,000 shares of common stock at a price of $38.00 per share. In
the States of Georgia and Tennessee, the common stock offered hereby will be
sold by certain of our executive officers, and no commission will be paid on
such sales. To comply with securities requirements of the State of North
Carolina, we have engaged Wachovia Securities, Inc., pursuant to the terms of a
broker-dealer agreement dated March 31, 2000, to act as a broker-dealer for our
account in effecting offers and sales of the common stock to investors in North
Carolina at the public offering price. Wachovia Securities has no obligation to
purchase any of the common stock. At the closing of the offering, Wachovia
Securities will receive a fee of $40,000 for its services. Whether or not the
offering is completed, we will a;sp reo,birse Wachovia Securities for its
reasonable fees and expenses. We will indemnify Wachovia against certain
liabilities, including civil liabilities under the Securities Act of 1933.
A minimum of 350,000 shares must be sold in the offering, or it will be
terminated. The offering will terminate on June 5, 2000, subject to termination
at an earlier date upon acceptance of subscriptions for all of the securities
offered hereby or to extension for an additional period or periods up to 90 days
from the date of this prospectus at our sole discretion. On the offering
termination date, subscription funds will be returned to subscribers if 350,000
shares have not been subscribed, and we will receive all interest earned on any
funds held by SunTrust Bank as escrow agent. Our officers will receive no
compensation for selling the shares of common stock, but they will be reimbursed
for reasonable expenses incurred by them in connection with the offering, such
as travel, telephone, and similar expenses. Our affiliates who purchase shares
in the offering have committed to purchase those shares for investment purposes.
How To Subscribe
The shares of common stock offered hereby will be first offered to
current holders of our common stock in proportion to the amount of common stock
owned by each on the date of this prospectus. No later than the close of
business on May 22, 2000, our current shareholders who wish to subscribe for
shares of common stock must submit a subscription agreement, attached as Exhibit
A to this prospectus, and a check made payable to SunTrust Bank as escrow agent
in the amount of the purchase price for the shares of common stock they wish to
purchase. The subscription funds will be held in escrow at SunTrust Bank pending
sale of a total of 350,000 shares. The number of shares of common stock
initially subscribed for by each shareholder may not exceed an amount which is
the same percentage of the maximum amount of shares of common stock being
offered hereby, 450,000, as the percentage of outstanding common stock held by
the shareholder on the date of this prospectus (0.056 shares for each 1 share of
common stock owned by the current shareholders rounded to the nearest whole
share). We may, in our discretion, allow shareholders to elect to have entities
related to such shareholders, such as qualified retirement plans, purchase our
common stock if permitted by, and subject to the terms and conditions of, such
qualified retirement plans. Thereafter, we will offer that number of shares of
common stock not subscribed for by current shareholders and accepted by us to
members of the public who are residents of the States of Georgia, North
Carolina, and Tennessee who may subscribe for blocks of whole shares of common
stock consisting of at least 100 shares (unless otherwise agreed to by us).
6
Persons who wish to subscribe for shares of common stock must, prior to
the termination of the offering:
(1) Complete the appropriate portions of and sign the
subscription agreement that is attached to this prospectus as
Exhibit A to subscribe for at least 100 shares of common
stock;
(2) Make full payment of the aggregate purchase price for the
shares subscribed in United States currency by check, bank
draft, or money order payable to "SunTrust Bank, as Escrow
Agent for United Community Banks, Inc."; and
(3) Deliver the subscription agreement together with a check
for full payment of the purchase price, to United Community
Banks, Inc., Post Office Box 398, Blairsville, Georgia 30514,
Attention: Lois Rich.
Subscriptions are not binding until accepted by us. We reserve the
right to accept or reject subscriptions, in whole or in part, or to cancel the
offering, in our sole discretion. All subscription payments received by us for
the first 350,000 shares subscribed will be deposited in an interest-bearing
escrow account at SunTrust Bank. If subscription funds for 350,000 shares are
not received by the offering termination date, all subscription funds will be
returned promptly to investors, and we will receive all interest earned on any
funds held by SunTrust Bank as escrow agent. Once subscription funds for 350,000
shares have been received and placed in the escrow account, such proceeds and
any interest earned thereon will be made available to us, as will the proceeds
of any subsequent sales of shares.
Certificates representing the common stock purchased in the offering
will be issued by us and mailed to subscribers as soon as practicable after
acceptance of subscriptions. Rejected subscription payments will be returned to
subscribers by mail, as soon as possible, but in no event later than 30 days
after the occurrence of such rejection.
Determination of Offering Price
We determined the offering price for the common stock in light of
factors such as recent sales of the common stock and our earnings for the three
months ended March 31, 2000 and the year ended December 31, 1999, as well as our
prospective earnings, an assessment of our management, the nature of our assets
and liabilities, our future prospects and those of the banking industry in
general, area and national economic conditions, interest rate environment,
market prices of and demand for securities of institutions engaged in activities
similar to our activities, and a comparison of prices of securities of other
financial institutions to their earnings and book values.
No assurance can be given that investors in the offering will be able
to resell their shares of common stock at a price equal to or greater than the
offering price set forth on the cover page of this prospectus or that such price
necessarily indicates the fair market value of the common stock.
7
Market For and Price Range of Common Stock
Since we began operations as a holding company in 1988, there has been
no established market for our common stock. As of May 1, 2000, 8,442,990 shares
of common stock were issued and outstanding, including 140,000 shares deemed
outstanding pursuant to outstanding debentures and presently exercisable options
to acquire 267,122 shares.
7
We are aware of approximately 118 sales of common stock in 2000 as of
May 1, aggregating approximately 22,282 shares in blocks ranging from one share
to 1,000 shares at prices ranging from $38.00 per share to $50.00 per share. We
are aware of approximately 551 sales of common stock in 1999, aggregating
approximately 168,000 shares in blocks ranging from one share to 4,136 shares at
prices ranging from $35.00 per share to $55.00 per share, and of approximately
435 sales of common stock in 1998, aggregating approximately 170,000 shares in
blocks ranging from one share to 4,000 shares at prices ranging from $25.00 per
share to $50.00 per share. At December 31, 1999, there were 3,530 holders of
record of common stock.
It is not expected that any active public market for the common stock
will develop as a result of the completion of the offering or otherwise.
Use of Proceeds
The net proceeds from the sale of the shares of common stock offered
hereby are estimated to be $17 million after the deduction of estimated offering
expenses, assuming the entire amount of common stock offered for sale hereby is
subscribed. We intend to use these proceeds to provide capital for our
subsidiary banks and for other corporate purposes including reduction of our
debt.
Capitalization
The following table sets forth our consolidated capitalization at
December 31, 1999, and as adjusted at that date to give effect to the sale of
350,000 and 450,000 shares of common stock and the application of the estimated
resulting net proceeds as described in "Use of Proceeds." This table should be
reviewed in conjunction with our Consolidated Financial Statements and the
related notes thereto appearing elsewhere in this prospectus.
8
December 31, 1999
Dollars in thousands
Actual 350,000 Shares 450,000 Shares
As Adjusted As Adjusted
-------------- ------------------- -----------------
Long-Term Debt $222,255 $222,255 $222,255
Convertible Subordinated Debentures 3,500 3,500 3,500
Guaranteed preferred beneficial interests in Company's junior 21,000 21,000 21,000
subordinated debentures (Trust Preferred Securities)
Stockholders' Equity:
Preferred Stock, $1.00 par value; 10,000,000 shares - - -
authorized, no shares issued and outstanding
Common stock, $1.00 par value; 10,000,000 shares 8,034 8,384 8,484
authorized, 8,034,268 shares issued and outstanding,
8,384,268 and 8,484,268 shares issued and outstanding, as
adjusted for the 350,000 and 450,000 shares offered hereby
Capital surplus 30,310 43,140 46,840
Retained earnings 66,606 66,606 66,606
Accumulated other comprehensive income (loss) (8,680) (8,680) (8,680)
-------------- ------------------- -----------------
Total stockholders' equity 96,270 109,450 113,250
-------------- ------------------- -----------------
Total capitalization $343,025 $356,205 $360,005
============== =================== =================
- -------------------------
Gives effect to the application of the net proceeds of the offering.
Dividends
We paid cash dividends of $0.20 per share of common stock to
shareholders of record in 1999 and $0.15 per share of common stock to
shareholders of record in 1998. On April 1, 2000, we paid a dividend of $0.075
per share. We presently intend to continue paying cash dividends on a quarterly
basis on our common stock.
The amount and frequency of dividends will be determined by our Board
of Directors in light of our earnings, capital requirements, and financial
condition, and no assurance can be given that dividends on our common stock will
be declared in the future. Further, our ability to pay cash dividends on the
common stock will be dependent on cash dividends paid to us by our bank
subsidiaries. The ability of our bank subsidiaries to pay dividends to us is
restricted by applicable regulatory requirements.
9
Business
General
We were incorporated under the laws of Georgia in 1987 and commenced
operations in 1988 by acquiring 100% of the outstanding shares of Union County
Bank, now known as United Community Bank. We are a bank holding company
registered under the Bank Holding Company Act of 1956. All of our activities are
currently conducted by our wholly-owned subsidiaries:
o United Community Bank, organized as a Georgia banking
corporation in 1950;
o Carolina Community Bank, Murphy, North Carolina, acquired in
1990;
o Peoples Bank of Fannin County, Blue Ridge, Georgia, acquired
in 1992;
o Towns County Bank, Hiawassee, Georgia, acquired in 1992;
o White County Bank, Cleveland, Georgia, acquired in 1995;
o First Clayton Bank and Trust, Clayton, Georgia, acquired in
1997;
o Bank of Adairsville, Adairsville, Georgia, acquired in 1999;
and
o 1st Floyd Bank, Rome, Georgia, acquired in 1999.
Our banks are community-oriented and offer a full range of retail and
corporate banking services, including checking, savings, and time deposit
accounts, secured and unsecured loans, wire transfers, trust services, and
rental of safe deposit boxes. As of December 31, 1999, our banks operated a
total of 34 locations. To emphasize the commitment to community banking, both
United Community Bank and Peoples Bank of Fannin County operate offices under
trade names that are closely identified with the communities in which they are
located. United Community Bank operates two offices in Union County under the
trade name "Union County Bank," two offices in Lumpkin County, Georgia, under
the trade name "United Community Bank of Lumpkin County," two offices in
Habersham County, Georgia, under the trade name "First Bank of Habersham," and
one office in Hall County, Georgia, under the trade name "United Community Bank
of Hall County." Peoples Bank of Fannin County operates one office in Gilmer
County, Georgia, under the trade name of "United Community Bank of Gilmer
County." The operation of bank offices under trade names is permissible under
current state and federal banking regulations and requires certain customer
disclosures, which both United Community Bank and Peoples Bank of Fannin County
provide.
The Mortgage People Company, a division of United Community Bank, is a
full-service retail mortgage lending operation approved as a seller/servicer for
Federal National Mortgage Association and Federal Home Mortgage Corporation. The
Mortgage People Company was organized to provide fixed and adjustable-rate
mortgages. During 1999, it originated $129 million of residential mortgage loans
for the purchase of homes and to refinance existing mortgage debt, substantially
all of which were sold along with the servicing rights into the secondary market
with no recourse.
We operate two consumer finance companies - United Family Finance Co.,
which operates two offices in Georgia, and United Family Finance Co. of North
Carolina, which operates two offices in North Carolina. In addition, we own an
insurance agency, United Agencies, Inc.
Recent Developments
Pending Acquisitions. On March 3, 2000, we entered into an agreement to
-------------------
acquire North Point Bancshares, Inc. of Dawsonville, Georgia, for 958,211 shares
of our common stock in a transaction that will be accounted for as a pooling of
interests. As of December 31, 1999, North Point had total consolidated assets of
$106.5 million, total liabilities of $97.3 million, and total shareholders'
equity of approximately $9.2 million. The assets included $29.1 million of
10
investment securities and $61.0 million of loans, net of allowance for loan
losses. Total liabilities included $96.6 million of deposits, of which $17.7
million were non-interest bearing demand deposits and $78.9 million were
interest bearing deposits.
On March 3, 2000, we entered into an agreement to acquire Independent
Bancshares, Inc. of Powder Springs, Georgia, for 870,598 shares of our common
stock in a transaction that will be accounted for as a pooling of interests. As
of December 31, 1999, Independent had $145.1 million of total assets, $132.1
million of total liabilities, and $13.1million of total shareholders' equity.
The assets included $26.1 million of investment securities and $100.5 million of
loans, net of allowance for loan losses. Total liabilities included $123.4
million of deposits, of which $16.6 million were non-interest bearing demand
deposits and $106.8 million were interest bearing deposits.
At our shareholders' meeting to be held in the second quarter of 2000, our
shareholders will be asked to approve an increase in our authorized common stock
from 10,000,000 shares to 50,000,000 shares to provide sufficient shares to
issue in the North Point and Independent acquisitions. The closings of those
acquisitions are conditioned upon our shareholders' approval of the increase in
common stock. There are sufficient shares currently available to issue to
subscribers in this offering.
Services
Our banks are community-oriented, with an emphasis on retail banking,
and offer such customary banking services as customer and commercial checking
accounts, NOW accounts, savings accounts, certificates of deposit, lines of
credit, MasterCard and VISA accounts, money transfers, and trust services. Our
banks finance commercial and consumer transactions, make secured and unsecured
loans, including residential mortgage loans, and provide a variety of other
banking services.
The Mortgage People Company, a division of United Community Bank, is a
full-service mortgage lending operation approved as a seller/servicer for the
Federal National Mortgage Association and the Federal Home Mortgage Corporation
and offers fixed and adjustable-rate mortgages.
United Family Finance Company, is a traditional consumer finance
company. United Family Finance, formerly known as Mountain Mortgage and Loan
Company, is based in Hiawassee, Georgia, and also has been granted a license to
conduct business in Blue Ridge, Georgia. United Family Finance Co. of North
Carolina operates two offices in Murphy and Franklin, North Carolina.
Markets
We conduct banking activities primarily through United Community Bank
in Union, Lumpkin, and Habersham Counties; through Peoples Bank in Fannin
County, Georgia and Polk County, Tennessee; through Towns County Bank in Towns
County, Georgia; through Carolina Community Bank in Cherokee, Macon, Haywood,
Graham, and Clay Counties, North Carolina; through White County Bank in White
County, Georgia; through First Clayton Bank and Trust in Clayton County,
Georgia; through Bank of Adairsville in Adairsville, Georgia; and through 1st
Floyd Bank in Floyd County, Georgia. Mortgage People Company makes mortgage
loans inside the banks' market areas. Customers of our subsidiary banks are
primarily consumers and small businesses.
Deposits
Our banks offer a full range of depository accounts and services to
both consumers and businesses. At December 31, 1999, our deposit base, totaling
approximately $1.6 billion, consisted of approximately $192 million in
non-interest-bearing demand deposits (12% of total deposits), approximately $329
million in interest-bearing demand and money market deposits (20% of total
11
deposits), approximately $74 million in savings deposits (4% of total deposits),
approximately $743 million in time deposits in amounts less than $100,000 (45%
of total deposits), and approximately $312 million in time deposits of $100,000
or more (19% of total deposits). Certificates of deposit in excess of $100,000
may be more volatile than other deposits because those deposits, to the extent
that they exceed $100,000, are not insured by the FDIC. Our management is of the
opinion that its time deposits of $100,000 or more are customer-relationship
oriented and represent a reasonably stable source of funds. Time deposits of
less than $100,000 include approximately $70 million of "brokered" deposits,
which have an average maturity of less than one year.
Loans
Our banks make both secured and unsecured loans to individuals and
businesses. Secured loans include first and second real estate mortgage loans.
The banks also make direct installment loans to consumers on both a secured and
unsecured basis. At December 31, 1999, the break out of loans by collateral type
is:
(dollar amounts in thousands) Percent of
Amount Total Loans
Secured by real estate:
Residential first liens $ 506,729 36.1%
Residential second liens 27,177 1.9%
Home equity lines of credit 53,191 3.8%
Construction and land development 161,774 11.6%
Non-farm, non-residential 355,269 25.4%
Farmland 16,173 1.2%
Multi-family residential 10,846 0.8%
---------- -------
Total real estate 1,131,159 80.8%
Other Loans:
Commercial and industrial 105,221 7.5%
Agricultural production 9,923 0.7%
States and municipalities 10,101 0.7%
Consumer installment loans 136,983 9.8%
Credit cards and other revolving credit 6,973 0.5%
---------- -------
Total other loans 269,201 19.2%
---------- -------
Total loans $1,400,360 100.0%
========== =======
Specific risk elements associated with each of the banks' lending
categories are as follows:
Commercial, financial, and Industry concentrations, inability to
agricultural monitor the condition of collateral
(inventory, accounts receivable, and
vehicles), lack of borrower management
expertise, increased competition, and
specialized or obsolete equipment as
collateral
Real estate - construction Inadequate collateral and long-term
financing agreements
Real estate - mortgage Changes in local economy and rate limits
on variable rate loans
Installment loans to individuals Loss of borrower's
employment, changes in local economy,
and the inability to monitor collateral
(vehicles, boats, and mobile homes)
13
Competition
The market for banking and bank-related services is highly competitive.
Our banks actively compete in their respective market areas, which collectively
cover portions of north Georgia and western North Carolina, with other providers
of deposit and credit services. These competitors include other commercial
banks, thrift institutions, credit unions, mortgage companies, and brokerage
firms. The following table displays each of our banks and the respective
percentage of total deposits in each county where each bank has operations. The
darker shaded counties, Paulding, Cobb, Dawson, and Forsyth, represent the
markets of our pending acquisitions of North Point and Independent. The table
also indicates the ranking by deposit size in each of the local markets. All
information in the table was obtained from the Federal Deposit Insurance
Corporation Summary of Deposits as of June 30, 1999.
UNITED COMMUNITY BANKS
[The graphic on this page is a map that sets forth the market areas where each
of United's subsidiary banks are located.]
United Community Banks, Inc.
Share of Local Market (County)
Banks and Savings Institutions
Market Rank in
Share Market
United Community
Habersham 15% 4
Lumpkin 24% 2
Union 83% 1
Carolina
Cherokee 45% 1
Clay 64% 1
Graham 40% 1
Haywood 7% 6
Henderson 2% 13
Jackson 13% 3
Macon 7% 6
Swain 21% 2
Transylvania 6% 5
Fannin
Fannin 59% 1
Gilmer 17% 3
White
White 50% 1
Towns
Towns 36% 2
First Clayton
Rabun 29% 3
Adairsville
Bartow 7% 7
Floyd
Floyd 8% 6
Independent*
Cobb 2% 11
Paulding 2% 5
North Point*
Dawson 47% 1
* Pending acquisitions.
14
Management
Executive Officers
Our executive officers are elected by the Board of Directors annually
in January and hold office until the following January unless they sooner resign
or are removed from office by the Board of Directors.
Our executive officers, and their ages, positions, and terms of office
as of February 1, 2000, are as follows:
Name (age) Position with us Position with our subsidiary banks Officer since
- ---------- ---------------- ---------------------------------- -------------
Jimmy C. Tallent President, Chief Executive Chairman of the Board of Union County 1988
(47) Officer and Director Bank, Towns County Bank and White
County Bank; Director of Carolina
Community Bank, Peoples Bank, First
Clayton Bank and Trust, Bank of
Adairsville, 1st Floyd Bank and United
Family Finance
Thomas C. Gilliland Executive Vice President and President, Chief Executive Officer and 1992
(51) Director Vice Chairman of the Board of Peoples
Bank; Executive Vice President and
Director of United
Billy M. Decker Senior Vice President, Director Senior Vice President, Director and 1988
(56) and Secretary Secretary of United Community Bank;
Director of Carolina Community Bank
Guy Freeman Senior Vice President President, Chief Executive Officer and 1995
(64) Director of Carolina Community Bank
Christopher J. Bledsoe Senior Vice President and Chief Director of United Family Finance 1993
(36) Financial Officer
Roger L. Bishop Senior Vice President and None 1998
(50) Chief Operations and
Information Officer (prior
to joining us, he served
as Senior Vice President
to Brintech, Inc., a
consulting firm in New Smyrna
Beach, Florida, from
April of 1996 to August of
1998 and was a Senior
Consultant for Alex Sheshunoff
Management Services,
Inc., a consulting firm of Austin,
Texas, from March
of 1994 to April of 1996)
15
James G. Campbell Senior Vice President (prior to None 1999
(43) joining us in 1999, he served
as Regional Community Bank
President of Firstar Bank, NA
in Bowling Green, Kentucky,
successor by merger in 1998 to
Trans Financial, Inc. Prior to
the merger, he served as
Executive Vice President of
Trans Financial, from 1995 to
1998)
Patrick J. Rusnak Vice President and Controller None 1998
(36) (prior to joining United, he
was Senior Assistant Controller
of Trans Financial, Inc., a
bank holding company in Bowling
Green, Kentucky, from 1994 to
1998)
None of the above officers is related to another, and there are no
arrangements or understandings between them and any other person pursuant to
which any of them was elected as an officer.
Principal Shareholders
The following table lists information concerning the beneficial
ownership of our common stock at May 1, 2000, by (i) each person known to us to
beneficially own more than 5% of the common stock, (ii) each director and
executive officer, and (iii) all directors and executive officers as a group.
Except as set forth below, the stockholders named below have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
Shareholder Number of Shares Owned Percent of Class
Beneficially
Jimmy C. Tallent 166,036 1.97%
Billy M. Decker 138,122 1.64%
Thomas C. Gilliland 183,931 2.18%
Robert H. Blalock 41,260 0.49%
Robert L. Head, Jr. 672,743 7.97%
Charles E. Hill 156,332 1.85%
Hoyt O. Holloway 48,085 0.57%
16
Deral P. Horne 25,000 0.30%
John R. Martin 57,633 0.68%
Clarence W. Mason, Sr. 30,382 0.36%
Zell B. Miller 1,000 0.01%
W.C. Nelson, Jr. 672,622 7.97%
Charles E. Parks 102,259 1.21%
Tim Wallis 53,829 0.64%
Christopher J. Bledsoe 22,633 0.28%
Guy W. Freeman 41,018 0.49%
All Directors and Executive Officers as a 2,418,635 28.65%
Group (19 persons)
- -------------------------
Includes 10,000 shares beneficially owned by Mr. Tallent pursuant to
debentures and 37,000 shares beneficially owned pursuant to stock
options exercisable within 60 days of May 1, 2000.
Includes 10,000 shares beneficially owned by Mr. Decker pursuant to
debentures and 13,600 shares beneficially owned pursuant to stock
options exercisable within 60 days of May 1, 2000. Does not include
9,613 shares owned by Mr. Decker's wife, for which he disclaims
beneficial ownership.
Includes 6,270 shares beneficially owned by Mr. Gilliland as custodian
for his children, 10,000 shares beneficially owned pursuant to
debentures and 23,000 shares beneficially owned pursuant to stock
options exercisable within 60 days of May 1, 2000.
Includes 80 shares owned by Mr. Blalock's minor children and 30,993
shares owned by Blalock Insurance Agency, Inc., a company owned by Mr.
Blalock.
Includes 96,555 shares beneficially owned by a trust over which Mr.
Head has voting power and 10,000 shares owned pursuant to the 2006
Debentures. Does not include 18,465 shares owned by Mr. Head's wife,
for which he disclaims beneficial ownership. Mr. Head's address is Post
Office Box 147, Blairsville, Georgia 30514.
Includes 10,000 shares beneficially owned by Mr. Hill pursuant to
debentures. Does not include 77,455 shares owned by Mr. Hill's wife,
for which he disclaims beneficial ownership.
Includes 10,000 shares beneficially owned pursuant to debentures and
35,565 beneficially owned by Holloway Motors, Inc., a company owned by
Mr. Holloway. Does not include 485 shares owned by Mr. Holloway's wife,
for which he disclaims beneficial ownership.
Includes 10,000 shares beneficially owned by Mr. Horne pursuant to
debentures. Does not include 1,920 shares owned by Mr. Horne's wife,
for which he disclaims beneficial interest.
Includes 10,000 shares beneficially owned by Mr. Mason pursuant to
debentures. Does not include 16,958 shares owned by Mr. Mason's wife,
for which he disclaims beneficial ownership.
Includes 11,250 shares beneficially owned by a trust over which Mr.
Nelson has voting power and 10,000 shares owned pursuant to debentures.
Does not include 15,005 shares owned by Mr. Nelson's wife, for which he
disclaims beneficial ownership. Mr. Nelson's address is Post Office Box
127, Blairsville, Georgia 30514.
Includes 10,000 shares beneficially owned by Mr. Parks pursuant to
debentures.
Includes 6,000 shares beneficially owned by Mr. Bledsoe pursuant to
debentures and 10,500 shares beneficially owned pursuant to stock
options exercisable within 60 days of May 1, 2000.
17
Includes 6,000 shares beneficially owned by Mr. Freeman pursuant to
debentures and 21,500 shares beneficially owned pursuant to stock
options exercisable within 60 days of May 1, 2000.
Includes 110,600 shares beneficially owned pursuant to stock options
exercisable within 60 days of May 1, 2000, and 112,000 shares
beneficially owned pursuant to debentures.
18
Description of Securities
The following is a summary of certain provisions of the common stock,
preferred stock, debentures, and trust preferred securities.
General
Our authorized capital stock consists of 10,000,000 shares of common
stock, $1.00 par value per share, and 10,000,000 shares of preferred stock,
$1.00 par value per share. As of May 1, 2000, 8,442,990 shares of our common
stock, including 140,000 shares deemed outstanding pursuant to outstanding
debentures and presently exercisable options to acquire 267,122 shares of our
common stock, were issued and outstanding and no shares of preferred stock were
issued and outstanding.
Preferred Stock
We are authorized to issue 10,000,000 shares of preferred stock,
issuable in such series and bearing such voting, dividend, conversion,
liquidation, and other rights and preferences as the Board of Directors may
determine. The preferred stock can be issued for any lawful corporate purpose
without further action by the shareholders. The issuance of any preferred stock
having conversion rights might have the effect of diluting the interests of the
other shareholders. Shares of preferred stock could be issued with such rights,
privileges, and preferences as would deter a further tender or exchange offer or
to discourage the acquisition of control of us. The Board of Directors presently
has no plans to issue any preferred stock.
Common Stock
All voting rights are vested in the holders of the common stock. Each
holder of common stock is entitled to one vote per share on any issue requiring
a vote at any meeting. The shares do not have cumulative voting rights in the
election of directors. All shares of common stock are entitled to share equally
in such dividends as our Board of Directors may declare on our common stock from
sources legally available therefor. The determination and declaration of
dividends is within the discretion of our Board of Directors. Our common stock
will be entitled to receive on a pro rata basis, after payment or provision for
payment of all our debts and liabilities, all of our assets available for
distribution, in cash or in kind. The shares of common stock do not have
preemptive rights to subscribe to additional shares of common stock.
The outstanding shares of common stock are, and the shares of common
stock to be issued by us in connection with the offering will be, duly
authorized, validly issued, fully paid, and nonassessable.
Debentures
Debentures in the principal amount of $3,500,000 which are due on
December 31, 2006, are outstanding as of the date hereof. The debentures bear
interest at the rate of one quarter of one percentage point over the prime rate
per annum as quoted in The Wall Street Journal, payable on April 1, July 1,
October 1, and January 1 of each year commencing on April 1, 1997, to holders of
record at the close of business on the 15th day of the month immediately
preceding the interest payment date. Interest is computed on the basis of the
actual number of days elapsed in a year of 365 or 366 days, as applicable.
Interest on the debentures is payable, at the option of our Board of Directors,
in cash or in an additional debenture with the same terms as the debentures.
19
The debentures may be redeemed, in whole or in part from time to time
on or after January 1, 1998, at our option upon at least 20 days and not more
than 60 days notice, at a redemption price equal to 100% of the principal amount
of the debentures to be redeemed plus interest accrued and unpaid as of the date
of redemption.
The holder of any debentures not called for redemption will have the
right, exercisable at any time up to December 31, 2006, to convert such
debenture at the principal amount thereof into shares of our common stock at the
conversion price of $25 per share, subject to adjustment for stock splits and
stock dividends.
The debentures are unsecured obligations and are subordinate in right
of payment to all of our obligations to our other creditors, except obligations
ranking on a parity with or junior to such debentures. The debentures were not
issued pursuant to an indenture nor is there a trustee to act on behalf of
debenture holders.
Trust Preferred Securities.
In July 1998, we created a Delaware statutory business trust, which
issued $21 million of guaranteed preferred beneficial interests to institutional
investors. These securities represent guaranteed preferred beneficial interests
in $21.7 million principal amount of junior subordinated deferrable interest
debentures issued by us to the business trust. Holders of the securities are
entitled to receive preferential cumulative cash distributions accumulating from
the date of their original issuance and payable semi-annually. The distribution
rate, distribution payment dates, and other payment dates for the securities
correspond to the interest rate, interest payment dates, and other payment dates
for the debentures. For regulatory purposes, the securities are treated as Tier
I capital. The debentures are the sole assets of the business trust and bear
interest at 8.125% with a maturity date of July 15, 2028. We may redeem the
debentures, and the business trust may redeem the securities, in whole or in
part, on or after July 15, 2008. If the debentures and the securities are
redeemed in part or in whole prior to January 1, 2008, the redemption price will
include a premium ranging from 4.06% in 2008 to 0.41% in 2017.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our common stock and debentures is
SunTrust Bank, 58 Edgewood Avenue, Room 200, Atlanta, Georgia 30303.
Shares Eligible For Future Sale
Upon completion of the offering, there will be between 8,792,990 and
8,892,990 shares of common stock outstanding (including 267,122 shares issuable
pursuant to presently exercisable options and 140,000 shares issuable upon
conversion of outstanding debentures). All of the shares offered hereby will be
freely transferable, without restriction, under the Securities Act of 1933,
unless acquired by one of our affiliates (as that term is defined under the
Securities Act). Sales of substantial amounts of shares in the limited trading
market following the offering could adversely affect the market price of the
common stock. Since such stock is not listed on a stock exchange or quoted in
the over-the-counter market, no shares can be sold under Rule 144 promulgated
under the Securities Act.
20
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated financial statements
have been prepared from the historical results of operations of United and to
give effect to the pending acquisition of North Point Bancshares, Inc. and
Independent Bancshares, Inc. using the pooling of interests method of
accounting. These statements should be read in conjunction with our historical
consolidated financial statements, including the notes thereto. The pro forma
combined results are not necessarily indicative of the combined results of
future operations.
21
United Community Banks, Inc. Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 1999
(dollar amounts in thousands)
Pending Mergers
--------------------------
Historical Historical Pro Forma
As Reported North Point Independent Adjustments Consolidated
-------------- ------------ ------------- ------------ ------------
ASSETS
Cash and due from banks $ 89,231 7,250 4,639 101,120
Federal funds sold 23,380 4,180 5,000 32,560
----------- -------- -------- ---------- ----------
Cash and cash equivalents 112,611 11,430 9,639 -- 133,680
Securities held to maturity (estimated fair -- 3,762 7,226 10,988
values of $3,784 and $6,169)
Securities available for sale 534,503 25,372 18,834 578,709
Mortgage loans held for sale 6,326 -- -- 6,326
Loans, net of unearned income 1,400,360 62,212 101,576 1,564,148
Less: Allowance for loan losses (17,722) (1,196) (1,125) (20,043)
----------- -------- -------- ---------- ----------
Loans, net 1,382,638 61,016 100,451 -- 1,544,105
Premises and equipment, net 47,365 2,746 5,543 -- 55,654
Other assets 47,997 2,152 3,409 53,558
----------- -------- -------- ---------- ----------
Total assets $ 2,131,440 106,478 145,102 2,383,020
=========== ======== ======== ========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
Deposits:
Demand $ 192,006 17,738 16,614 226,358
Interest bearing demand 328,815 26,991 38,333 394,139
Savings 73,953 5,350 5,169 84,472
Time 1,054,618 46,486 63,306 1,164,410
----------- -------- -------- ---------- ----------
Total deposits 1,649,392 96,565 123,422 -- 1,869,379
Accrued expenses and other liabilities 24,378 344 1,351 26,073
Federal funds purchased and repurchase 31,812 389 -- 32,201
agreements
Federal Home Loan Bank advances 287,572 -- 6,707 294,279
Long-term debt and other borrowings 17,516 -- -- 17,516
Convertible subordinated debentures 3,500 -- -- 3,500
Guaranteed preferred beneficial interests in
company's junior subordinated debentures
(Trust Preferred Securities) 21,000 -- -- 21,000
----------- -------- -------- ---------- ----------
Total liabilities 2,035,170 97,298 131,480 -- 2,263,948
Commitments and contingent liabilities:
Redeemable common stock held by KSOP -- -- 577 -- 577
(44,432 shares outstanding)
Stockholders' Equity:
Preferred stock -- -- -- -- --
Common stock 8,034 2,142 1,948 (4,090) 9,812
1,778
Capital surplus 30,310 1,985 8,614 (10,599) 43,221
12,911
Retained earnings 66,606 5,629 2,822 75,057
Accumulated other comprehensive income (loss) (8,680) (576) (339) -- (9,595)
----------- -------- -------- ---------- ----------
Total stockholders' equity 96,270 9,180 13,045 -- 118,495
----------- -------- -------- ---------- ----------
Total liabilities and stockholders' equity $ 2,131,440 106,478 145,102 -- 2,383,020
=========== ======== ======== ========== ==========
Outstanding common shares 8,034 9,812
Book value per common share $ 11.98 12.08
22
United Community Banks, Inc. And Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Income
For the Year Ended December 31, 1999
(dollar amounts in thousands)
Pending Mergers
United ------------------------
As Historical Historical Pro Forma
Reported North Point Independent Adjustments Consolidated
-------- ----------- ----------- ----------- ------------
Interest income $149,740 8,156 11,096 168,992
Interest expense 81,766 3,629 4,805 90,200
-------- ------ ------ ------- ------
Net interest income 67,974 4,527 6,291 -- 78,792
Provision for loan losses 5,104 620 242 5,966
-------- ------ ------ ------- ------
Net interest income after 62,870 3,907 6,049 -- 72,826
provision
for loan losses
Non-interest income 10,836 625 1,103 12,564
Non-interest expense 54,165 3,070 4,746 61,981
-------- ------ ------ ------- ------
Income before income taxes 19,541 1,462 2,406 -- 23,409
-------- ------ ------ ------- ------
Income taxes 5,893 453 785 7,131
-------- ------ ------ ------- ------
Net income $ 13,648 1,009 1,621 -- 16,278
======== ====== ====== ======= ======
Basic earnings per share $ 1.70 1.66
Diluted earnings per share $ 1.66 1.63
Basic average shares outstanding 8,020 9,796
Diluted average shares outstanding 8,316 10,110
23
United Community Banks, Inc. And Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Income
For the Year Ended December 31, 1998
(dollar amounts in thousands)
Pending Mergers
United ------------------------
As Historical Historical Pro Forma
Reported North Point Independent Adjustments Consolidated
-------- ----------- ----------- ----------- ------------
Interest income $116,214 7,693 9,978 133,885
Interest expense 60,004 3,003 4,623 67,630
-------- ------ ----- ------- ------
Net interest income 56,210 4,690 5,355 -- 66,255
Provision for loan losses 2,612 200 202 3,014
-------- ------ ----- ------- ------
Net interest income after 53,598 4,490 5,153 -- 63,241
provision
for loan losses
Non-interest income 9,129 653 938 10,720
Non-interest expense 43,964 2,692 4,442 51,098
-------- ------ ----- ------- ------
Income before income taxes 18,763 2,451 1,649 -- 22,863
-------- ------ ----- ------- ------
Income taxes 5,990 814 549 7,353
-------- ------ ----- ------- ------
Net income $ 12,773 1,637 1,100 -- 15,510
======== ====== ===== ======= ======
Basic earnings per share $ 1.60 1.59
Diluted earnings per share $ 1.57 1.56
Basic average shares outstanding 7,973 9,751
Diluted average shares outstanding 8,246 10,043
24
United Community Banks, Inc. And Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Income
For the Year Ended December 31, 1997
(dollar amounts in thousands)
Pending Mergers
United ------------------------
As Historical Historical Pro Forma
Reported North Point Independent Adjustments Consolidated
-------- ----------- ----------- ----------- ------------
Interest income $94,188 6,843 8,332 109,363
Interest expense 48,470 2,802 4,049 55,321
------- ----- ----- ------- ------
Net interest income 45,718 4,041 4,283 -- 54,042
Provision for loan losses 2,814 175 262 3,251
------- ----- ----- ------- ------
Net interest income after 42,904 3,866 4,021 -- 50,791
provision
for loan losses
Non-interest income 7,200 626 671 8,497
Non-interest expense 34,063 2,490 3,542 40,095
------- ----- ----- ------- ------
Income before income taxes 16,041 2,002 1,150 -- 19,193
------- ----- ----- ------- ------
Income taxes 4,987 662 346 5,995
------- ----- ----- ------- ------
Net income $11,054 1,340 804 -- 13,198
======= ===== ===== ======= ======
Basic earnings per share $ 1.42 1.41
Diluted earnings per share $ 1.40 1.40
Basic average shares outstanding 7,810 9,335
Diluted average shares outstanding 8,031 9,564
25
Legal Matters
The legality of the shares of common stock offered by this prospectus
will be passed upon for us by Kilpatrick Stockton LLP, Atlanta, Georgia.
Experts
Our consolidated audited financial statements, incorporated into the
registration statement of which this prospectus forms a part, have been
incorporated in reliance upon the reports of Porter Keadle Moore, LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
Where You Can Find More Information
This prospectus is part of a registration statement on Form S-3 that we
have filed with the SEC covering the shares of common stock that we are
offering. This prospectus does not contain all of the information presented in
the registration statement, and you should refer to that registration statement
with its exhibits for further information. Statements in this prospectus
describing or summarizing any contract or other document are not complete, and
you should review the copies of those documents filed as exhibits to the
registration statement for more detail. You may read and copy the registration
statement at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. For information on the operation of the Public Reference
Room, call the SEC at 1-800-SEC-0330. You can also inspect our registration
statement on the Internet at the SEC's web site, http://www.sec.gov.
We are subject to certain informational reporting requirements of the
Securities Exchange Act of 1934 and in accordance therewith files reports, proxy
statements, and other information with the SEC. Such periodic reports, proxy
statements and other information filed by us with the SEC can be inspected and
copied at the public reference facilities maintained by the SEC's regional
offices in New York (7 World Trade Center, Suite 1300, New York, New York 10048)
and Chicago (Citicorp Center, 500 W. Madison, Suite 1400, Chicago, Illinois
60661), and copies of such material can be obtained from the public reference
section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, or at the
SEC's web site at http://www.sec.gov.
26
================================================================= ===========================================================
No dealer, sales person, or other person has been authorized to
give any information or to make any representations other than
those contained in this prospectus, and, if given or made, such
information or representations must not be relied upon as having
been authorized by us. This prospectus does not
constitute an offer to sell or the solicitation of any offer to A MINIMUM OF 350,000 AND A MAXIMUM OF
buy any security other than the securities to which it relates 450,000 SHARES OF COMMON STOCK
or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no
change in the affairs of United since the date hereof or that
the information contained herein is correct as of any time
subsequent to its date.
UNITED COMMUNITY BANKS, INC.
---------------
--------------
PROSPECTUS
--------------
TABLE OF CONTENTS
Page
Prospectus Summary ................................... 1
Risk Factors.......................................... 4
Forward-Looking Statements............................ 5
The Offering.......................................... 6
Determination of Offering Price....................... 7
Market For and Price Range of Common Stock............ 8
Use of Proceeds....................................... 8
Capitalization........................................ 8
Dividends............................................. 9 May 8, 2000
Business.............................................. 10
Management............................................ 15
Principal Shareholders................................ 16
Description of Securities............................. 18
Shares Eligible for Future Sale....................... 19
Pro Forma Consolidated Financial Statements........... 20
Legal Matters......................................... 25
Experts............................................... 25
Where You Can Find More Information................... 25
Index to Financial Statements......................... F-1
================================================================= ============================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the various expenses and costs expected to be
incurred in connection with the sale and distribution of the securities being
registered. All of the amounts shown are estimated except for the registration
fees of the Securities and Exchange Commission:
Securities and Exchange Commission Registration Fee.................................$ 4,514.40
Broker/Dealer Fee .................................................................. 40,000.00
Blue Sky Fees* ..................................................................... 8,000.00
Printing, Engraving, and Mailing Expenses*.......................................... 9,250.00
Legal Fees and Expenses*............................................................ 35,000.00
Accounting and Consulting Fees and Expenses*........................................ 18,500.00
Escrow Fees......................................................................... 6,000.00
--------------
Total.........................................................................$ 121,264.40
- ----------------------------------
* Estimate
Item 15. Indemnification of Directors and Officers
Our Bylaws require us to indemnify and hold harmless our directors,
officers, and agents against judgments, fines, penalties, amounts paid in
settlement, and expenses, including attorney's fees, resulting from various
types of legal actions or proceedings if the actions of the party being
indemnified meet the standards of conduct specified therein. Determination
concerning whether or not the applicable standard of conduct has been met can be
made by (a) a disinterested majority of the Board of Directors, (b) independent
legal counsel, (c) an affirmative vote of a majority of shares held by the
shareholders. No indemnification may be made to or on behalf of a corporate
director, officer, employee or agent (I) in connection with a proceeding by or
in the right of the corporation in which such person was adjudged liable on the
basis that personal benefit was improperly received by him. As provided under
Georgia law, the liability of a director may not be eliminated or limited (a)
for any appropriation, in violation of his duties, of any business opportunity
of United, (b) for acts or omissions which involve intentional misconduct or a
knowing violation of law, (c) for unlawful corporate distributions or (d) for
any transaction from which the director received an improper benefit.
Our directors and officers are insured against losses arising from any
claim against them as such for wrongful acts or omissions, subject to certain
limitations.
II-1
Item 16. Exhibits and Financial Statement Schedules
Exhibit No. Exhibit
1.1* Broker-Dealer Agreement between Wachovia Securities,
Inc. and United Community Bank, Inc. dated March 31,
2000.
1.2* Escrow Agreement between United Community Banks, Inc.
and SunTrust Bank, N.A., dated March 31, 2000.
2.1* Agreement and Plan of Reorganization dated March 3,
2000, between United Community Banks, Inc. and
Independent Bancshares, Inc.
2.2* Agreement and Plan of Reorganization dated March 3,
2000, between United Community Banks, Inc. and North
Point Bancshares, Inc.
4.1(a) Junior Subordinated Indenture of United with The
Chase Manhattan Bank, as Trustee, relating to the
Junior Subordinated Debentures (included as Exhibit
4.1 to our Registration Statement on Form S-4, File
No. 333-64911, filed with the Commission on September
30, 1998 (the "1998 S-4") and incorporated herein by
reference).
4.1(b) Form of Certificate of Junior Subordinated Debenture
(included as Exhibit 4.2 to the 1998 S-4 previously
filed with the Commission and incorporated herein by
reference).
4.1(c) Certificate of Trust of United Community Capital
Trust (included as Exhibit 4.3 to the 1998 S-4
previously filed with the Commission and incorporated
herein by reference).
4.1(d) Amended and Restated Trust Agreement for United
Community Capital Trust (included as Exhibit 4.4 to
the 1998 S-4 previously filed with the Commission and
incorporated herein by reference).
4.1(e)
Form of New Capital Security Certificate for United
Community Capital Trust (included as Exhibit 4.5 to
the 1998 S-4 previously filed with the Commission and
incorporated herein by reference).
4.1(f) Guarantee of United relating to the Capital
Securities (included as Exhibit 4.6 to the 1998 S-4
previously filed with the Commission and incorporated
herein by reference).
4.1(g) Registration Rights Agreement (included as Exhibit
4.7 to the 1998 S-4 previously filed with the
Commission and incorporated herein by reference).
4.1(h) Form of Floating Rate Convertible Subordinated
Payable In Kind Debenture due December 31, 2006
(included as Exhibit 4.2 to our Registration
Statement on Form S-1, File No. 33-93278, filed with
the Commission on June 8, 1995, and incorporated
herein by reference).
4.1(i) Form of Subscription Agreement (included as Exhibit A
to our Form S-1, File No. 333-20887, filed with the
Commission on January 31, 1997, and incorporated by
reference).
4.2(a) See Exhibits 3.1 and 3.2 for provisions of Articles
of Incorporation and By-Laws, as amended, which
define the rights of Shareholders.
II-2
5* Opinion of Kilpatrick Stockton LLP.
12.1 Computation of ratio of earnings to fixed charges
(included as Exhibit 12.1 to the 1998 S-4 previously
filed with the Commission and incorporated herein by
reference).
23.1* Consent of Porter Keadle Moore, LLP
23.2* Consent of Kilpatrick Stockton LLP (included in
Exhibit 5).
24.1 Power of Attorney of certain officers and directors
of United (included on Signature Page)
27.1 Financial Data Schedule.
================
* Filed herewith.
II-3
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
Signatures
Pursuant to the requirements of the Securities Act of 1933, United has
duly caused this Registration Statement on Form S-3 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Blairsville, State
of Georgia, on the 4th day of May, 2000.
UNITED COMMUNITY BANKS, INC.
By: /s/ Jimmy C. Tallent
Jimmy C. Tallent
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of United in the capacities set forth and on the 4th day of May, 2000.
/s/ Jimmy C. Tallent President, Chief Executive Officer,
Jimmy C. Tallent and Director
(Principal Executive Officer)
* Senior Vice President and Chief
- ---------------------- Financial Officer
Christopher J. Bledsoe (Principal Financial Officer)
Vice President and Controller
*
- ---------------------
Patrick J. Rusnak (Principal Accounting Officer)
/s/ Robert L. Head, Jr. Chairman of the Board
Robert L. Head, Jr.
* Director
- ---------------------
Billy M. Decker
* Director
- ---------------------
Thomas C. Gilliland
* Director
- ----------------------
Charles Hill
* Director
- ----------------------
Hoyt O. Holloway
* Director
- ----------------------
P. Deral Horne
* Director
- ----------------------
John R. Martin
* Director
- ----------------------
Clarence William Mason, Sr.
* Director
- ----------------------
Zell B. Miller
* Director
- ----------------------
W. C. Nelson, Jr.
* Director
- -----------------------
Charles E. Parks
* Director
- -----------------------
Tim Wallis
* By: /s/ Jimmy C. Tallent *By Robert L. Head, Jr.
Jimmy C. Tallent, as attorney-in-fact Robert L. Head, Jr., as
attorney-in-fact
- - EXHIBIT INDEX
Exhibit
No. Description of Exhibit
1.1 Broker-Dealer Agreement between Wachovia Securities,
Inc. and United Community Bank, Inc. dated March 31,
2000.
1.2 Escrow Agreement between United Community Banks, Inc.
and SunTrust Bank, N.A., dated March 31, 2000.
2.1 Agreement and Plan of Reorganization dated March 3,
2000, between United Community Banks, Inc. and
Independent Bancshares, Inc.
2.2 Agreement and Plan of Reorganization dated March 3,
2000, between United Community Banks, Inc. and North
Point Bancshares, Inc.
5 and 23.2 -- Opinion and Consent of Kilpatrick Stockton LLP
23.1 -- Consent of Porter Keadle Moore, LLP
EXHIBIT A
UNITED COMMUNITY BANKS, INC.
63 Highway 515
P.O. Box 398
Blairsville, Georgia 30514
SUBSCRIPTION FOR COMMON STOCK
United Community Banks, Inc. (the "Company") is offering to sell shares
of Common Stock (the "Shares") at a price of $38.00 per share.
The undersigned hereby tenders this subscription for the purchase of
the number of Shares set forth below, to United Community Banks, Inc., P.O. Box
398, Blairsville, Georgia 30514, Attention: Lois Rich. The undersigned has also
enclosed a CHECK, BANK DRAFT OR MONEY ORDER which represents the full
subscription price, payable to "SunTrust Bank as escrow agent for United
Community Banks, Inc."
The Shares purchased by the undersigned shall be registered as
specified below. If Shares are to be issued in more than one name, please
specify whether ownership is to be as individual owner, tenants in common, joint
tenants with right of survivorship, community property, etc. If Shares are to be
held in joint ownership, all joint owners should sign this subscription. If
Shares are to be issued in the name of one person for the benefit of another,
please indicate whether registration should be as trustee or custodian for such
other person.
The undersigned certifies, acknowledges and agrees that:
1. The undersigned has received a copy of the Company's Prospectus and has
read and considered the Prospectus, and by executing this subscription
agreement, the undersigned acknowledges and agrees to all the terms and
conditions of the offering as described in the Prospectus and all the terms
and conditions of this subscription. The subscriber by executing this
subscription is not waiving any rights available under applicable federal
or state securities laws.
2. A subscription is not binding until accepted by the Company. The Company
reserves the right to accept or reject a subscription, in whole or in part,
in its sole discretion.
3. The undersigned acknowledges that there is no public market for the Shares,
nor is a public market expected to develop after this offering.
4. The undersigned represents that he/she is (i) a resident of the State of
Georgia, (ii) a resident of the State of North Carolina, or (iii) a
resident of the State of Tennessee.
IN WITNESS WHEREOF, the undersigned has executed this subscription on the
date set forth below and has returned the subscription, with the full
subscription price for the Shares, to the Company.
================================================================================
Clearly Print Name(s) in which Shares
are to be Registered:
__________________________________________ _________________________________
Social Security Number (Complete
_________________________________________ Form W-9 on reverse)
Mailing Address:
______________________________________________ __________________________
Telephone Number
______________________________________________
(1) Pursuant to the offer of Shares to existing shareholders, please
indicate:
Number of Shares Subscribed for: ___________ at $38.00 per Share for a Total
Subscription Price of $______
___Check here if purchased within an IRA. Payment MUST be made by the IRA.
Personal funds WILL NOT BE ACCEPTED.
___Check here if purchased within a 401k plan. Payment MUST be made by the plan.
Personal funds WILL NOT BE ACCEPTED.
(2) If the offering is not fully subscribed for by existing shareholders
based on their pre-emptive rights, please indicate how many additional
shares you wish to purchase:_________________________. We will notify
you of the availability pursuant to the offer of Shares to the general
public.
______________________________________________________ __________
Signature of Subscriber Date
================================================================================
YOU MUST COMPLETE, SIGN AND DATE THIS FORM AND SIGN AND DATE THE FORM W-9 BELOW.
The Form W-9 is used by the Internal Revenue Service to certify Social Security
and Tax Identification numbers. Please note the Exchange Agent, SunTrust Bank,
Atlanta, may be required to withhold 31% of any dividend or cash payment made to
an individual who has not certified his Social Security number through a Form
W-9.
YOU MUST COMPLETE, SIGN AND DATE THIS FORM AND SIGN AND DATE THE FORM W-9 BELOW.
The Form W-9 is used by the Internal Revenue Service to certify social security
and tax identification numbers. Please note that the Company may be required to
withhold 31% of any dividend or cash payment made to an individual who has not
certified his social security number through a Form W-9.
- ------------------------------------- ------------------------------------------ ---------------------------------
SUBSTITUTE
FORM W-9 Part 1 - PLEASE PROVIDE YOUR TIN IN THE
Department of the Treasury BOX AT RIGHT AND CERTIFY BY SIGNING AND Social security number
Internal Revenue Service DATING BELOW
OR
--------------------------------
Employer identification number
- ------------------------------------- ------------------------------------------ ------------------------------------
Part 2 - Check the box if you are NOT
subject to backup withholding under the
provisions of section 3406(a)(1)(C) of the
Internal Revenue Code because (1) you have
not been notified that you are subject to
backup withholding as a result of failure
to report all interest or dividends or (2)
the Internal Revenue Service has notified
you that you are no longer subject to
backup withholding.
-----------------------------------------
Payer's Request for Taxpayer CERTIFICATION -- UNDER THE PENALTIES OF PERJURY I Part 3 -
Identification Number (TIN) CERTIFY THAT THE INFORMATION ON THIS FORM
IS TRUE, CORRECT AND COMPLETE Awaiting TIN
/ /
________________________________________________________
SIGNATURE DATE
- ------------------------------------- ---------------------------------------------------------------- ---------------
EXHIBIT A
UNITED COMMUNITY BANKS, INC.
63 Highway 515
P.O. Box 398
Blairsville, Georgia 30514
SUBSCRIPTION FOR COMMON STOCK
United Community Banks, Inc. (the "Company") is offering to sell shares
of Common Stock (the "Shares") at a price of $38.00 per share.
The undersigned hereby tenders this subscription for the purchase of
the number of Shares set forth below, to United Community Banks, Inc., P.O. Box
398, Blairsville, Georgia 30514, Attention: Lois Rich. The undersigned has also
enclosed a CHECK, BANK DRAFT OR MONEY ORDER which represents the full
subscription price, payable to "SunTrust Bank as escrow agent for United
Community Banks, Inc."
The Shares purchased by the undersigned shall be registered as
specified below. If Shares are to be issued in more than one name, please
specify whether ownership is to be as individual owner, tenants in common, joint
tenants with right of survivorship, community property, etc. If Shares are to be
held in joint ownership, all joint owners should sign this subscription. If
Shares are to be issued in the name of one person for the benefit of another,
please indicate whether registration should be as trustee or custodian for such
other person.
The undersigned certifies, acknowledges and agrees that:
1. The undersigned has received a copy of the Company's Prospectus and has
read and considered the Prospectus, and by executing this subscription
agreement, the undersigned acknowledges and agrees to all the terms and
conditions of the offering as described in the Prospectus and all the
terms and conditions of this subscription. The subscriber by executing
this subscription is not waiving any rights available under applicable
federal or state securities laws.
2. A subscription is not binding until accepted by the Company. The Company
reserves the right to accept or reject a subscription, in whole or in
part, in its sole discretion.
3. The undersigned acknowledges that there is no public market for the
Shares, nor is a public market expected to develop after this offering.
4. The undersigned represents that he/she is (i) a resident of the State of
Georgia, (ii) a resident of the State of North Carolina, or (iii) a
resident of the State of Tennessee.
IN WITNESS WHEREOF, the undersigned has executed this subscription on the
date set forth below and has returned the subscription, with the full
subscription price for the Shares, to the Company.
================================================================================
Clearly Print Name(s) in which
Shares are to be Registered:
_________________________________________ ________________________________
Social Security Number (Complete
_________________________________________ Form W-9 on reverse)
Mailing Address:
_________________________________________ ________________________________
Telephone Number
_________________________________________
Number of Shares Subscribed for: ________ at $38.00 per Share for a Total
Subscription Price of $________
___Check here if purchased within an IRA. Payment MUST be made by the IRA.
Personal funds WILL NOT BE ACCEPTED.
___Check here if purchased within a 401k plan. Payment MUST be made by the plan.
Personal funds WILL NOT BE ACCEPTED.
_________________________________________ ________________________________
Signature of Subscriber Date
===============================================================================
YOU MUST COMPLETE, SIGN AND DATE THIS FORM AND SIGN AND DATE THE FORM W-9 BELOW.
The Form W-9 is used by the Internal Revenue Service to certify Social Security
and Tax Identification numbers. Please note the Exchange Agent, SunTrust Bank,
Atlanta, may be required to withhold 31% of any dividend or cash payment made to
an individual who has not certified his Social Security number through a Form
W-9.
YOU MUST COMPLETE, SIGN AND DATE THIS FORM AND SIGN AND DATE THE FORM W-9 BELOW.
The Form W-9 is used by the Internal Revenue Service to certify social security
and tax identification numbers. Please note that the Company may be required to
withhold 31% of any dividend or cash payment made to an individual who has not
certified his social security number through a Form W-9.
- ------------------------------------- ------------------------------------------ ---------------------------------
SUBSTITUTE
FORM W-9 Part 1 - PLEASE PROVIDE YOUR TIN IN THE
Department of the Treasury BOX AT RIGHT AND CERTIFY BY SIGNING AND Social security number
Internal Revenue Service DATING BELOW
OR
--------------------------------
Employer identification number
- ------------------------------------- ------------------------------------------ ------------------------------------
Part 2 - Check the box if you are NOT
subject to backup withholding under the
provisions of section 3406(a)(1)(C) of the
Internal Revenue Code because (1) you have
not been notified that you are subject to
backup withholding as a result of failure
to report all interest or dividends or (2)
the Internal Revenue Service has notified
you that you are no longer subject to
backup withholding.
-----------------------------------------
Payer's Request for Taxpayer CERTIFICATION -- UNDER THE PENALTIES OF PERJURY I Part 3 -
Identification Number (TIN) CERTIFY THAT THE INFORMATION ON THIS FORM
IS TRUE, CORRECT AND COMPLETE Awaiting TIN
/ /
________________________________________________________
SIGNATURE DATE
- ------------------------------------- ---------------------------------------------------------------- ---------------
UNITED COMMUNITY BANKS, INC.
Common Stock
BROKER-DEALER AGREEMENT
March 31, 2000
Wachovia Securities, Inc.
IJL Financial Center
201 North Tryon Street, Suite 2300
Charlotte, North Carolina 28202
Dear Sirs:
SECTION 1. Broker-Dealer Agreement. United Community Banks, Inc., a
Georgia corporation (the "Company") proposes to issue, offer and sell a minimum
of 350,000 shares and a maximum of 450,000 shares of its authorized but unissued
Common Stock, par value $1.00 per share (the "Common Shares") and intends to
offer a portion of those securities in the State of North Carolina. In order
that its offering meets the requirements of Chapter 78A of the North Carolina
General Statutes ("Chapter 78A"), the Company must obtain the sponsorship of its
offering by a North Carolina registered dealer.
Accordingly, the Company hereby appoints Wachovia Securities, Inc.
("WSI") as a sponsoring dealer and WSI accepts appointment under the provisions
of Section 18 NCAC 6.1305 of the North Carolina Administrative Code. In that
capacity, WSI will act as a sponsoring dealer for the account of the Company in
connection with a public offering of the Common Shares in the State of North
Carolina after the effective date of the registration statement hereinafter
referred to. WSI will act as dealer on behalf of the Company in connection with
effecting the offer and sale of the Common Shares in North Carolina to residents
of North Carolina. In North Carolina, the sales of the Common Shares are to be
made for the account of the Company at a price of $38.00 per share, unless and
until the Company establishes another price. WSI has not and will not be
involved with determining the price of the shares to be sold in the public
offering and shall have no financial commitment to purchase any of the Common
Shares.
SECTION 2. Representations and Warranties of the Company. The Company
hereby represents and warrants to WSI that:
(a) A registration statement on Form S-3 (the "Registration
Statement") has been or will be filed with the Securities and Exchange
Commission (the "Commission") with respect to the Common Shares and has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the Commission's
rules and regulations (the "Rules and Regulations"). The Company has
1
prepared and has filed or proposes to file prior to the effective date
of such registration statement an amendment or amendments to such
registration statement, which amendment or amendments have been or will
be similarly prepared. There have been delivered to WSI a copy of such
registration statement and amendments, as to which the prospectus (the
"Prospectus") is a part, together with a copy of each exhibit filed
therewith. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final Prospectus, or
(ii) a final Prospectus in accordance with Rule 424(b) of the Rules and
Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of the Prospectus and the Prospectus conforms in all
material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, does not include 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; and at the time the Registration Statement
becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements
thereto, will contain all material statements and information required
to be included therein by the Act and the Rules and Regulations and
will in all material respects conform to the requirements of the Act
and the Rules and Regulations, and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, will
include 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 therein not misleading; provided, however, no representation
or warranty contained in this subsection 2(b) shall be applicable to
information contained in or omitted from the Registration Statement,
the Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by or
on behalf of WSI, specifically for use in the preparation thereof.
(c) The Company is current in all filings of reports,
financial statements and schedule requirements to be made with the
Commission under the Securities Exchange Act of 1934 (the "Exchange
Act").
(d) The Company and each of United Community Bank ("United"),
Carolina Community Bank ("Carolina"), Peoples Bank of Fannin County
("Fannin"), Towns County Bank ("Towns"), White County Bank ("White"),
First Clayton Bank and Trust ("First Clayton"), Bank of Adairsville
("Adairsville"), and 1st Floyd Bank ("Floyd"), (United, Carolina,
Fannin, Towns, White, First Clayton, Adairsville and Floyd are
collectively referred to herein as the "Subsidiaries") have been duly
organized and are validly existing and in good standing under the laws
of their respective jurisdictions of organization, with full power and
authority to own and lease their properties and conduct their
respective businesses as described in the Prospectus; except as
disclosed in the Prospectus and the financial statements of the
2
Company, the Company, directly or indirectly, owns all of the
outstanding capital stock of its Subsidiaries free and clear of all
claims, liens, charges and encumbrances; the Company and each of its
Subsidiaries are in possession of and operating in compliance with all
banking, insurance and other applicable approvals, authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of their respective businesses, all of which are valid and in
full force and effect. The deposits in each of the Company's banking
subsidiaries are insured by the Federal Deposit Insurance Corporation.
(e) The Company has authorized and outstanding capital stock
as set forth under the heading "Capitalization" in the Prospectus; the
issued and outstanding Common Shares have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued
in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and conform to the description
thereof contained in the Prospectus. All issued and outstanding shares
of capital stock of each Subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and are owned directly
or indirectly by the Company. Except as disclosed in or contemplated by
the Prospectus and the financial statements of the Company and the
related notes thereto included in the Prospectus, neither the Company
nor any Subsidiary has outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock, or any such
options, rights, convertible securities or obligations. The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights.
(f) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable, and will conform to the description thereof
contained in the Prospectus. No preemptive rights or other rights to
subscribe for or purchase exist with respect to the issuance and sale
of the Common Shares by the Company pursuant to this Agreement. No
shareholder of the Company has any right which has not been waived to
require the Company to register the sale of any share owned by such
shareholder under the Act in the public offering contemplated by this
Agreement. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the issuance and
sale of the Common Shares to be sold by the Company as contemplated
herein.
(g) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws affecting the rights of creditors
3
generally and by principles of equity, whether considered at law or
equity. The making and performance of this Agreement by the Company and
the consummation of the transactions herein contemplated will not
violate any provisions of the articles of incorporation or bylaws, or
other organizational documents, of the Company and will not conflict
with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company is a party
or by which the Company or any of its properties may be bound or
affected, any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or any of
its properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement,
except for compliance with the Act and Blue Sky securities laws
applicable to the public offering of the Common Shares by the Company.
(h) Porter Keadle Moore, LLP, who have expressed their opinion
with respect to the financial statements and schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus and in the Registration Statement, or incorporated by
reference therein, and are independent accountants as required by the
Act and the Rules and Regulations.
(i) The combined financial statements and schedules of the
Company and the related notes thereto included in the Registration
Statement and the Prospectus present fairly the financial position of
the Company as of the respective dates of such financial statements and
schedules, and the results of operations and changes in financial
position of the Company for the respective periods covered thereby.
Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis as certified by Porter Keadle Moore, LLP. No other
financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the
Prospectus under the captions "Capitalization" and "Pro Forma
Confidential Financial Statements" fairly present the information set
forth therein on the basis stated in the Registration Statement. The
pro forma financial information (including the related notes) included
in the Prospectus complies as to form in all material respects to the
applicable accounting requirements of the Act and the Rules and
Regulations, and management of the Company believes that the
assumptions underlying the pro forma adjustments are reasonable. Such
pro forma adjustments have been properly applied to the historical
amounts in the compilation of the information and such information
fairly represents with respect to the Company the financial position,
results of operations and other information purported to be shown
therein at the respective dates and for the respective periods
specified.
4
(j) The Company has disclosed in the Registration Statement
and Prospectus all information it is required to disclose therein, and
such Registration Statement and Prospectus are true and correct in
every material respect and do not fail to disclose any information
which if not disclosed would cause the Registration Statement and/or
Prospectus to be materially misleading in any respect.
(k) The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted
only in accordance with management's general or specific authorization,
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
SECTION 3. Representations and Warranties of WSI. WSI hereby represents
and warrants to the Company that:
(a) The information set forth in the Prospectus that was
furnished to the Company by and on behalf of WSI for use in connection
with the preparation of the Registration Statement and the Prospectus
is correct in all material respects;
(b) WSI is registered as a dealer under the requirements of
Chapter 78A; and
(c) WSI will make all necessary filings with the National
Association of Securities Dealers, Inc. (the "NASD") in connection with
its services provided hereunder.
SECTION 4. Covenants of the Company. The Company covenants and
agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is executed and delivered by the
parties hereto, to become effective. WSI will have the opportunity to
review and approve the Registration Statement and any amendment
thereto. The Company will promptly advise WSI in writing (i) of the
receipt of any comments of the Commission, (ii) of any request of the
Commission for amendment of or supplement to the Registration Statement
(either before or after it becomes effective) or the Prospectus or for
additional information, (iii) when the Registration Statement shall
have become effective, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose. If
the Commission shall enter any such stop order at any time, the Company
will use its best efforts to obtain the lifting of such order at the
earliest possible moment. The Company will not file any amendment or
5
supplement to the Registration Statement (either before or after it
becomes effective) or the Prospectus of which WSI has not been
furnished with a copy a reasonable time prior to such filing or to
which WSI reasonably objects or which is not in compliance with the Act
and the Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon WSI's request, any amendment or supplements to the
Registration Statement or the Prospectus which in WSI's judgment may be
necessary or advisable to enable WSI to continue the distribution of
the Common Shares, and will use its best efforts to cause the same to
become effective as promptly as possible. In addition, the Company will
assist WSI in connection with WSI's filings with the NASD. The Company
covenants that it will not commence the offering until such time as WSI
has received any required approvals from the NASD.
(c) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event
occurs, as a result of which the Prospectus, including any amendments
or supplements, would include an untrue statement of a material fact,
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments
or supplements, to comply with the Act or the Rules and Regulations,
the Company will promptly advise WSI thereof and will promptly prepare
and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an
amendment or supplement which will effect such compliance and will use
its best efforts to cause the same to become effective as soon as
possible; and, in case WSI is required to deliver a prospectus after
such nine-month period, the Company upon request, but at the expense of
WSI, will promptly prepare such amendment or amendments to the
Registration Statement and such Prospectus or Prospectuses as may be
necessary to permit compliance with the requirements of Section
10(a)(3) of the Act.
(d) The Company will timely file such reports pursuant to the
Exchange Act as are necessary in order to make generally available to
its security holders as soon as practicable an earnings statement for
the purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to
be delivered in connection with sales by WSI, the Company, at its
expense, but only for the nine-month period referred to in Section
10(a)(3) of the Act, will furnish to WSI or mail to the order of WSI
copies of the Registration Statement and the Prospectus and all
amendments and supplements to any such documents, in each case as soon
as available and in such quantities as WSI may request, for the
purposes contemplated by the Act.
(f) The Company shall qualify or register the Common Shares
for sale under (or obtain exemptions from the application of) the Blue
Sky securities law of North Carolina, will comply with such law and
will continue such qualification, registration and exemption in effect
so long as reasonably required for the distribution of the Common
Shares. The Company will advise WSI promptly of the suspension of the
qualification or registration of (or any such exemption relating to)
the Common Shares for offering, sale or trading in any jurisdiction or
6
any initiation or threat of any proceeding for any such purpose, and in
the event of the issuance of any order suspending such qualification,
registration or exemption, the Company, with WSI's cooperation, will
use its best efforts to obtain the withdrawal thereof.
(g) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its
statements under the caption "Use of Proceeds" in the Prospectus.
WSI may, in its sole discretion, waive in writing the performance by
the Company of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION 5. Payment of Fees and Expenses.
(a) The Company will pay to WSI at the closing of the offering
a fee of $40,000 for WSI's services performed hereunder; and
(b) Whether or not the transactions contemplated hereunder are
consummated or this Agreement becomes effective or is terminated, the
Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby and all reasonable
fees and expenses of WSI, including reasonable fees and disbursements
of WSI's counsel.
(c) The parties agree that, pursuant to clauses (a) and (b)
above, if an offering is not consummated in accordance with the terms
of this agreement, WSI will only be entitled to be reimbursed its
actual out of pocket expenses.
SECTION 6. Effectiveness of Registration Statement. WSI and the Company
will use their best efforts to cause the Registration Statement to become
effective, to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
SECTION 7. Indemnification.
(a) The Company agrees to indemnify and hold harmless WSI
against any losses, claims, damages or liabilities to which WSI may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged
untrue statement made by the Company in Section 2 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any material
fact contained in (A) the Registration Statement or any amendment
thereto, or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"); or (iii)
the omission or alleged omission to state in the Registration Statement
or any amendment thereto or any Application, a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse WSI for any legal or other expenses
7
reasonably incurred by WSI in connection with investigating, defending
against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any amendment
thereto or any Application in reliance upon and in conformity with
written information furnished to the Company by WSI expressly for
inclusion in the Prospectus beneath the heading "The Offering". The
Company will not, without the prior written consent of WSI, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of
action or portion thereof) in respect of which indemnification may be
sought hereunder (whether or not WSI is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of WSI from all liability arising out
of such claim, action, suit or proceeding or related cause of action or
portion thereof.
(b) WSI agrees to indemnify and hold harmless the Company and
its officers, directors, agents, representatives and affiliates against
any losses, claims, damages or liabilities to which the Company or its
officers, directors, agents, representatives and affiliates may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or any amendment thereto or any Application or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by WSI
expressly for inclusion in the Prospectus beneath the heading "The
Offering"; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or
action.
(c) Promptly after receipt by an indemnified party under
subsection (a) and (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to
the indemnifying party); provided, however, that if the defendants in
any such action included the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party and such indemnified party shall have the right to
select separate counsel to defend such action on behalf of such
indemnified party. After such notice from the indemnifying party to
8
such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend
such action, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof, unless
(i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same jurisdiction
arising out of the same general allegations or circumstances, which
separate counsel shall be designated by WSI in the case of indemnity
arising under paragraph (a) of this Section 7) or (ii) the indemnifying
party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. Nothing in this Section
7(c) shall preclude an indemnified party from participating at its own
expense in the defense of any such action so assumed by the
indemnifying party.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and WSI on the other from the offering
of the Common Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and WSI on
the other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and WSI on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Company bear to the total fees received by WSI. The relative fault
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Company on the one hand and WSI on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and WSI agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
9
subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
subsection (d), WSI shall not be required to contribute any amount in
excess of the fees described in Section 1 hereto. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 7 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls WSI within the meaning of the Securities Act; and
the obligations of WSI under this Section 7 shall be in addition to any
liability which WSI may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and
to each person, if any, who controls the Company within the meaning of
the Securities Act.
SECTION 8. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice
to WSI or by WSI by notice to the Company at any time prior to the time
this Agreement shall become effective as to all its provisions, and any
such termination shall be without liability on the part of the Company
to WSI (except for the fees and expenses to be paid or reimbursed by
the Company, pursuant to Sections 5 and 7 hereof and except to the
extent provided in Section 9 hereof) or of WSI to the Company (except
for the expenses to be paid or reimbursed by WSI, pursuant to Section 7
hereof and except to the extent provided in Section 9 hereof).
(b) This Agreement may also be terminated by WSI by notice to
the Company (i) if any adverse event shall have occurred or shall exist
which makes untrue or incorrect in any material respect any statement
or information contained in the Registration Statement or Prospectus or
which is not reflected in the Registration Statement or Prospectus but
should be reflected therein in order to make the statements or
information contained therein not misleading in any material respect,
or (ii) if there shall be any action, suit or proceeding pending or
threatened; or there shall have been any development or prospective
10
development involving particularly the business or properties or
securities of the Company or any of its Subsidiaries or the
transactions contemplated by this Agreement which, in the reasonable
judgment of WSI, may materially and adversely affect the Company's
business or earnings and makes it impracticable or inadvisable to offer
or sell the Common Shares. Any termination pursuant to this subsection
(b) shall be without liability on the part of WSI to the Company or on
the part of the Company to WSI (except for the fees and expenses to be
paid or reimbursed by the Company pursuant to Sections 5 and 7 hereof
and except to the extent provided in Section 9 hereof).
SECTION 9. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of the Company's officers and of WSI set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of WSI, the Company, or any of its or
their partners, officers or directors or any controlling person, as the case may
be, and will survive delivery of and payment for the Common Shares sold
hereunder and any termination of this Agreement.
SECTION 10. Notices. All communications hereunder shall be in writing
and, if sent to WSI shall be mailed, delivered or telegraphed and confirmed to
Wachovia Securities, Inc., IJL Financial Center, 201 North Tryon Street, Suite
2300, Charlotte, North Carolina, Attention: James H. Glen, Jr., with a copy to
Smith, Helms, Mulliss & Moore, LLP, 201 North Tryon Street, Charlotte, North
Carolina, 28202, Attention: Boyd C. Campbell, Jr.; and if sent to the Company
shall be mailed, delivered or telegraphed and confirmed to the Company at P.O.
Box 398, 63 Highway 515, Blairsville, Georgia 30512, with a copy to Kilpatrick
Stockton LLP, Suite 2800, 1100 Peachtree Street, Atlanta, Georgia 30309,
Attention: F. Sheffield Hale. The Company or WSI may change the address for
receipt of communications hereunder by giving notice to the others.
SECTION 11. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, and to the benefit of the officers and
directors and controlling persons referred to in Section 7, and in each case
their respective successors, personal representatives and assigns, and no other
person will have any right or obligation hereunder. No such assignment shall
relieve any party of its obligations hereunder. The term "successors" shall not
include any purchaser of the Common Shares as such from WSI merely by reason of
such purchase.
SECTION 12. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 13. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of North Carolina.
11
SECTION 16. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company.
If the foregoing is in accordance with WSI's understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company and WSI, all in accordance
with its terms.
Very truly yours,
UNITED COMMUNITY BANKS, INC.
By: /s/ Patrick J. Rusnak
Name: Patrick J. Rusnak
Title: Controller
WACHOVIA SECURITIES, INC.
By: /s/ Joe H. Glen, Jr.
Name: Joe H. Glen, Jr.
Title:
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into the ____ day of ________, 2000,
by and among United Community Banks, Inc., a Georgia corporation, ("United"),
Wachovia Securities, Inc., a North Carolina corporation ("WSI") and SunTrust
Bank, a Georgia state chartered bank, as Escrow Agent ("Escrow Agent").
WHEREAS, United contemplates a public offering of a minimum of 350,000
shares (the "Minimum Purchase") up to a maximum of 450,000 shares of its common
stock, par value $1.00 per share (the "Common Stock") at a public offering price
of $38.00 per share (the "Offering"); and
WHEREAS, in connection with the Offering, United has filed a
Registration Statement on Form S-3 (File No. 333-_____) with the Securities &
Exchange Commission (the "Registration Statement"); and
WHEREAS, pursuant to a Broker Dealer Agreement dated March 31, 2000, by
and between United and WSI (the "Broker Dealer Agreement"), WSI agreed to act as
a sponsoring Dealer in connection with the sale of Common Stock to investors in
the State of North Carolina (the "NC Investors"); and
WHEREAS, under the terms of the Registration Statement, each investor
in the Offering (each an "Investor" and cumulatively the "Investors") will be
required to submit a subscription agreement for shares of Common Stock
(cumulatively, the "Subscription Agreements"), along with the aggregate purchase
price for shares of Common Stock subscribed for ("Subscription Proceeds" or
"Fund"); and
WHEREAS, the parties intend that Escrow Agent receive the Subscription
Agreements and the Subscription Proceeds from the Investors, and hold and
distribute such Subscription Agreements and Subscription Proceeds in accordance
with the terms and conditions set forth herein; and
WHEREAS, if subscriptions for the Minimum Purchase are not received and
accepted by United by the specific date described in, or that date as extended
pursuant to, the Registration Statement (the "Offering Termination Date"), all
Subscription Proceeds are to be returned to each Investor;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Appointment of Escrow Agent. (a) United hereby appoints Escrow Agent
--------------------------
for the purpose of holding the Subscription Agreements and Subscription Proceeds
in accordance with the terms and conditions contained herein. Escrow Agent
hereby accepts such appointment.
(b) Investors will be instructed to remit their Subscription Agreements
and Subscription Proceeds (in the form of check, bank draft or money order
payable to SunTrust Bank, as escrow agent for United Community Banks, Inc.)
directly to United Community Banks, Inc. and United will promptly send
Subscription Proceeds to SunTrust Bank.
2. Disposition. (a) Within one business day after receipt by United or
-----------
WSI of any Subscription Proceeds, it will forward those proceeds to Escrow
Agent. WSI agrees to transmit any checks it receives to the Escrow Agent by noon
on the day after receipt. Notwithstanding the foregoing, as described in Section
1(b) above, all checks shall be made payable to "SunTrust Bank, as escrow agent
for United Commuhnity Banks, Inc."
(b) Within one (1) business day of United's receipt of any Subscription
Agreements for any NC Investor, it will forward that Subscription Agreement to
WSI.
(c) Upon receipt of a Subscription Agreement, United shall determine
whether to accept or reject such Subscription Agreement, and shall notify Escrow
Agent and WSI (if it is a NC Investor) in writing of same. Within two (2)
business days of United's notice of rejection, United shall promptly return to
the Investor who executed the rejected Subscription Agreement such Subscription
Agreement and will direct the Escrow Agent to refund the amount tendered
therewith.
(d) Upon receipt by Escrow Agent prior to the Offering Termination Date
of Subscription Agreements and Subscription Proceeds for a Minimum Purchase
which have been accepted in writing by United, the escrow will terminate and
Escrow Agent shall (i) within two (2) business days of such receipt forward all
Subscription Proceeds then held by it to United; and (ii) after WSI or United
notifies Escrow Agent that the Minimum Purchase has been met, thereafter any
additional proceeds shall be disbursed to United upon the written direction of
United.
(e) In the event that on the Offering Termination Date, Escrow Agent is
not in receipt of Subscription Proceeds for the Minimum Purchase which have been
accepted in writing by United, Escrow Agent shall, after notification by United
or WSI in writing of same, terminate the escrow and Escrow Agent shall promptly
return all Subscription Proceeds delivered to it to each Investor and United
will supply SunTrust with Subscription Agreements containing the addresses of
the Investors.
(f) Escrow Agent shall invest any Subscription Proceeds received from
Investors in short-term obligations of the United States government,
or certificates of deposit issued by SunTrust Bank as may be directed by United
in writing, until termination of the escrow. In the absence of written
directions, SunTrust will invest the Subscription Proceeds in short-term
obligations of the United States government. United will be entitled to all
interest earned on the escrow.
3. Fees. United agrees to compensate Escrow Agent in accordance with
----
its schedule for fees attached hereto as Exhibit A.
4. Termination of Escrow Funds; Payment of Interest. The Escrow
-----------------------------------------------------
Agreement will terminate on the Offering Termination Date. United hereby agrees
to provide Escrow Agent advance confirmation of the Offering Termination Date.
Within two (2) business days of Escrow Agent's receipt of such notice, Escrow
Agent shall forward to United all interest actually earned on Subscription
Proceeds then held by Escrow Agent.
-2-
5. Legal Action. Escrow Agent shall be under no duty to take any legal
------------
action in connection with this Agreement or towards its enforcement, or to
appear, prosecute or defend any action or legal proceeding that would result in
or might require it to incur any cost, expense, loss or liability, unless it
shall have been indemnified with respect thereto in accordance with Paragraph 6
of this Agreement.
6. Indemnification. (a) Escrow Agent undertakes to perform only such
---------------
duties as are expressly set forth herein, and no additional duties or
obligations shall be implied hereunder. In performing its duties under this
Agreement, or upon the claimed failure to perform any of its duties hereunder,
Escrow Agent shall not be liable to anyone for any damages, losses or expenses
which may be incurred as a result of Escrow Agent so acting or failing to so
act; provided, however, Escrow Agent shall not be relieved from liability for
damages arising out of its proven gross negligence or willful misconduct under
this Agreement. Escrow Agent shall in no event incur any liability with respect
to (i) any action taken or omitted to be taken in good faith upon advice of
legal counsel, which may be counsel to any party hereto, given with respect to
any question relating to the duties and responsibilities of Escrow Agent
hereunder or (ii) any action taken or omitted to be taken in reliance upon any
instrument delivered to Escrow Agent and believed by it to be genuine and to
have been signed or presented by the proper party or parties.
(b) United warrants to and agrees with Escrow Agent that, unless
otherwise expressly set forth in this Agreement, there is no security interest
in the Fund or any part of the Fund; no financing statement under the Uniform
Commercial Code of any jurisdiction is on file in any jurisdiction claiming a
security interest in or describing, whether specifically or generally, the Fund
or any part of the Fund; and the Escrow Agent shall have no responsibility at
any time to ascertain whether or not any security interest exists in the Fund or
any part of the Fund or to file any financing statement under the Uniform
Commercial Code of any jurisdiction with respect to the Fund or any part
thereof.
(c) As an additional consideration for and as an inducement for Escrow
Agent to act hereunder, it is understood and agreed that, in the event of any
disagreement between the parties to this Agreement or among them or any other
person(s) resulting in adverse claims and demands being made in connection with
or for any money or other property involved in or affected by this Agreement,
Escrow Agent shall be entitled, at the option of Escrow Agent, to refuse to
comply with the demands of such parties, or any of such parties, so long as such
disagreement shall continue. In such event, Escrow Agent shall make no delivery
or other disposition of the Fund or any part of such Fund. Anything herein to
the contrary notwithstanding, Escrow Agent shall not be or become liable to such
parties or any of them for the failure of Escrow Agent to comply with the
conflicting or adverse demands of such parties or any of such parties.
-3-
Escrow Agent shall be entitled to continue to refrain and refuse to
deliver or otherwise dispose of the Fund or any part thereof or to otherwise act
hereunder, as stated above, unless and until:
(1) the rights of such parties have been finally settled by binding
arbitration or duly adjudicated in a court having jurisdiction of the parties
and the Fund; or
(2) the parties have reached an agreement resolving their differences
and have notified Escrow Agent in writing of such agreement and have provided
Escrow Agent with indemnity satisfactory to Escrow Agent against any liability,
claims or damages resulting from compliance by Escrow Agent with such agreement.
In the event of a disagreement between such parties as described above,
Escrow Agent shall have the right, in addition to the rights described above and
at the option of Escrow Agent, to tender into the registry or custody of any
court having jurisdiction, all money and property comprising the Fund and may
take such other legal action as may be appropriate or necessary, in the opinion
of Escrow Agent. Upon such tender, the parties hereto agree that Escrow Agent
shall be discharged from all further duties under this Agreement; provided,
however, that the filing of any such legal proceedings shall not deprive Escrow
Agent of its compensation hereunder earned prior to such filing and discharge of
Escrow Agent of its duties hereunder.
(d) United agrees to pay Escrow Agent for its ordinary services
hereunder the fees determined in accordance with and payable as specified in the
Schedule of Fees set forth in Exhibit A attached hereto and made a part hereof.
In addition, United agrees to pay to Escrow Agent its expenses incurred in
connection with this Agreement, including but not limited to the actual cost of
legal services in the event Escrow Agent deems it necessary to retain counsel.
Such expenses shall be paid to Escrow Agent within 10 days following receipt by
United of a written statement setting forth such expenses.
United agrees that, in the event any controversy arises under or in
connection with this Agreement or the Fund or Escrow Agent is made a party to or
intervenes in any litigation pertaining to this Agreement or the Fund, to pay to
Escrow Agent reasonable compensation for its extraordinary services and to
reimburse Escrow Agent for all costs and expenses associated with such
controversy or litigation.
As security for all fees and expense to Escrow Agent hereunder and any
and all losses, claims, damages, liabilities and expenses incurred by Escrow
Agent in connection with its acceptance of appointment hereunder or with the
performance of its obligations under this Agreement and to secure the obligation
of United to indemnify Escrow Agent as provided herein, Escrow Agent is hereby
granted a security interest in and a lien upon the Fund, which security interest
and lien shall be prior to all other security interests, liens or claims against
the Fund or any part thereof.
-4-
(e) Escrow Agent may resign at any time from its obligations
under this Agreement by providing written notice to the parties hereto. Such
resignation shall be effective on the date set forth in such written notice
which shall be no earlier than 10 days after such written notice has been given.
In the event no successor escrow agent has been appointed on or prior to the
date such resignation is to become effective, Escrow Agent shall be entitled to
tender into the custody of a court of competent jurisdiction all assets then
held by it hereunder and shall thereupon be relieved of all further duties and
obligations under this Agreement. Escrow Agent shall have no responsibility for
the appointment of a successor escrow agent hereunder.
(f) Escrow Agent shall have no obligation to take any legal
action in connection with this Agreement or towards it enforcement, or to appear
in, prosecute or defend any action or legal proceeding which would or might
involve it in any cost, expense, loss or liability unless security and
indemnity, as provided in this paragraph, shall be furnished.
United agrees to indemnify Escrow Agent and it officers,
directors, employees and agents and save Escrow Agent and its officers,
directors, employees and agents harmless from and against any and all Claims (as
hereinafter defined) and Losses (as hereinafter defined) which may be incurred
by Escrow Agent or any of such officers, directors, employees or agents as a
result of Claims asserted against Escrow Agent or any of such officers,
directors, employees or agents as a result of or in connection with Escrow
Agent's capacity as such under this Agreement by any person or entity. For the
purposes hereof, the term "Claims" shall mean all claims, lawsuits, causes of
action or other legal actions and proceedings of whatever nature brought against
(whether by way of direct action, counterclaim, cross action or impleader)
Escrow Agent or any such officer, director, employee or agent, even if
groundless, false or fraudulent, so long as the claim, lawsuit, cause of action
or other legal action or proceeding is alleged or determined, directly or
indirectly, to arise out of, result from, relate to or be based upon, in whole
or in part: (a) the acts or omissions of United, (b) the appointment of Escrow
Agent as escrow agent under this Agreement, or (c) the performance by Escrow
Agent of its powers and duties under this Agreement; and the term "Losses" shall
mean losses, costs, damages, expenses, judgments and liabilities of whatever
nature (including but not limited to attorneys', accountants' and other
professionals' fees, litigation and court costs and expenses and amounts paid in
settlement), directly or indirectly resulting from, arising out of or relating
to one or more Claims. Upon the written request of Escrow Agent or any such
officer, director, employee or agent (each referred to hereinafter as an
"Indemnified Party"), United agrees to assume the investigation and defense of
any Claim, including the employment of counsel acceptable to the applicable
Indemnified Party and the payment of all expenses related thereto and,
notwithstanding any such assumption, the Indemnified Party shall have the right,
and United agrees to pay the cost and expense thereof, to employ separate
counsel with respect to any such Claim and participate in the investigation and
defense thereof in the event that such Indemnified Party shall have been advised
by counsel that there may be one or more legal defenses available to such
Indemnified Party which are different from or additional to those available to
United. United hereby agrees that the indemnifications and protections afforded
Escrow Agent in this section shall survive the termination of the Agreement.
-5-
In order to induce and as partial consideration for Escrow Agent's
acceptance of this Agreement, United or WSI acknowledge that Escrow Agent is
serving as escrow agent for the limited purposes set forth herein and each
represent, covenant and warrant to Escrow Agent that no statement or
representation, whether oral or in writing, has been or will be made to any
prospective subscribers for any of the Common Stock to the effect that Escrow
Agent has investigated the desirability or advisability of investment in the
Common Stock or approved, endorsed or passed upon the merits of such investment
or is otherwise involved in any manner with the transactions or events
contemplated in the Parties' disclosure statements or subscription agreements,
other than as Escrow Agent under this Agreement. It is further agreed that no
party shall in any way use the name "SunTrust Bank" or "SunTrust Banks, Inc." in
any sales presentation or literature except in the context of the duties of the
Escrow Agent as escrow agent of the offering of the Common Stock in the
strictest sense. Any breach or violation of the paragraph shall be grounds for
immediate termination of the Agreement by Escrow Agent in accordance with the
terms and provisions set forth herein.
Without limitation to any release, indemnification or hold harmless
provision in favor of Escrow Agent as elsewhere provided in this Agreement,
United covenants and agrees to indemnify Escrow Agent and its officers,
directors, employees and agents and to hold Escrow Agent and such officers,
directors, employees and agents harmless from and against all liability, cost,
losses and expenses, including but not limited to attorneys' fees and expenses
which are suffered or incurred by Escrow Agent or any such officer, director,
employee or agent as a direct or indirect result of the threat or the
commencement of any claim or proceeding against Escrow Agent or any such
officer, director, employee or agent based in whole or in part upon the
allegation of a misrepresentation or an omission of a material or significant
fact in connection with the sale or subscription of any one or more of the
Common Stock. Escrow Agent shall have no responsibility for approving or
accepting on behalf of United any proceeds delivered to it hereunder, nor shall
Escrow Agent be responsible for authorizing issuance of the Common Stock or for
determining the qualification of any purchaser or the accuracy of the
information contained in the Parties' disclosure statements or subscription
agreements.
7. Interpleader. If the parties at any time are in disagreement about
------------
the interpretation of this Agreement, or the rights and obligations hereunder,
or the propriety of any action contemplated by the Escrow Agent hereunder, the
Escrow Agent may, at its sole discretion, file an action in interpleader to
resolve said disagreement. The Escrow Agent shall be indemnified by United for
all costs, including reasonable attorney's fees, in connection with the
aforesaid interpleader action, and shall be fully protected by United in
suspending all or a part of its activities under this Agreement until a final
judgment in the interpleader action is received.
8. Notices. All notices and other communications shall be in writing
-------
and shall be deemed to have been given immediately if delivered personally, on
receipt of facsimile transmission with original mailed via First Class Mail
(provided such receipt is confirmed by the recipient), or five days after
mailing by registered or certified mail (return receipt requested), postage
prepaid to the parties to this Agreement at the following addresses or at such
other address for a party as shall be specified by like notice:
-6-
(a) To United:
United Community Banks, Inc.
P.O. Box 398
Blairsville, Georgia 30512
Attn.: Christopher Bledsoe, Chief Financial Officer
Telephone: (706) 745-2151
Telecopy: (706) 745-4865
EIN: 58-1807304
(b) To WSI:
Wachovia Securities, Inc.
IJL Financial Center
201 North Tryon Street
Charlotte, North Carolina 28202
Attn.: James H. Glen, Jr.
Telephone: (704) 379-9217
Telecopy: (704) 379-9025
(c) To Escrow Agent:
SunTrust Bank
Corporate Trust Department
424 Church Street, 6th Floor
Nashville, Tennessee 37219
Attn.: Donna Williams
Telephone: (615) 748-4745
Telecopy: (615) 748-5331
9. Execution and Counterparts. This Agreement may be executed in any
---------------------------
number of counterparts, each of which shall be deemed an original, and all of
which shall constitute a single instrument.
10. Entire Agreement. This Agreement supersedes all prior discussions
---------------
and agreements between the parties with respect to the subject matter hereof,
and this Agreement contains the sole and entire agreement between the parties
with respect to the matters covered hereby and thereby. This Agreement shall not
be altered or amended, except by an instrument in writing, signed by or on
behalf of the parties hereto.
11. Governing Law. The validity and effect of this Agreement shall be
-------------
governed by and construed and enforced in accordance with the laws of the State
of Tennessee.
-7-
12. Successors and Assigns. Except for resignations permitted under the
---------------------
terms hereof, this Agreement may not be assigned to any party hereto without the
prior written consent of the other parties hereto. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, legal representatives, successors and permitted assigns.
13. Partial Invalidity and Severability. All rights and restrictions
-------------------------------------
contained herein may be exercised and may be applicable and binding only to the
extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement shall be held to be illegal, invalid
or unenforceable by a court of competent jurisdiction or by a duly constituted
arbitral tribunal, it is the intent of the parties that the remaining terms
hereof shall constitute their Agreement with respect to the subject matter
hereof and all such remaining terms shall remain in full force and effect.
14. Headings. The headings as to contents of particular paragraphs in
--------
this Agreement are inserted only for convenience and shall not be construed as a
part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
and caused this Agreement to be executed under seal by their duly authorized
officers as of the day and year first above written.
(CORPORATE SEAL) UNITED COMMUNITY BANKS, INC.
Attest:/s/ Billy M. Decker By: /s/ Christopher J. Bledsoe
Secretary Christopher J. Bledsoe
Chief Financial Officer
(CORPORATE SEAL) WACHOVIA SECURITIES, INC.
Attest:______________________ By: /s/ Joe H. Glen, Jr.
Secretary
(Signatures continued on following page)
(Signatures continued from previous page)
ESCROW AGENT:
SUNTRUST BANK
(BANK SEAL) By:_____________________________
Name:_______________________
Title:______________________
EXHIBIT A
FEES
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered into as of this 3rd day of March, 2000, by and between
INDEPENDENT BANCSHARES, INC., a Georgia business corporation (hereinafter
"Independent," and unless the context otherwise requires, the term "Independent"
shall include both Independent Bancshares, Inc. and its subsidiary Independent
Bank & Trust Company ("Independent Bank")), and UNITED COMMUNITY BANKS, INC., a
Georgia business corporation (hereinafter "United," and unless the context
otherwise requires, the term "United" shall include United Community Banks, Inc.
and its subsidiaries, United Community Bank, a Georgia banking corporation,
Peoples Bank of Fannin County, a Georgia banking corporation, White County Bank,
a Georgia banking corporation, Towns County Bank, a Georgia banking corporation,
Bank of Adairsville, a Georgia banking corporation, Carolina Community Bank, a
North Carolina banking corporation, First Clayton Bank & Trust Company, a
Georgia banking corporation, 1st Floyd Bank, a Georgia banking corporation and
United Family Finance Company, a Georgia business corporation).
R E C I T A L S:
WHEREAS, the respective boards of directors of Independent and
United deem it advisable and in the best interests of each such entity and their
respective shareholders that Independent merge with United (the "Merger"), with
United being the surviving corporation and with all of the issued and
outstanding shares of common stock, $1.00 par value per share, of Independent
("Independent Stock") being converted into the right to receive shares of the
authorized common stock, $1 par value per share, of United ("United Stock"), all
upon the terms and conditions hereinafter set forth and as set forth in the
Agreement and Plan of Merger attached hereto as Exhibit A and incorporated
herein by reference (the "Merger Agreement"); and
WHEREAS, the boards of directors of the respective entities
believe that the merger of Independent and United and the synergies produced
thereby will greatly enhance and strengthen the franchises and future prospects
of both companies;
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, and other good and
valuable consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
---------
CLOSING
-------
The transactions contemplated herein shall be consummated (the
"Closing") at the offices of Kilpatrick Stockton LLP, Suite 2800, 1100 Peachtree
Street, Atlanta, Georgia, on the first business day following receipt of all
approvals from any governmental authorities having jurisdiction over the
transactions contemplated by this Agreement and the Merger Agreement, and the
expiration of any waiting or similar period required by applicable law (the
"Closing Date"), or at such other time and place as may be mutually satisfactory
to the parties hereto.
ARTICLE II
----------
MERGER
------
Pursuant to the terms and conditions provided herein, on the
Closing Date Independent and United shall be merged in accordance with and in
the manner set forth in the Merger Agreement. The surviving corporation
following the Merger will operate under the Articles of Incorporation of United
and will be the parent holding company of Independent Bank & Trust Company, a
Georgia banking corporation, United Community Bank, a Georgia banking
corporation, Peoples Bank of Fannin County, a Georgia banking corporation, White
County Bank, a Georgia banking corporation, Towns County Bank, a Georgia banking
corporation, Bank of Adairsville, a Georgia banking corporation, Carolina
Community Bank, a North Carolina banking corporation, Clayton Bank & Trust
Company, a Georgia banking corporation, 1st Floyd Bank, a Georgia banking
corporation and United Family Finance Company, a Georgia business corporation,
the latter nine of which are currently wholly-owned subsidiaries of United. Upon
the terms and conditions of this Agreement and the Merger Agreement, United
shall make available on or before the Effective Date (as defined in the Merger
Agreement) for delivery to the holders of Independent Stock (i) the number of
shares of United Stock to be issued upon conversion of the shares of Independent
Stock and (ii) sufficient funds to provide for cash payments in lieu of the
issuance of fractional shares as provided in the Merger Agreement, provided,
however, that unless and until a holder of Independent Stock entitled to receive
United Stock pursuant to the Merger shall have surrendered his Independent Stock
certificate(s) or unless otherwise required by law, the holder of such
certificate(s) shall not have any right to receive payment of any dividends or
other distributions on the shares of United Stock or receive any notices sent by
United to its shareholders or to vote such shares.
ARTICLE III
-----------
OTHER AGREEMENTS
----------------
3.1 Registration of United Stock. United agrees to file with
----------------------------
the Securities and Exchange Commission (the "SEC") as soon as reasonably
practical a registration statement (the "United Registration Statement") under
the Securities Act of 1933, as amended (the "1933 Act"), on Form S-4 or some
other appropriate form covering the issuance of the shares of United Stock to
the shareholders of Independent pursuant to this Agreement and the Merger
Agreement and to use its reasonable best efforts to cause the United
Registration Statement to become effective and to remain effective through the
Closing Date. United agrees to take any action required to be taken under the
applicable state securities laws in connection with the issuance of shares of
United Stock upon consummation of the Merger. Independent agrees to provide
United reasonable assistance as necessary in the preparation of the United
Registration Statement, including, without limitation, providing United with all
-2-
material facts regarding the operations, business, assets, liabilities and
personnel of Independent, together with the audited financial statements of
Independent, all as required by the 1933 Act and the rules, regulations and
practices of the SEC, for inclusion in the United Registration Statement. The
United Registration Statement shall not cover resales of United Stock by any of
the shareholders of Independent, and United shall have no obligation to cause
the United Registration Statement to continue to be effective after the Closing
or to prepare or file any post-effective amendments to the United Registration
Statement after the Closing.
3.2 Meeting of Shareholders of Independent. Independent shall
--------------------------------------
call a special meeting of its shareholders (the "Special Meeting") to be held
not more than forty-five (45) days after the United Registration Statement
becomes effective under the 1933 Act for the purpose of submitting the Merger
Agreement to such shareholders for their approval. In connection with the
Special Meeting, United and Independent shall prepare and submit to the
Independent shareholders a notice of meeting, proxy statement and proxy (the
"Independent Proxy Materials"), which shall include the final prospectus from
the United Registration Statement in the form filed with the SEC.
3.3 Absence of Brokers. Each party hereto represents and
-------------------
warrants to the other that no broker, finder or other financial consultant has
acted on its behalf in connection with this Agreement or the transactions
contemplated hereby. Each party agrees to indemnify the other and hold and save
it harmless from any claim or demand for commissions or other compensation by
any broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party.
3.4 Access to Properties, Books, Etc. Each party hereto shall
---------------------------------
allow the other party and its authorized representatives full access during
normal business hours from and after the date hereof and prior to the Closing
Date to all of the respective properties, books, contracts, commitments and
records of such party and its subsidiaries and shall furnish the other party and
its authorized representatives such information concerning its affairs and the
affairs of its subsidiaries as the other party may reasonably request provided
that such request shall be reasonably related to the transactions contemplated
by this Agreement and shall not interfere unreasonably with normal operations.
Each party shall cause its and its subsidiaries' personnel, employees and other
representatives to assist the other party in making any such investigation.
During such investigation, the investigating party and its authorized
representatives shall have the right to make copies of such records, files, tax
returns and other materials as it may deem advisable and shall advise the other
party of those items of which copies are made. No investigation made heretofore
or hereafter by either party and its authorized representatives shall affect the
representations and warranties of either such party hereunder.
3.5 Confidentiality. Prior to consummation of the Merger, the
---------------
parties to this Agreement will provide one another with information which may be
deemed by the party providing the information to be confidential. Each party
agrees that it will hold confidential and protect all information provided to it
by the other party to this Agreement or such party's affiliates, except that the
obligations contained in this Section 3.5 shall not in any way restrict the
rights of any party or person to use information that (i) was known to such
party prior to the disclosure by the other party; (ii) is or becomes generally
available to the public other than by breach of this Agreement; (iii) is
-3-
provided by one party for disclosure concerning such party in the United
Registration Statement; or (iv) otherwise becomes lawfully available to a party
to this Agreement on a nonconfidential basis from a third party who is not under
an obligation of confidence to the other party to this Agreement. If this
Agreement is terminated prior to the Closing, each party hereto agrees to return
all documents, statements and other written materials, whether or not
confidential, and all copies thereof, provided to it by or on behalf of the
other party to this Agreement. The provisions of this Section 3.5 shall survive
termination, for any reason whatsoever, of this Agreement, and, without limiting
the remedies of the parties hereto in the event of any breach of this Section
3.5, the parties hereto will be entitled to seek injunctive relief against the
other party in the event of a breach or threatened breach of this Section 3.5.
3.6 Full Cooperation. The parties shall cooperate fully with
-----------------
each other in connection with any acts or actions required to be taken as part
of their respective obligations under this Agreement.
3.7 Expenses. All of the expenses incurred by United in
--------
connection with the authorization, preparation, execution and performance of
this Agreement and the Merger Agreement including, without limitation, all fees
and expenses of its agents, representatives, counsel and accountants and the
fees and expenses related to filing the United Registration Statement and all
regulatory applications with state and federal authorities in connection with
the transactions contemplated hereby and thereby, shall be paid by United. All
expenses incurred by Independent in connection with the authorization,
preparation, execution and performance of this Agreement and the Merger
Agreement, including, without limitation, all fees and expenses of its agents,
representatives, counsel and accountants for Independent (except for the cost of
reproducing and mailing the Independent Proxy Materials which shall be equally
divided between United and Independent), shall be paid by Independent.
3.8 Preservation of Goodwill. Each party hereto shall use its
------------------------
best efforts to preserve its business organization and the business organization
of its subsidiaries, to keep available the services of its present employees and
of the present employees of its subsidiaries, and to preserve the goodwill of
customers and others having business relations with such party or its
subsidiaries.
3.9 Approvals and Consents. Each party hereto represents and
----------------------
warrants to and covenants with the other that it will use its best efforts, and
will cause its officers, directors, employees and agents and its subsidiaries
and any subsidiary's officers, directors, employees and agents to use their best
efforts, to obtain as soon as is reasonably practicable all approvals and
consents of state and federal departments or agencies required or deemed
necessary for consummation of the transactions contemplated by this Agreement
and the Merger Agreement.
3.10 Agreement by Independent Executive Officers and
-----------------------------------------------
Directors.
- ---------
Each of the directors and executive officers of Independent will,
contemporaneously with the execution of this Agreement, execute and deliver to
United an agreement, the form of which is attached hereto as Exhibit B, pursuant
to which each of them agrees, subject to their fiduciary duty, (i) to recommend
to Independent shareholders approval of the Merger, (ii) to vote the capital
stock of Independent owned or controlled by them in favor of the Merger, and
(iii) to transfer or assign shares of United Stock received by them in
connection with the Merger only in compliance with the 1933 Act, applicable
state securities laws and the rules and regulations promulgated under either.
-4-
3.11 Press Releases. Prior to the Effective Date, Independent
--------------
and United shall agree with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, however, that nothing in this
Section 3.11 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by law.
3.12 Employee Benefits and Contracts. Following the Effective
-------------------------------
Date, United shall provide generally to officers, employees and former employees
of Independent who continue employment with United employee benefits on terms
and conditions which, when taken as a whole, are substantially similar to those
then currently provided by United to its other similarly situated officers,
employees and former employees. For purposes of eligibility to participate and
any vesting determinations in connection with the provision of any such employee
benefits, service with Independent prior to the Effective Date shall be counted.
United shall also honor in accordance with their terms all employment,
severance, consulting, option and other contracts of a compensatory nature to
the extent disclosed in the Independent Disclosure Memorandum between
Independent and any current or former director, officer or employee thereof and
no other contracts of the types described that are not so disclosed shall be
deemed to be assumed by United by reason of this Section 3.12. If, during the
calendar year in which falls the Effective Date, United shall terminate any
"group health plan", within the meaning of Section 4980B(g)(2) of the Internal
Revenue Code, in which one or more Independent employees participated
immediately prior to the Effective Date (a "Independent Plan"), United shall
cause any successor group health plan to waive any underwriting requirements; to
give credit for any such Independent employee's participation in the Independent
Plan prior to the Effective Date for purposes of applying any pre-existing
condition limitations set forth therein; and to give credit for covered expenses
paid by any such Independent employee under a Independent Plan prior to the
Effective Date towards satisfaction of any annual deductible limitation and
out-of pocket maximum applied under such successor group health plan. United
also shall be considered a successor employer for and shall provide to
"qualified beneficiaries", determined immediately prior to the Effective Date,
under any Independent Plan appropriate "continuation coverage" (as those terms
are defined in Section 4980B of the Internal Revenue Code) following the
Effective Date under either the Independent Plan or any successor group health
plan maintained by United.
-5-
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF INDEPENDENT
---------------------------------------------
As an inducement to United to enter into this Agreement and to
consummate the transactions contemplated hereby, Independent represents,
warrants, covenants and agrees as follows:
4.1 Independent Disclosure Memorandum. By March 17, 2000,
-----------------------------------
Independent will deliver to United a memorandum (the "Independent Disclosure
Memorandum") containing certain information regarding Independent as indicated
at various places in this Agreement. All information set forth in the
Independent Disclosure Memorandum or in documents incorporated by reference in
the Independent Disclosure Memorandum is true, correct and complete, does not
omit to state any fact necessary in order to make the statements therein not
misleading, and shall be deemed for all purposes of this Agreement to constitute
part of the representations and warranties of Independent under this Article IV.
The information contained in the Independent Disclosure Memorandum shall be
deemed to be part of and qualify all representations and warranties contained in
this Article IV and the covenants in Article V to the extent applicable. All
information in each of the documents and other writings furnished to United
pursuant to this Agreement or the Independent Disclosure Memorandum is or will
be true, correct and complete and does not and will not omit to state any fact
necessary in order to make the statements therein not misleading. Independent
shall promptly provide United with written notification of any event, occurrence
or other information necessary to maintain the Independent Disclosure Memorandum
and all other documents and writings furnished to United pursuant to this
Agreement as true, correct and complete in all material respects at all times
prior to and including the Closing. Independent agrees that upon receipt of the
Independent Disclosure Memorandum, United shall have until March 24, 2000 to
review the Independent Disclosure Memorandum and to terminate this Agreement if
for any reason in its sole discretion United believes that proceeding with the
Merger in light of the contents of such memorandum would be detrimental to
United.
4.2 Corporate and Financial.
-----------------------
4.2.1 Authority. Subject to the approval of various
---------
state and federal regulators and Independent Shareholders, the execution,
delivery and performance of this Agreement and the other transactions
contemplated or required in connection herewith will not, with or without the
giving of notice or the passage of time, or both, (a) violate any provision of
federal or state law applicable to Independent, the violation of which could be
reasonably expected to have a material adverse effect on the business,
operations, properties, assets, financial condition or prospects of Independent;
(b) violate any provision of the articles of incorporation or bylaws of
Independent; (c) conflict with or result in a breach of any provision of, or
termination of, or constitute a default under any instrument, license,
agreement, or commitment to which Independent is a party, which, singly or in
the aggregate, could reasonably be expected to have a material adverse effect on
the business, operations, properties, assets, financial condition or prospects
of Independent; or (d) constitute a violation of any order, judgment or decree
-6-
to which Independent is a party, or by which Independent or any of its assets or
properties are bound. Assuming this Agreement constitutes the valid and binding
obligation of United, this Agreement constitutes the valid and binding
obligation of Independent, and is enforceable in accordance with its terms,
except as limited by laws affecting creditors' rights generally and by the
discretion of courts to compel specific performance.
4.2.2 Corporate Status. Independent is a business
----------------
corporation duly organized, validly existing and in good standing under the laws
of the state of Georgia and has no direct or indirect subsidiaries other than
Independent Bank. Independent Bank is a banking corporation duly organized and
validly existing under the laws of the State of Georgia. Independent and
Independent Bank have all of the requisite corporate power and authority and are
entitled to own or lease their respective properties and assets and to carry on
their respective businesses as and in the places where such properties or assets
are now owned, leased or operated and such businesses are now conducted.
4.2.3 Capital Structure. (a) Independent has an
------------------
authorized capital stock consisting of 10,000,000 shares, $1.00 par value of
common stock, of which 2,067,439 shares of common stock are issued and
outstanding as of the date hereof including options to acquire 119,283 shares
(the "Independent Stock Options"). Independent Bank has an authorized capital
stock consisting solely of 5,000,000 shares of Common Stock, par value $1.00
("Independent Bank Stock"), of which 1,116,438 shares are issued and outstanding
as of the date hereof. All of the outstanding shares of Independent Stock and
Independent Bank Stock are duly and validly issued, fully paid and
non-assessable and were offered, issued and sold in compliance with all
applicable federal and state securities laws. No person has any right of
rescission or claim for damages under federal or state securities laws with
respect to the issuance of any shares of Independent Stock or Independent Bank
Stock previously issued. None of the shares of Independent Stock or Independent
Bank Stock has been issued in violation of any preemptive or other rights of its
shareholders. All of the issued and outstanding shares of Independent Bank Stock
are owned by Independent.
(b) Except for the Independent Stock Options and as
set forth in the Independent Disclosure Memorandum, Independent does not have
outstanding any securities which are either by their terms or by contract
convertible or exchangeable into capital stock of Independent, or any other
securities or debt, of Independent, or any preemptive or similar rights to
subscribe for or to purchase, or any options or warrants or agreements or
understandings for the purchase or the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital stock
or securities convertible into its capital stock. Independent is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(c) There is no agreement, arrangement or
understanding to which Independent is a party restricting or otherwise relating
to the transfer of any shares of capital stock of Independent.
-7-
(d) All shares of common stock or other capital
stock, or any other securities or debt, of Independent, which have been
purchased or redeemed by Independent have been purchased or redeemed in
accordance with all applicable federal, state and local laws, rules, and
regulations, including, without limitation, all federal and state securities
laws and rules and regulations of any securities exchange or system on which
such stock, securities or debt are, or at such time were, traded, and no such
purchase or redemption has resulted or will, with the giving of notice or lapse
of time, or both, result in a default or acceleration of the maturity of, or
otherwise modify, any agreement, note, mortgage, bond, security agreement, loan
agreement or other contract or commitment of Independent.
4.2.4 Corporate Records. The stock records and minute books of
-----------------
Independent, whether heretofore or hereafter furnished or made available to
United by Independent, (a) fully and accurately reflect all issuances, transfers
and redemptions of the Common Stock, (b) correctly show the record addresses and
the number of shares of such stock issued and outstanding on the date hereof
held by the shareholders of Independent, (c) correctly show all corporate action
taken by the directors and shareholders of Independent (including actions taken
by consent without a meeting) and (d) contain true and correct copies or
originals of the respective articles of incorporation and all amendments
thereto, bylaws as amended and currently in force, and the minutes of all
meetings or consent actions of its directors and shareholders. No resolutions,
regulations or bylaws have been passed, enacted, consented to or adopted by such
directors or shareholders except those contained in the minute books. All
corporate records have been maintained in accordance with all applicable
statutory requirements and are complete and accurate.
4.2.5 Tax Returns; Taxes. (a) Independent has duly filed (i)
-------------------
all required federal and state tax returns and reports, and (ii) all required
returns and reports of other governmental units having jurisdiction with respect
to taxes imposed upon its income, properties, revenues, franchises, operations
or other assets or taxes imposed which might create a material lien or
encumbrance on any of such assets or affect materially and adversely its
business or operations. To the knowledge of the officers of Independent (the
"Independent Management"), such returns or reports are, and when filed will be,
true, complete and correct, and Independent has paid, to the extent such taxes
or other governmental charges have become due, all taxes and other governmental
charges set forth in such returns or reports. To the knowledge of the
Independent Management, all federal, state and local taxes and other
governmental charges paid or payable by Independent have been paid, or have been
accrued or reserved on its books in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods. To the
knowledge of the Independent Management, adequate reserves for the payment of
taxes have been established on the books of Independent for all periods through
the date hereof, whether or not due and payable and whether or not disputed.
Until the Closing Date, Independent shall continue to provide adequate reserves
for the payment of expected tax liabilities in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods.
Independent has not received any notice of a tax deficiency or assessment of
additional taxes of any kind and, to the knowledge of the Independent
Management, there is no threatened claim against Independent, or to the
-8-
knowledge of the Independent Management, any basis for any such claim, for
payment of any additional federal, state, local or foreign taxes for any period
prior to the date of this Agreement in excess of the accruals or reserves with
respect to any such claim shown in the 1999 Independent Financial Statements
described in Section 4.2.6 below or disclosed in the notes with respect thereto.
There are no waivers or agreements by Independent for the extension of time for
the assessment of any taxes. The federal income tax returns of Independent have
not been examined by the Internal Revenue Service for any period since December
31, 1994.
(b) Except as set forth in the Independent Disclosure
Memorandum, to the knowledge of the Independent Management, proper and accurate
amounts have been withheld by Independent from its employees for all periods in
full and complete compliance with the tax withholding provisions of applicable
federal, state and local tax laws, and proper and accurate federal, state and
local tax returns have been filed by Independent for all periods for which
returns were due with respect to withholding, social security and unemployment
taxes, and the amounts shown thereon to be due and payable have been paid in
full.
4.2.6 Financial Statements. Independent has delivered to
---------------------
United true, correct and complete copies of the audited financial statements of
Independent for the years ended December 31, 1997, 1998 and 1999, including
balance sheets, statements of income, statements of shareholders' equity,
statements of cash flows and related notes (the audited financial statements for
the year ended December 31, 1999 being referred to as the "1999 Independent
Financial Statements"). All of such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and present fairly the assets, liabilities and financial condition of
Independent as of the dates indicated therein and the results of its operations
for the respective periods then ended.
4.2.7 Regulatory Reports. Independent has made available to
-------------------
United for review and inspection the year-end Report of Condition and year-end
Report of Income and Dividends as filed by Independent Bank with the Federal
Deposit Insurance Corporation (the "FDIC") for each of the three years ended
December 31, 1999, 1998 and 1997, together with all such other reports filed for
the same three-year period with the FDIC, and the Department of Banking and
Finance of the State of Georgia (the "Department of Banking"), and other
applicable regulatory agencies and the Form F.R. Y-6 filed by Independent with
the Board of Governors of the Federal Reserve System (the "Federal Reserve") for
each of the three years ended December 31, 1999, 1998 and 1997 (collectively,
the "Independent Reports"). All of the Independent Reports, as amended, have
been prepared in accordance with applicable rules and regulations applied on a
basis consistent with prior periods and contain in all material respects all
information required to be presented therein in accordance with such rules and
regulations.
4.2.8 Accounts. The Independent Disclosure Memorandum contains
---------
a list of each and every bank and other institution in which Independent
maintains an account or safety deposit box, the account numbers, and the names
of all persons who are presently authorized to draw thereon, have access thereto
or give instructions regarding distribution of funds or assets therein.
-9-
4.2.9 Notes and Obligations. (a) Except as set forth in the
----------------------
Independent Disclosure Memorandum or as provided for in the loss reserve
described in subsection (b) below, all notes receivable or other obligations
owned by Independent or due to it shown in the 1999 Independent Financial
Statements and any such notes receivable and obligations on the date hereof and
on the Closing Date are and will be genuine, legal, valid and collectible
obligations of the respective makers thereof and are not and will not be subject
to any offset or counterclaim. Except as set forth in subsection (b) below, all
such notes and obligations are evidenced by written agreements, true and correct
copies of which will be made available to United for examination prior to the
Closing Date. All such notes and obligations were entered into by Independent in
the ordinary course of its business and in compliance with all applicable laws
and regulations.
(b) Independent has established a loss reserve in the 1999
Independent Financial Statements and as of the date of this Agreement and will
establish a loan loss reserve as of the Closing Date which is adequate to cover
anticipated losses which might result from such items as the insolvency or
default of borrowers or obligors on such loans or obligations, defects in the
notes or evidences of obligation (including losses of original notes or
instruments), offsets or counterclaims properly chargeable to such reserve, or
the availability of legal or equitable defenses which might preclude or limit
the ability of Independent to enforce the note or obligation, and the
representations set forth in subsection (a) above are qualified in their
entirety by the aggregate of such loss reserve. Except as described in the
Independent Disclosure Memorandum, at the Closing Date, the ratio of the loss
reserve, established on such date in good faith by Independent, to total loans
outstanding at such time shall not exceed the ratio of the loan loss reserve to
the total loans outstanding as reflected in the 1999 Independent Financial
Statements, established on or before such date in good faith by Independent, in
accordance with generally accepted accounting principles.
4.2.10 Liabilities. Independent has no debt, liability or
-----------
obligation of any kind required to be shown pursuant to generally accepted
accounting principles on the consolidated balance sheet of Independent, whether
accrued, absolute, known or unknown, contingent or otherwise, including, but not
limited to (a) liability or obligation on account of any federal, state or local
taxes or penalty, interest or fines with respect to such taxes, (b) liability
arising from or by virtue of the distribution, delivery or other transfer or
disposition of goods, personal property or services of any type, kind or
variety, (c) unfunded liabilities with respect to any pension, profit sharing or
employee stock ownership plan, whether operated by Independent or any other
entity covering employees of Independent, or (d) environmental liabilities,
except (i) those reflected in the 1999 Independent Financial Statements, and
(ii) as disclosed in the Independent Disclosure Memorandum.
4.2.11 Absence of Changes. Except as specifically provided for
------------------
in this Agreement or specifically set forth in the Independent Disclosure
Memorandum, since December 31, 1998:
(a) there has been no change in the business, assets,
liabilities, results of operations or financial condition of Independent, or in
any of its relationships with customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had, or which the Independent Management believes may have,
a material adverse effect on such businesses or properties;
-10-
(b) there has been no material damage, destruction or loss to
the assets, properties or business of Independent, whether or not covered by
insurance, which has had, or which the Independent Management believes may have,
an adverse effect thereon;
(c) the business of Independent has been operated in the
ordinary course, and not otherwise;
(d) the properties and assets of Independent used in its
business have been maintained in good order, repair and condition, ordinary wear
and tear excepted;
(e) the books, accounts and records of Independent have been
maintained in the usual, regular and ordinary manner;
(f) there has been no declaration, setting aside or payment of
any dividend or other distribution on or in respect of the capital stock of
Independent;
(g) there has been no increase in the compensation or in the
rate of compensation or commissions payable or to become payable by Independent
to any director or executive officer, or to any employee earning $35,000 or more
per annum, or any general increase in the compensation or in the rate of
compensation payable or to become payable to employees of Independent earning
less than $35,000 per annum ("general increase" for the purpose hereof meaning
any increase generally applicable to a class or group of employees, but not
including increases granted to individual employees for merit, length of
service, change in position or responsibility or other reasons applicable to
specific employees and not generally to a class or group thereof), or any
director, officer, or employee hired at a salary in excess of $35,000 per annum,
or any increase in any payment of or commitment to pay any bonus, profit sharing
or other extraordinary compensation to any employee;
(h) there has been no change in the articles of incorporation
or bylaws of Independent;
(i) there has been no labor dispute, unfair labor practice
charge or employment discrimination charge, nor, to the knowledge of
Independent, any organizational effort by any union, or institution or
threatened institution, of any effort, complaint or other proceeding in
connection therewith, involving Independent, or affecting its operations;
(j) there has been no issuance, sale, repurchase, acquisition,
or redemption by Independent of any of its capital stock, bonds, notes, debt or
other securities, and there has been no modification or amendment of the rights
of the holders of any outstanding capital stock, bonds, notes, debt or other
securities thereof;
-11-
(k) there has been no mortgage, lien or other encumbrance or
security interest (other than liens for current taxes not yet due or purchase
money security interests arising in the ordinary course of business) created on
or in (including without limitation, any deposit for security consisting of) any
asset or assets of Independent or assumed by it with respect to any asset or
assets;
(l) there has been no indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise) incurred by
Independent which would be required to be reflected on a balance sheet of
Independent prepared as of the date hereof in accordance with generally accepted
accounting principles applied on a consistent basis, except as incurred in the
ordinary course of business;
(m) no obligation or liability of Independent has been
discharged or satisfied, other than in the ordinary course of business;
(n) there have been no sales, transfers or other dispositions
of any asset or assets of Independent, other than sales in the ordinary course
of business; and
(o) there has been no amendment, termination or waiver of any
right of Independent under any contract or agreement or governmental license,
permit or permission which has had or may have an adverse effect on its business
or properties.
4.2.12 Litigation and Proceedings. Except as set forth on the
--------------------------
Independent Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or investigations,
pending or, to the knowledge of Independent, threatened against, by or affecting
Independent, or any officer, director, employee or agent in such person's
capacity as an officer, director, employee or agent of Independent or relating
to the business or affairs of Independent, in any court or before any arbitrator
or governmental agency, and no judgment, award, order or decree of any nature
has been rendered against or with respect thereto by any agency, arbitrator,
court, commission or other authority, nor does Independent have any unasserted
contingent liabilities which might have an adverse effect on its assets or on
the operation of its businesses or which might prevent or impede the
consummation of the transactions contemplated by this Agreement.
4.2.13 Proxy Materials. Neither the Independent Proxy
-----------------
Materials nor other materials furnished by Independent to the Independent
shareholders in connection with the transactions contemplated by this Agreement
or the Merger Agreement, or in any amendments thereof or supplements thereto,
will, at the times such documents are distributed to the holders of shares of
Independent Stock and through the acquisition of shares of Independent Stock by
United pursuant to the Merger, contain with respect to Independent any untrue
statement of a material fact or omit to state any information required to be
stated therein or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made with
respect to Independent, not misleading.
4.3 Business Operations.
-------------------
-12-
4.3.1 Customers. Independent has no knowledge of any presently
---------
existing facts which could reasonably be expected to result in the loss of any
material borrower or depositor or in Independent's inability to collect amounts
due therefrom or to return funds deposited thereby, except as set forth on the
Independent Disclosure Memorandum.
4.3.2 Permits; Compliance with Law. (a) Independent has all
------------------------------
permits, licenses, approvals, authorizations and registrations under all
federal, state, local and foreign laws required for Independent to carry on its
business as presently conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect, and no suspension
or cancellation of any of them is pending or, to the knowledge of Independent,
threatened.
(b) Independent has complied with all laws, regulations, and
orders applicable to it or its business, except for any non-compliance which
would not have a material adverse effect on Independent. The Independent
Disclosure Memorandum contains a list of any known violations of such laws,
regulations, ordinances or rules by any present officer, director, or employee
of Independent which occurred since December 31, 1994, and which resulted in any
order, proceeding, judgment or decree which would be required to be disclosed
pursuant to Item 401(f) of Regulation S-K promulgated by the Securities and
Exchange Commission if Independent had been subject to the reporting
requirements under the 1933 Act or the Securities Exchange Act of 1934. No past
violation of any such law, regulation, ordinance or rule has occurred which
could impair the right or ability of Independent to conduct its business.
(c) Except as set forth in the Independent Disclosure
Memorandum, no notice or warning from any governmental authority with respect to
any failure or alleged failure of Independent to comply in any respect with any
law, regulation or order has been received, nor is any such notice or warning
proposed or, to the knowledge of Independent, threatened.
4.3.3 Environmental. (a) Except as set forth in the
-------------
Independent Disclosure Memorandum, Independent
(i) has not caused or permitted, and has no knowledge
of any claim regarding the environmental condition of the
property or the generation, manufacture, use, or handling or
the release or presence of, any Hazardous Material on, in,
under or from any properties or facilities currently owned or
leased by Independent or adjacent to any properties so owned
or leased; and
(ii) has complied in all material respects with, and
has kept all records and made all filings or reports required
by, and is otherwise in substantial compliance with all
applicable federal, state and local laws, regulations, orders,
permits and licenses relating to the generation, treatment,
manufacture, use, handling, release or presence of any
Hazardous Material on, in, under or from any properties or
facilities currently owned or leased by Independent.
-13-
(b) To Independent's knowledge, except as set forth in the
Independent Disclosure Memorandum, neither Independent nor any of its officers,
directors, employees or agents, in the course of such individual's employment by
Independent, has given advice with respect to, or participated in any respect
in, the decisions regarding Hazardous Material handling or disposal of any
entity or concern whose business relates in any way to the generation, storage,
handling, disposal, transfer, production, use or processing of Hazardous
Material, nor to Independent's knowledge has Independent foreclosed on any
property on which there is a threatened release of any Hazardous Material, or on
which there has been such a release and full remediation has not been completed.
(c) Except as set forth in the Independent Disclosure
Memorandum, neither Independent, nor any of its officers, directors, employees,
or agents, is aware of, has been told of, or has observed, the presence of any
Hazardous Material on, in, under, or around property on which Independent holds
a legal or security interest, in violation of, or creating a material liability
under, federal, state, or local environmental statutes, regulations, or
ordinances.
(d) The term "Hazardous Material" means any substance whose
nature, use, manufacture, or effect render it subject to federal, state or local
regulation governing that material's investigation, remediation or removal as a
threat or potential threat to human health or the environment and includes,
without limitation, any substance within the meaning of "hazardous substances"
under the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. ss. 9601, "hazardous wastes" within the meaning of the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6921, any petroleum product,
including any fraction of petroleum, or any asbestos containing materials.
However, the term "Hazardous Material" shall not include those substances which
are normally and reasonably used in connection with the occupancy or operation
of office buildings (such as cleaning fluids, and supplies normally used in the
day to day operation of business offices).
4.3.4 Insurance. The Independent Disclosure Memorandum
---------
contains a complete list and description (including the expiration date, premium
amount and coverage thereunder) of all policies of insurance and bonds presently
maintained by, or providing coverage for, Independent or any of its officers,
directors and employees, all of which are, and will be maintained through the
Closing Date, in full force and effect, together with a complete list of all
pending claims under any of such policies or bonds. All terms, obligations and
provisions of each of such policies and bonds have been complied with, all
premiums due thereon have been paid, and no notice of cancellation with respect
thereto has been received. Except as set forth in the Independent Disclosure
Memorandum, such policies and bonds provide adequate coverage to insure the
properties and businesses of Independent and the activities of its officers,
directors and employees against such risks and in such amounts as are prudent
and customary. Independent will not as of the Closing Date have any liability
for premiums or for retrospective premium adjustments for any period prior to
the Closing Date. Independent has heretofore made, or will hereafter make,
available to United a true, correct and complete copy of each insurance policy
and bond in effect since December 31, 1994 with respect to the business and
affairs of Independent.
-14-
4.4 Properties and Assets.
---------------------
4.4.1 Contracts and Commitments. The Independent Disclosure
--------------------------
Memorandum contains a list identifying and briefly describing all written
contracts, purchase orders, agreements, security deeds, guaranties or
commitments to which Independent is a party or by which it may be bound
involving the payment or receipt, actual or contingent, of more than $25,000 or
having a term or requiring performance over a period of more than ninety (90)
days. Each such contract, agreement, guaranty and commitment of Independent is
in full force and effect and is valid and enforceable in accordance with its
terms, and constitutes a legal and binding obligation of the respective parties
thereto and is not the subject of any notice of default, termination, partial
termination or of any ongoing, pending, completed or threatened investigation,
inquiry or other proceeding or action that may give rise to any notice of
default, termination or partial termination. Independent has complied in all
material respects with the provisions of such contracts, agreements, guaranties
and commitments. A true and complete copy of each such document has been or will
be made available to United for examination.
4.4.2 Licenses; Intellectual Property. Independent has all
---------------------------------
patents, trademarks, trade names, service marks, copyrights, trade secrets and
know-how reasonably necessary to conduct its business as presently conducted
and, except as described in the Independent Disclosure Memorandum, Independent
is not a party, either as licensor or licensee, to any agreement for any patent,
process, trademark, service mark, trade name, copyright, trade secret or other
confidential information and there are no rights of third parties with respect
to any trademark, service mark, trade secrets, confidential information, trade
name, patent, patent application, copyright, invention, device or process owned
or used by Independent or presently expected to be used by either of them in the
future. All patents, copyrights, trademarks, service marks, trade names, and
applications therefor or registrations thereof, owned or used by Independent,
are listed in the Independent Disclosure Memorandum. Independent has complied
with all applicable laws relating to the filing or registration of "fictitious
names" or trade names.
4.4.3 Personal Property. Independent has good and marketable
------------------
title to all of its personalty, tangible and intangible, reflected in the 1999
Independent Financial Statements (except as since sold or otherwise disposed of
by it in the ordinary course of business), free and clear of all encumbrances,
liens or charges of any kind or character, except (i) those referred to in the
notes to the 1999 Independent Financial Statements as securing specified
liabilities (with respect to which no default exists or, to the knowledge of
Independent, is claimed to exist), (ii) those described in the Independent
Disclosure Memorandum and (iii) liens for taxes not due and payable.
4.4.4 Independent Leases. (a) All leases (the "Independent
-------------------
Leases") pursuant to which Independent is lessor or lessee of any real or
personal property (such property, the "Leased Property") are valid and
enforceable in accordance with their terms; there is not under any of the
Independent Leases any default or, to the knowledge of Independent, any claimed
default by Independent, or event of default or event which with notice or lapse
of time, or both, would constitute a default by Independent and in respect of
which adequate steps have not been taken to prevent a default on its part from
occurring.
-15-
(b) The copies of the Independent Leases heretofore or
hereafter furnished or made available by Independent to United are true, correct
and complete, and the Independent Leases have not been modified in any respect
other than pursuant to amendments, copies of which have been concurrently
delivered or made available to United, and are in full force and effect in
accordance with their terms.
(c) Except as set forth in the Independent Disclosure
Memorandum, there are no contractual obligations, agreements in principle or
present plans for Independent to enter into new leases of real property or to
renew or amend existing Independent Leases prior to the Closing Date.
4.4.5 Real Property. (a) Independent does not own any interest
-------------
in any real property (other than as lessee) except as set forth in the
Independent Disclosure Memorandum (such properties being referred to herein as
"Independent Realty"). Except as disclosed in the Independent Disclosure
Memorandum, Independent has good title to the Independent Realty and the titles
to the Independent Realty are covered by title insurance policies providing
coverage in the amount of the original purchase price, true, correct and
complete copies of which have been or will be furnished to United with the
Independent Disclosure Memorandum. Independent has not encumbered the
Independent Realty since the effective dates of the respective title insurance
policies.
(b) Except as set forth in the Independent Disclosure
Memorandum, the interests of Independent in the Independent Realty and in and
under each of the Independent Leases are free and clear of any and all liens and
encumbrances and are subject to no present claim, contest, dispute, action or,
to the knowledge of Independent, threatened action at law or in equity.
(c) The present and past use and operations of, and
improvements upon, the Independent Realty and all real properties leased by
Independent (the "Independent Leased Real Properties") are in compliance in all
material respects with all applicable building, fire, zoning and other
applicable laws, ordinances and regulations and with all deed restrictions of
record, no notice of any violation or alleged violation thereof has been
received, and to the knowledge of Independent there are no proposed changes
therein that would affect the Independent Realty, the Independent Leased Real
Properties or their uses.
(d) Except as set forth in the Independent Disclosure
Memorandum, no rent has been paid in advance and no security deposit has been
paid by, nor is any brokerage commission payable by or to, Independent with
respect to any Lease pursuant to which it is lessor or lessee.
(e) Independent is not aware of any proposed or pending change
in the zoning of, or of any proposed or pending condemnation proceeding with
respect to, any of the Independent Realty or the Independent Leased Real
Properties which may adversely affect the Independent Realty or the Independent
Leased Real Properties or the current or currently contemplated use thereof.
-16-
(f) The buildings and structures owned, leased or used by
Independent are, taken as a whole, in good operating order (except for ordinary
wear and tear), usable in the ordinary course of business, and are sufficient
and adequate to carry on the business and affairs of Independent.
4.5 Employees and Benefits.
----------------------
4.5.1 Directors or Officers of Other Corporations. Except as
--------------------------------------------
set forth in the Independent Disclosure Memorandum, no director, officer, or
employee of Independent serves, or in the past five years has served, as a
director or officer of any other corporation on behalf of or as a designee of
Independent or any of its subsidiaries.
4.5.2 Employee Benefits. (a) Except as set forth in the
------------------
Independent Disclosure Memorandum, Independent does not provide and is not
obligated to provide, directly or indirectly, any benefits for employees of a
material nature, including, without limitation, any pension, profit sharing,
stock option, retirement bonus, hospitalization, medical, insurance or vacation
under any practice, agreement or understanding.
(b) The Independent Disclosure Memorandum lists separately any
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") sponsored by
Independent (collectively, "ERISA Plans"). True, correct and complete copies of
all ERISA Plans and, to the extent applicable, all related trust agreements,
insurance contracts, summary plan descriptions, Internal Revenue Service
determination letters and filings, the past three years of actuarial reports and
valuations, annual reports and Form 5500 filings (including attachments), and
any other related documents requested by United or its counsel have been, or
prior to the Closing Date will be, made available to United.
(c) Independent is not currently and has never been in the
past required to contribute to a multiemployer plan as defined in Section
3(37)(A) of ERISA. Independent does not maintain or contribute to, nor within
the past six years has it maintained or contributed to, an employee pension
benefit plan as defined in Section 3(2) of ERISA that is or was subject to Title
IV of ERISA.
(d) Except as set forth in the Independent Disclosure
Memorandum, each ERISA Plan has been operated and administered in all material
respects in accordance with, and has been amended to comply with (unless such
amendment is not yet required), all applicable laws, rules and regulations,
including, without limitation, ERISA, the Internal Revenue Code of 1986, as
amended ("Code"), and the regulations issued under ERISA and the Code. With
respect to each ERISA Plan, other than routine claims for benefits submitted in
the ordinary course of the benefits process, no litigation or administrative or
other proceeding is pending or, to the knowledge of Independent, threatened
involving such ERISA Plan or any of its fiduciaries. With respect to each ERISA
Plan, neither Independent nor any of its directors, officers, employees or
agents, nor to Independent's knowledge, any "party in interest" or "disqualified
-17-
person" (as such terms are defined in Section 3(14) of ERISA and Section 4975 of
the Code) has been engaged in or been a party to any transaction relating to the
ERISA Plan which would constitute a breach of fiduciary duty under ERISA or a
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code), unless such transaction is specifically permitted
under Sections 407 or 408 of ERISA, Section 4975 of the Code or a class or
administrative exemption issued by the Department of Labor. Except as disclosed
in the Independent Disclosure Memorandum, each ERISA Plan that is a group health
plan within the meaning of Section 607(l) of ERISA and Section 4980B of the Code
is in material compliance with the continuation coverage requirements of Section
501 of ERISA and Section 4980B of the Code.
(e) Of the ERISA Plans, the "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA (collectively, the "Employee Pension
Benefit Plans") are separately identified on the Independent Disclosure
Memorandum. With respect to each Employee Pension Benefit Plan, except as set
forth on the Independent Disclosure Memorandum: (i) such Employee Pension
Benefit Plan is intended to constitute a qualified plan within the meaning of
Section 401(a) of the Code and the trust is intended to be exempt from federal
income tax under Section 501(a) of the Code; (ii) all contributions required by
such plan have been made or will be made on a timely basis; and (iii) no
termination, partial termination or discontinuance of contributions has occurred
without a determination by the IRS that such action does not affect the
tax-qualified status of such plan.
(f) As of the Closing Date, with respect to each ERISA Plan,
Independent will have provided adequate reserves, or insurance or qualified
trust funds, to provide for all payments and contributions required, or
reasonably expected to be required, to be made under the provisions of such
ERISA Plan or required to be made under applicable laws, rules and regulations,
with respect to any period prior to the Closing Date to the extent reserves are
required under generally accepted accounting principles, based on an actuarial
valuation satisfactory to the actuaries of Independent representing a projection
of claims expected to be incurred under such ERISA Plan.
(g) Except as disclosed on the Independent Disclosure
Memorandum, Independent does not provide and has no obligation to provide
benefits, including, without limitation, death, health or medical benefits
(whether or not insured) with respect to current or former employees of
Independent beyond their retirement or other termination of service with
Independent other than (i) coverage mandated by applicable Law, (ii) benefits
under the Employee Pension Benefit Plans, or (iii) benefits the full cost of
which is borne by the current or former employee or his beneficiary.
(h) Except as disclosed in the Independent Disclosure
Memorandum, neither this Agreement nor any transaction contemplated hereby will
(i) entitle any current or former employee, officer or director of Independent
to severance pay, unemployment compensation or any similar or other payment, or
(ii) accelerate the time of payment or vesting of, or increase the amount of
compensation or benefits due any such employee, officer or director.
-18-
4.5.3 Labor-Related Matters. Except as described in the
----------------------
Independent Disclosure Memorandum, Independent is not, and has not been, a party
to any collective bargaining agreement or agreement of any kind with any union
or labor organization or to any agreement with any of its employees which is not
terminable at will or upon ninety (90) days notice at the election of, and
without cost or penalty to, Independent. Independent has not received at any
time in the past five (5) years, any demand for recognition from any union, and
no attempt has been made, or will have been made as of the Closing Date, to
organize any of its employees. Independent has complied in all material respects
with all obligations under the National Labor Relations Act, as amended, the Age
Discrimination in Employment Act, as amended, and all other federal, state and
local labor laws and regulations applicable to employees. There are no unfair
labor practice charges pending or threatened against Independent, and there are,
and in the past three (3) years there have been, no charges, complaints, claims
or proceedings, no slowdowns or strikes pending or threatened against, or
involving, as the case may be, Independent with respect to any alleged violation
of any legal duty (including but not limited to any wage and hour claims,
employment discrimination claims or claims arising out of any employment
relationship) by Independent as to any of its employees or as to any person
seeking employment therefrom, and no such violations exist.
4.5.4 Related Party Transactions. Except for (a) loans and
----------------------------
extensions of credit made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions by Independent with other persons who are not affiliated with
Independent, and which do not involve more than the normal risk of repayment or
present other unfavorable features, (b) deposits, all of which are on terms and
conditions identical to those made available to all customers of Independent at
the time such deposits were entered into, and (c) transactions specifically
described in the Independent Disclosure Memorandum, there are no contracts with
or commitments to present or former 5% or greater shareholders, directors,
officers, or employees involving the expenditure after December 31, 1994 of more
than $60,000 as to any one individual, including with respect to any business
directly or indirectly controlled by any such person, or $100,000 for all such
contracts or commitments in the aggregate for all such individuals (other than
contracts or commitments relating to services to be performed by any officer,
director or employee as a currently-employed employee of Independent).
4.6 Other Matters.
-------------
4.6.1 Regulatory Reports. Independent will make available to
-------------------
United for review and inspection all applications, reports or other documents
filed by it for each of its past three full fiscal years with any regulatory or
governmental agencies. All of such applications, reports and other documents
have been prepared in accordance with applicable rules and regulations of the
regulatory agencies with which they were filed.
4.6.2 Approvals, Consents and Filings. Except for the approval
-------------------------------
of the Federal Reserve and the Department of Banking, or as set forth in the
Independent Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
-19-
thereby will (a) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, or (b)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Independent, or any of Independent's assets.
4.6.3 Default. (a) Except for those consents described in or
-------
set forth pursuant to Section 4.6.2 above, neither the execution of this
Agreement nor consummation of the transactions contemplated herein (i)
constitutes a breach of or default under any contract or commitment to which
Independent is a party or by which Independent or its properties or assets are
bound, (ii) does or will result in the creation or imposition of any security
interest, lien, encumbrance, charge, equity or restriction of any nature
whatsoever in favor of any third party upon any assets of Independent, or (iii)
constitutes an event permitting termination of any agreement or the acceleration
of any indebtedness of Independent.
(b) Independent is not in default under its articles of
incorporation or bylaws or under any term or provision of any security deed,
mortgage, indenture or security agreement or of any other contract or instrument
to which Independent is a party or by which it or any of its property is bound.
4.6.4 Representations and Warranties. No representation or
-------------------------------
warranty contained in this Article IV or in any written statement delivered by
or at the direction of Independent pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of all
documents that have been or will be furnished to United in connection with this
Agreement or pursuant hereto are or shall be true, correct and complete.
ARTICLE V
---------
CONDUCT OF BUSINESS OF INDEPENDENT PENDING CLOSING
--------------------------------------------------
Except as expressly otherwise provided herein, Independent
covenants and agrees that, without the prior written consent of United between
the date hereof and the Closing Date:
5.1 Conduct of Business. Independent will conduct its business
-------------------
only in the ordinary course, without the creation of any indebtedness for
borrowed money (other than deposit and similar accounts and customary credit
arrangements between banks in the ordinary course of business). Independent will
not engage in or undertake any action that would lead to the disqualification of
the pooling of interests method of accounting. Independent knows of no reason
that the proposed transaction would not qualify for pooling of interests
accounting treatment.
5.2 Maintenance of Properties. Independent will maintain its
-------------------------
properties and assets in good operating condition, ordinary wear and tear
excepted.
-20-
5.3 Insurance. Independent will maintain and keep in full
---------
force and effect all of the insurance referred to in Section 4.3.4 hereof or
other insurance equivalent thereto in all material respects.
5.4 Capital Structure. No change will be made in the
------------------
authorized or issued capital stock or other securities of Independent, and
Independent will not issue or grant any right or option to purchase or otherwise
acquire any of the capital stock or other securities of Independent.
5.5 Dividends. Except for quarterly dividends paid in
---------
accordance with previous practices, no dividend, distribution or payment will be
declared or made in respect to the Independent Stock and Independent will not,
directly or indirectly, redeem, purchase or otherwise acquire any of its capital
stock.
5.6 Amendment of Articles; Corporate Existence. Independent
---------------------
will not amend its articles of incorporation or bylaws, and Independent will
maintain its corporate existence and powers.
5.7 No Acquisitions. Independent shall not, without the
----------------
express written consent of United, acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other entity or
division thereof or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to it.
5.8 No Dispositions. Independent will not sell, mortgage,
----------------
lease, buy or otherwise acquire, transfer or dispose of any real property or
interest therein (except for sales in the ordinary course of business) and
Independent will not, except in the ordinary course of business, sell or
transfer, mortgage, pledge or subject to any lien, charge or other encumbrance
any other tangible or intangible asset.
5.9 Banking Arrangements. No change will be made in the
---------------------
banking and safe deposit arrangements referred to in Section 4.2.8 hereof.
5.10 Contracts. Except for renewals of existing contracts in
---------
effect as of the date hereof, or entering into a contract for the purpose of
substituting a vendor under any such existing contract, Independent will not,
without the express written consent of United, enter into any contract of the
kind described in Section 4.4.1 hereof.
5.11 Books and Records. The books and records of Independent
-----------------
will be maintained in the usual, regular and ordinary course.
5.12 Advice of Changes. Independent shall promptly advise
-----------------
United orally and in writing of any change or event having, or which the
Independent Management believes could have, a material adverse effect on the
assets, liabilities, business, operations or financial condition of Independent.
-21-
5.13 Reports. Independent shall file all reports required to
-------
be filed with any regulatory or governmental agencies between the date of this
Agreement and the Closing Date and shall deliver to United copies of all such
reports promptly after the same are filed.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF UNITED
----------------------------------------
As an inducement to Independent to enter into this Agreement
and to consummate the transactions contemplated hereby, United represents,
warrants, covenants and agrees as follows:
6.1 Corporate Status. United is a business corporation duly
-----------------
organized, validly existing and in good standing under the laws of the State of
Georgia and has no direct or indirect subsidiaries, which are material to
United, other than United Community Bank, Blairsville, Georgia ("United Bank"),
Towns County Bank, Hiawassee, Georgia ("Towns"), Peoples Bank of Fannin County,
Blue Ridge, Georgia ("Fannin"), White County Bank, Cleveland, Georgia ("White"),
Carolina Community Bank, Murphy, North Carolina ("Carolina"), Bank of
Adairsville, Adairsville, Georgia ("Adairsville"), First Clayton Bank & Trust
Company, Clayton, Georgia ("Clayton"), 1st Floyd Bank, Rome, Georgia ("Floyd")
and United Family Finance Company, Blairsville, Georgia (the "Finance Company")
(collectively the "United Subsidiaries.") The United Subsidiaries are banking
corporations, except for the Finance Company, which is a business corporation,
all of which are duly organized, validly existing and in good standing under the
laws of the State of Georgia with respect to United Bank, Towns, Fannin, White,
Adairsville, Floyd, Clayton, and the Finance Company, and the State of North
Carolina with respect to Carolina. United and the United Subsidiaries are
entitled to own or lease their respective properties and to carry on their
respective businesses in the places where such properties are now owned, leased
or operated and such businesses are now conducted.
6.2 Authority. Subject to the approval of various state and
---------
federal regulators, the execution, delivery and performance of this Agreement
and the other transactions contemplated or required in connection herewith will
not, with or without the giving of notice or the passage of time, or both, (a)
violate any provision of federal or state law applicable to United, the
violation of which could be reasonably expected to have a material adverse
effect on the business, operations, properties, assets, financial condition or
prospects of United; (b) violate any provision of the articles of incorporation
or bylaws of United; (c) conflict with or result in a breach of any provision
of, or termination of, or constitute a default under any instrument, license,
agreement, or commitment to which United is a party, which, singly or in the
aggregate, could reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, financial condition or prospects of
United; or (d) constitute a violation of any order, judgment or decree to which
-22-
bound. Assuming this Agreement constitutes the valid and binding obligation of
Independent, this Agreement constitutes the valid and binding obligation of
United, and is enforceable in accordance with its terms, except as limited by
laws affecting creditors' rights generally and by the discretion of courts to
compel specific performance.
6.3 Capital Structure. (a) As of the date of this Agreement,
------------------
United has authorized capital stock consisting solely of 10,000,000 shares of
common stock, par value $1.00 per share, of which 8,429,090 shares are issued
and outstanding as of the date hereof including 140,000 deemed outstanding
pursuant to United's prime plus 1/4% Convertible Subordinated Debentures due
December 31, 2006 (the "2006 Debentures") and presently exercisable options to
acquire 254,822 shares (the "United Stock Options") and 10,000,000 shares of
Preferred Stock, none of which is outstanding. All of the issued and outstanding
shares of United Stock and the United Subsidiaries capital stock (the "United
Subsidiaries Stock") is duly and validly issued, fully paid and nonassessable
and was offered, issued and sold in compliance with all applicable federal or
state securities laws. No person has any right of rescission or claim for
damages under federal or state securities laws with respect to the issuance of
shares of United Stock or any of the shares of United Subsidiaries Stock
previously issued. None of the shares of United Stock has been issued in
violation of the preemptive or other rights of any shareholder of United. None
of the shares of the United Subsidiaries Stock was issued in violation of the
preemptive or other rights of any shareholder of the United Subsidiaries. All of
the issued and outstanding shares of the United Subsidiaries Stock are owned by
United.
(b) Except for the 2006 Debentures and the United Stock
Options, United does not have outstanding any securities which are either by
their terms or by contract convertible or exchangeable into United Stock, or any
other securities or debt, of United, or any preemptive or similar rights to
subscribe for or to purchase, or any options or warrants or agreements or
understandings for the purchase or the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital stock
or securities convertible into its capital stock. United is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(c) There is no agreement, arrangement or understanding to
which United is a party restricting or otherwise relating to the transfer of any
shares of United Stock.
(d) All shares of common stock or other capital stock, or any
other securities or debt, of United, which have been purchased or redeemed by
United have been purchased or redeemed in accordance with all applicable
federal, state and local laws, rules, and regulations, including, without
limitation, all federal and state securities laws and rules and regulations of
any securities exchange or system on which such stock, securities or debt are,
or at such time were, traded, and no such purchase or redemption has resulted or
will, with the giving of notice or lapse of time, or both, result in a default
or acceleration of the maturity of, or otherwise modify, any agreement, note,
mortgage, bond, security agreement, loan agreement or other contract or
commitment of United.
6.4 Financial Statements. United has delivered to Independent
--------------------
true, correct and complete copies of the audited financial statements of United
for the years ended December 31, 1997, 1998 and 1999, including balance sheets,
statements of income, statements of shareholders' equity, statements of cash
flows and related notes (the audited financial statements for the year ended
-23-
December 31, 1999 being referred to as the "1999 United Financial Statements").
All of such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and present fairly the
assets, liabilities and financial condition of United as of the dates indicated
therein and the results of its operations for the respective periods then ended.
6.5 Permits; Compliance with Law. (a) United has all permits,
-----------------------------
licenses, approvals, authorizations and registrations under all federal, state,
local and foreign laws required for United to carry on its business as presently
conducted, and all of such permits, licenses, approvals, authorizations and
registrations are in full force and effect, and no suspension or cancellation of
any of them is pending or, to the knowledge of United, threatened.
(b) United has complied with all laws, regulations, and orders
applicable to it or its business, except for any non-compliance which would not
have a material adverse effect on United, and United has received no notice or
warning from any governmental authority with respect to any failure or alleged
failure of United to comply in any respect with any law, regulation or order has
been received, nor is any such notice or warning proposed or, to the knowledge
of United, threatened.
6.6 Litigation and Proceedings. There are no actions, decrees,
--------------------------
suits, counterclaims, claims, proceedings or governmental actions or
investigations, pending or, to the knowledge of United, threatened against, by
or affecting United, any officer, director, employee or agent in such person's
capacity as an officer, director, employee or agent of United or relating to the
business or affairs of United, in any court or before any arbitrator or
governmental agency, and no judgment, award, order or decree of any nature has
been rendered against or with respect thereto by any agency, arbitrator, court,
commission or other authority, nor does United have any unasserted contingent
liabilities which may have an adverse effect on its assets or on the operation
of its businesses or which might prevent or impede the consummation of the
transactions contemplated by this Agreement.
6.7 Default. (a) Except for those consents described in or set
-------
forth pursuant to Section 6.2 above, neither the execution of this Agreement nor
consummation of the transactions contemplated herein (i) constitutes a breach of
or default under any contract or commitment to which United is a party or by
which United or its properties or assets are bound, (ii) does or will result in
the creation or imposition of any security interest, lien, encumbrance, charge,
equity or restriction of any nature whatsoever in favor of any third party upon
any assets of United, or (iii) constitutes an event permitting termination of
any agreement or the acceleration of any indebtedness of United.
(b) United is not in default under its articles of
incorporation or bylaws or under any term or provision of any security deed,
mortgage, indenture or security agreement or of any other contract or instrument
to which United is a party or by which it or any of its property is bound.
-24-
6.8 Disclosure Reports. United has a class of securities
-------------------
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and has delivered to Independent copies of:
(a) its Annual Report on Form 10-K for its fiscal year ended
December 31, 1998 (and those portions of its 1998 Annual Report to Shareholders
incorporated therein by reference) filed pursuant to Section 13 of the Act;
(b) the Proxy Statement for its Annual Meeting of Shareholders
held on April 15, 1999, filed pursuant to Section 14 of the Act; and
(c) its Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999, and September 30, 1999, filed pursuant to Section
13 of the Act.
The report, proxy statement and quarterly reports include all of the regular and
periodic reports and proxy statements required to be filed by United with the
Securities and Exchange Commission since September 30, 1999, and are herein
collectively referred to as the "United SEC Reports." The United SEC Reports
taken together correctly describe, among other things, the business, operations
and principal properties of United in accordance with the requirements of the
applicable report forms. As of the respective dates of filing, none of the
United SEC Reports contained any untrue statement of material fact necessary to
make the statements therein not misleading. The financial statements contained
in the United SEC Reports have been prepared in accordance with generally
accepted accounting principals consistently applied and present fairly the
financial condition of United as of the dates thereof and the results of
operations for the periods covered thereby.
6.9 No Material Adverse Change. Since the date of its latest
----------------------------
published financial statements included in the United SEC Reports, there has not
been any change in the condition of United, any contracts entered into by
United, or other changes in the operations of United which, in any case, would
have a material adverse effect on United on a consolidated basis taken as a
whole.
6.10 Representations and Warranties. No representation or
-------------------------------
warranty contained in this Article VI or in any written statement delivered by
or at the direction of United pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of all
documents that have been or will be furnished to Independent in connection with
this Agreement or pursuant hereto are or shall be true, correct and complete.
-25-
ARTICLE VII
-----------
CONDITIONS TO OBLIGATIONS OF UNITED
-----------------------------------
All of the obligations of United under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by United:
7.1 Veracity of Representations and Warranties. The
-------------------------------------------------
representations and warranties of Independent contained herein or in any
certificate, schedule or other document delivered pursuant to the provisions
hereof, or in connection herewith, shall be true in all material respects as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true in all material respects at and as of such time, except
as a result of changes or events expressly permitted or contemplated herein.
7.2 Performance of Agreements. Independent shall have
----------------------------
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
7.3 Certificates, Resolutions, Opinion. Independent shall have
----------------------------------
delivered to United:
(a) a certificate executed by the President and
Secretary of Independent, dated as of the Closing Date, and certifying
in such detail as United may reasonably request to the fulfillment of
the conditions specified in Sections 7.1 and 7.2 hereof;
(b) duly adopted resolutions of the Board of
Directors and shareholders of Independent certified by the Secretary
thereof, dated the Closing Date, (i) authorizing and approving the
execution of this Agreement (with respect to the directors of
Independent) and the Merger Agreement (with respect to the directors and
shareholders of Independent) and the consummation of the transactions
contemplated herein and therein in accordance with their respective
terms and (ii) authorizing all other necessary and proper corporate
action to enable Independent to comply with the terms hereof and
thereof;
(c) certificates of the valid existence of
Independent and Independent Bank under the laws of the State of Georgia,
executed by the Secretary of State and the Department of Banking,
respectively, and dated not more than five (5) business days prior to
the Closing Date;
(d) certificates from the appropriate public
officials of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date, certifying that Independent has filed
all corporate tax returns required by the laws of such state and has
paid all taxes shown thereon to be due; and
-26-
(e) an opinion of Powell, Goldstein, Frazier &
Murphy, counsel for Independent, dated the Closing Date, in the form
attached hereto as Exhibit D.
7.4 Shareholder Approval. The Merger Agreement shall have been
--------------------
approved by the vote of the holders of at least a majority of Independent Stock.
7.5 Regulatory Approvals. United shall have received from any
--------------------
and all governmental authorities, bodies or agencies having jurisdiction over
the transactions contemplated by this Agreement and the Merger Agreement,
including, but not limited to the Federal Reserve and the Department of Banking,
such consents, authorizations and approvals as are necessary for the
consummation thereof and all applicable waiting or similar periods required by
law shall have expired.
7.6 Effective Registration Statement. The United Registration
-------------------------------
Statement shall have been declared effective by the SEC and no stop order shall
have been entered with respect thereto.
7.7 Certificate of Merger. The Secretary of State of the State
---------------------
of Georgia shall have issued a certificate of merger with regard to the Merger
in accordance with the provisions of the Georgia Business Corporation Code.
7.8 Accountants' Letter. United shall have received a letter
--------------------
from Mauldin & Jenkins, dated the Closing Date, to the effect that: At the
request of Independent they have carried out procedures to a specified date not
more than five business days prior to the Closing Date, which procedures did not
constitute an examination in accordance with generally accepted auditing
standards, of the financial statements of Independent, as follows: (a) read the
unaudited balance sheets and statements of income of Independent from December
31, 1999 through the date of the most recent monthly financial statements
available in the ordinary course of business; (b) read the minutes of the
meetings of shareholders and Board of Directors of Independent from December 31,
1998 to said date nor more than five business days prior to the Closing Date;
and (c) consulted with certain officers and employees of Independent responsible
for financial and accounting matters and, based on such procedures, nothing has
come to their attention which would cause them to believe that (i) such
unaudited interim balance sheets and statements of income are not fairly
presented in conformity with generally accepted accounting principles applied on
a basis consistent with that of the 1999 Independent Financial Statements, (ii)
as of said date not more than five business days prior to the Closing Date, the
shareholders' equity, long-term debt, reserve for possible loan losses and total
assets of Independent, in each case as compared with the amounts shown in the
1999 Independent Financial Statements, are not different except as set forth in
such letter, or (iii) for the period from December 31, 1998 to said date not
more than five business days prior to the Closing Date, the net interest income,
total and per-share amounts of consolidated income (before extraordinary items)
and net income of Independent, as compared with the corresponding portion of the
preceding 12-month period, are not different except as set forth in such letter.
-27-
7.9 Employment Agreement. James H. Powell shall have executed
--------------------
an employment agreement in form reasonably satisfactory to United and Mr.
Powell.
7.10 Pooling of Interests. United shall have received an
---------------------
opinion of Porter, Keadle, Moore LLP, certified public accountants, to the
effect that the Merger will be accounted for as a "pooling of interests," which
opinion will be subject only to such qualifications, exceptions and factual
assumptions as are satisfactory to United.
7.11 Increase in Authorized Capital Stock. An increase in the
-------------------------------------
number of authorized shares United common stock, from 10,000,000 shares to
50,000,000 shares, shall have been approved by a vote of the shareholders of
United.
ARTICLE VIII
------------
CONDITIONS TO OBLIGATIONS OF INDEPENDENT
----------------------------------------
All of the obligations of Independent under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by it:
8.1 Veracity of Representations and Warranties. The
-------------------------------------------------
representations and warranties of United contained herein or in any certificate,
schedule or other document delivered pursuant to the provisions hereof, or in
connection herewith, shall be true in all material respects as of the date when
made and shall be deemed to be made again at and as of the Closing Date and
shall be true in all material respects at and as of such time, except as a
result of changes or events expressly permitted or contemplated herein (provided
that representations and warranties which are confined to a specific date shall
speak only as of such date).
8.2 Performance of Agreements. United shall have performed and
-------------------------
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
8.3 Certificates, Resolutions, Opinion. United shall have
------------------------------------
delivered to Independent:
(a) a certificate executed by the President and
Secretary of United, dated the Closing Date, certifying in such detail
as Independent may reasonably request to the fulfillment of the
conditions specified in Sections 8.1 and 8.2 hereof;
(b) duly adopted resolutions of the board of
directors of United, certified by the Secretary thereof, dated the
Closing Date, (i) authorizing and approving the execution of this
Agreement and the Merger Agreement on behalf of United, and the
consummation of the transactions contemplated herein and therein in
accordance with their respective terms, and (ii) authorizing all other
necessary and proper corporate actions to enable United to comply with
the terms hereof and thereof;
-28-
(c) a certificate of the valid existence of United,
under the laws of the State of Georgia executed by the Secretary of
State of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date;
(d) certificates from the appropriate public
officials of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date, certifying that United has filed all
corporate tax returns required by the laws of such state and has paid
all taxes shown thereon to be due; and
(e) an opinion of Kilpatrick Stockton LLP, counsel
for United, dated the Closing Date, in the form attached hereto as
Exhibit E.
8.4 Shareholder Approval. The Merger Agreement shall have been
--------------------
approved by the vote of the holders of at least a majority of Independent Stock.
8.5 Regulatory Approvals. Any and all governmental
----------------------
authorities, bodies or agencies having jurisdiction over the transactions
contemplated by this Agreement and the Merger Agreement, including, but not
limited to the Federal Reserve and the Department of Banking, shall have granted
such consents, authorizations and approvals as are necessary for the
consummation hereof and thereof, and all applicable waiting or similar periods
required by law shall have expired.
8.6 Effective Registration Statement. The United Registration
--------------------------------
Statement shall have been declared effective by the SEC and no stop order shall
have been entered with respect thereto.
8.7 Tax Opinion. Independent shall have received from
------------
Kilpatrick Stockton LLP its opinion, in form and substance reasonably
satisfactory to Independent, to the effect that:
(1) The Merger and the issuance of shares of United
Stock in connection therewith, as described herein and in the Merger
Agreement, will constitute a tax-free reorganization under Section
368(a)(1)(A) of the Code;
(2) No gain or loss will be recognized by holders of
Independent Stock upon the exchange of such stock solely for United
Stock as a result of the Merger;
(3) Gain or loss will be recognized pursuant to
Section 302 of the Code by holders of Independent Stock upon their
receipt of cash in lieu of fractional shares of United Stock and upon
their exercise of dissenters' rights;
(4) No gain or loss will be recognized by Independent
as a result of the Merger;
-29-
(5) The aggregate tax basis of United Stock received
by shareholders of Independent pursuant to the Merger will be the same
as the tax basis of the shares of Independent Stock exchanged therefor
decreased by any portion of such tax basis allocated to fractional
shares of United Stock that are treated as redeemed by United; and
(6) The holding period of the shares of United Stock
received by the shareholders of Independent will include the holding
period of the shares of Independent Stock exchanged therefor, provided
that the stock of Independent is held as a capital asset on the date of
the consummation of the Merger.
8.8 Certificate of Merger. The Secretary of State of the State
---------------------
of Georgia shall have issued a certificate of merger with regard to the Merger
in accordance with the provisions of the Georgia Business Corporation Code.
8.9 Employment Agreement. James H. Powell shall have executed
--------------------
an employment agreement in form reasonably satisfactory to United and Mr.
Powell.
8.10 Increase in Authorized Capital Stock. An increase in the
------------------------------------
number of authorized shares United common stock, from 10,000,000 shares to
50,000,000 shares, shall have been approved by a vote of the shareholders of
United.
8.11 Fairness Opinion. Independent shall have received from
-----------------
Alex Sheshunoff and Company an opinion, dated no more than five business days
prior to the date of the Indpendent Proxy Materials, that the consideration to
be received by Independent shareholders as a result of the Merger is fair from a
financial point of view.
ARTICLE IX
----------
WARRANTIES, NOTICES, ETC.
-------------------------
9.1 Warranties. All statements contained in any certificate or
----------
other instrument delivered by or on behalf of Independent or United pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed representations and warranties hereunder by them. Unless the context
otherwise requires, the representations and warranties required of Independent
shall be required to be made, and shall be considered made, on behalf of both
Independent and its subsidiary Independent Bank, and the representations and
warranties required of United, shall be required to be made, and shall be
considered made, on behalf of United and the United Subsidiaries.
9.2 Survival of Representations. All representations,
------------------------------
warranties, covenants, and agreements made by either party hereto in or pursuant
to this Agreement or in any instrument, exhibit, or certificate delivered
pursuant hereto shall be deemed to have been material and to have been relied
upon by the party to which made, but, except as set forth hereafter or
specifically stated in this Agreement, such representations, warranties,
covenants, and agreements shall expire and be of no further force and effect
upon the consummation of the Merger; provided, however, that the following shall
survive consummation of the Merger and the transactions contemplated hereby:
-30-
(a) the opinions of counsel referred to in Sections
7.3(f) and 8.3(e) of this Agreement;
(b) any intentional misrepresentation of any material
fact made by either party hereto in or pursuant to this Agreement or in
any instrument, document or certificate delivered pursuant hereto; and
(c) the covenant with respect to the confidentiality
of certain information contained in Section 3.5 hereof.
9.3 Notices. All notices or other communications required or
-------
permitted to be given or made hereunder shall be in writing and delivered
personally or sent by pre-paid, first class certified or registered mail, return
receipt requested, or by facsimile transmission, to the intended recipient
thereof at its address or facsimile number set out below. Any such notice or
communication shall be deemed to have been duly given immediately (if given or
made in person or by facsimile confirmed by mailing a copy thereof to the
recipient in accordance with this Paragraph 9.3 on the date of such facsimile),
or five days after mailing (if given or made by mail), and in proving same it
shall be sufficient to show that the envelope containing the same was delivered
to the delivery service and duly addressed, or that receipt of a facsimile was
confirmed by the recipient as provided above. Either party may change the
address to which notices or other communications to such party shall be
delivered or mailed by giving notice thereof to the other party hereto in the
manner provided herein.
(a) To Independent: Independent Bancshares, Inc.
4484 Marietta Street
Powder Springs, Georgia 30127
Attention: James H. Powell
President & CEO
Facsimile:
With copies to: Powell, Goldstein, Frazer &
Murphy LLP
191 Peachtree Street, N.E.
Suite 1600
Atlanta, Georgia 30303
Attention: Walter G. Moeling,
IV
Facsimile: (404) 572-6999
(b) To United: United Community Banks, Inc.
P.O. Box 398
Blairsville, Georgia 30512
Attention: Jimmy Tallent
President
Facsimile: (706) 745-1335
-31-
With copies to: Kilpatrick Stockton LLP
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 303039-4530
Attention: Richard R. Cheatham
Facsimile: (404) 815-6555
9.4 Entire Agreement. This Agreement and the Merger Agreement
----------------
supersede all prior discussions and agreements between Independent and United
with respect to the Merger and the other matters contained herein and therein,
and this Agreement and the Merger Agreement contain the sole and entire
agreement between Independent and United with respect to the transactions
contemplated herein and therein.
9.5 Waiver; Amendment. Prior to or on the Closing Date, United
-----------------
shall have the right to waive any default in the performance of any term of this
Agreement by Independent, to waive or extend the time for the fulfillment by
Independent of any or all of Independent' obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of United
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any law or applicable governmental regulation. Prior to or
on the Closing Date, Independent shall have the right to waive any default in
the performance of any term of this Agreement by United, to waive or extend the
time for the fulfillment by United of any or all of United's obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Independent under this Agreement, except any condition which, if
not satisfied, would result in the violation of any law or applicable
governmental regulation. This Agreement may be amended by a subsequent writing
signed by the parties hereto, provided, however, that the provisions of Sections
7.5 and 8.5 requiring regulatory approval shall not be amended by the parties
hereto without regulatory approval.
ARTICLE X
---------
TERMINATION
-----------
This Agreement may be terminated at any time prior to or on
the Closing Date upon written notice to the other party as follows, and, upon
any such termination of this Agreement, neither party hereto shall have any
liability to the other, except that the provisions of Section 3.5 hereof shall
survive the termination of this Agreement for any reason.
10.1 Material Adverse Change. (a) By United, if, after the
-------------------------
date hereof, a material adverse change in the financial condition or business of
Independent shall have occurred which change would reasonably be expected to
have a material adverse affect on the market price of Independent Stock, or if
Independent shall have suffered a material loss or damage to any of its
properties or assets, which change, loss or damage materially affects or impairs
-32-
its ability to conduct its business. (b) By Independent, if, after the date
hereof, a material adverse change in the financial condition or business of
United shall have occurred which change would reasonably be expected to have a
material adverse affect on the market price of United Stock, or if United shall
have suffered a material loss or damage to any its properties or assets, which
change, loss or damage materially affects or impairs its ability to conduct its
business.
10.2 Noncompliance. (a) By United, if the terms, covenants or
-------------
conditions of this Agreement to be complied with or performed by Independent
before the Closing shall not have been substantially complied with or
substantially performed at or before the Closing Date and such noncompliance or
nonperformance shall not have been waived by United. (b) By Independent, if the
terms, covenants or conditions of this Agreement to be complied with or
performed by United before the Closing shall not have been substantially
complied with or substantially performed at or before the Closing Date and such
noncompliance or nonperformance shall not have been waived by Independent.
10.3 Failure to Disclose. (a) By United, if it learns of any
-------------------
fact or condition not disclosed in this Agreement, the Independent Disclosure
Memorandum, or the 1999 Independent Financial Statements, which was required to
be disclosed by Independent pursuant to the provisions of this Agreement at or
prior to the date of execution hereof with respect to the business, properties,
assets or earnings of Independent which materially and adversely affects such
business, properties, assets or earnings or the ownership, value or continuance
thereof. (b) By Independent, if it learns of any fact or condition not disclosed
in this Agreement or the 1999 United Financial Statements, which was required to
be disclosed by United pursuant to the provisions of this Agreement at or prior
to the date of execution hereof with respect to the business, properties, assets
or earnings of United which materially and adversely affect such business,
properties, assets or earnings or the ownership, value or continuance thereof.
10.4 Adverse Proceedings. By either party, if any action, suit
-------------------
or proceeding shall have been instituted or threatened against either party to
this Agreement to restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the consummation of the transactions contemplated
herein, which, in the good faith opinion of Independent or United makes
consummation of the transactions herein contemplated inadvisable.
10.5 Termination Date. By either party, if the Closing Date
-----------------
shall not have occurred on or before August 31, 2000.
10.6 Dissenters. By United, if the holders of more than
----------
155,852 shares of the outstanding Independent Stock elect to exercise this
statutory right to dissent from the Merger and demand payment in cash for the
"fair value" of their shares.
10.7 Shareholders Vote. By either party, if the Merger
------------------
Agreement is not approved by the Vote of the holders of Independent Stock as
required by applicable law.
-33-
10.8 Environmental Liability of Independent. By United, if it
--------------------------------------
learns of any potential liability of Independent arising from noncompliance with
any federal, state or local environmental law by Independent, or any potential
liability of Independent arising from any environmental condition of the
properties or assets of Independent, including any properties or assets in which
Independent holds a security interest.
ARTICLE XI
----------
COUNTERPARTS, HEADINGS, ETC.
----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The headings herein set out are for
convenience of reference only and shall not be deemed a part of this Agreement.
A pronoun in one gender includes and applies to the other genders as well.
ARTICLE XII
-----------
BINDING EFFECT
--------------
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement may not be assigned by either party
without the prior written consent of the other.
ARTICLE XIII
------------
GOVERNING LAW
-------------
The validity and effect of this Agreement and the Merger
Agreement and the rights and obligations of the parties hereto and thereto shall
be governed by and construed and enforced in accordance with the laws of the
State of Georgia.
-34-
IN WITNESS WHEREOF, Independent and United have caused this
Agreement to be executed by their respective duly authorized corporate officers
and their respective corporate seals to be affixed hereto as of the day and year
first above written.
INDEPENDENT BANCSHARES, INC.
(CORPORATE SEAL) By:_________________________
Name:___________________
Title:__________________
Attest:
_____________________________
Secretary
UNITED COMMUNITY BANKS, INC.
(CORPORATE SEAL) By: /s/ Jimmy C. Tallent
--------------------------
Name: Jimmy Tallent
Title: President
Attest:
/s/ Billy M. Decker
- ----------------------------
Secretary
-35-
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made
and entered into as of this _____ day of ____, 2000, by and between UNITED
COMMUNITY BANKS, INC. ("United") and INDEPENDENT BANCSHARES, INC.
("Independent"), both Georgia corporations (said corporations are hereinafter
collectively referred to as the "Constituent Corporations").
R E C I T A L S:
- - - - - - - -
WHEREAS, the authorized capital stock of United consists of
10,000,000 shares of Common Stock, $1.00 par value per share (the "United
Stock"), of which 8,429,090 shares are issued and outstanding; and
WHEREAS, the authorized capital stock of Independent consists
of 10,000,000 shares of Common Stock, $1.00 par value per share, of which
2,067,439 shares are issued and outstanding, including options to acquire
119,283 shares of Common Stock ("Independent Stock"); and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations deem it advisable and in the best interests of each such
corporation and its shareholders that Independent merge with United, with United
being the surviving corporation; and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations, by resolutions duly adopted, have unanimously approved and adopted
this Agreement, and the Board of Directors of Independent, by resolution duly
adopted, has directed that this Agreement be submitted to the shareholders of
Independent for their approval; and
WHEREAS, United has agreed to issue shares of United Stock
which shareholders of Independent will be entitled to receive, according to the
terms and conditions contained herein, on or after the Effective Date (as
defined herein) of the merger provided for herein.
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements herein contained, and other good and valuable
consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto have agreed and do
hereby agree, as follows:
1. MERGER.
------
Pursuant to and with the effects provided in the applicable
provisions of Article 11 of the Georgia Business Corporation Code, as amended
(Chapter 2 of Title 14 of the Official Code of Georgia), Independent
(hereinafter sometimes referred to as the "Merged Corporation") shall be merged
with and into United (the "Merger"). United shall be the surviving corporation
(the "Surviving Corporation") and shall continue under the name "United
Community Banks, Inc." On the Effective Date (as defined herein) of the Merger,
the individual existence of the Merged Corporation shall cease and terminate.
2. ACTIONS TO BE TAKEN.
-------------------
The acts and things required to be done by the Georgia
Business Corporation Code in order to make this Agreement effective, including
the submission of this Agreement to the shareholders of the Merged Corporation
and the filing of the Certificate of Merger relating hereto in the manner
provided in said Code, shall be attended to and done by the proper officers of
the Constituent Corporations with the assistance of counsel as soon as
practicable.
3. EFFECTIVE DATE.
--------------
The Merger shall be effective upon the approval of this
Agreement by the shareholders of the Merged Corporation and the filing of the
Certificate of Merger relating hereto in the manner provided in the Georgia
Business Corporation Code (the "Effective Date").
4. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
-----------------------------------------------------
CORPORATION.
- ------------
(a) The Articles of Incorporation of United, as heretofore
amended, shall on the Effective Date be the Articles of Incorporation of the
Surviving Corporation.
(b) Until altered, amended or repealed, as therein provided,
the Bylaws of United as in effect on the Effective Date shall be the Bylaws of
the Surviving Corporation.
5. MANNER AND BASIS OF CONVERTING SHARES OF CAPITAL STOCK;
----------------------------------------------------------
CAPITAL STRUCTURE OF THE SURVIVING CORPORATION.
- ------------------------------------------------
The manner and basis of converting the shares of capital stock
of each of the Constituent Corporations into shares of the Surviving Corporation
shall be as follows:
(a) Upon the Effective Date each of the shares of Independent
Stock outstanding on the Effective Date shall be converted into fully paid and
nonassessable shares of United Stock at the rate of .4211 shares of United Stock
for each outstanding share of Independent Stock. If either party should change
the number of its outstanding shares as a result of a stock split, stock
dividend, or similar recapitalization with respect to such shares prior to the
Effective Date then the shares to be issued hereunder to holders of Independent
Stock shall be proportionately adjusted.
(b) No scrip or fractional share certificates of United Stock
shall be issued in connection with the Merger and an outstanding fractional
share interest will not entitle the owner thereof to vote, to receive dividends
or to have any of the rights of a shareholder with respect to such fractional
interest. In lieu of any fractional interest, there shall be paid in cash an
amount (computed to the nearest cent) equal to such fraction multiplied by
$38.00.
-2-
(c) Upon the Effective Date, all rights with respect to
Independent Stock pursuant to stock options (the "Independent Stock Options")
granted by Independent which are outstanding at the Effective Date, whether or
not exercisable, shall be converted into and become rights with respect to
United Stock, and United shall assume each Independent Stock Option in
accordance with the terms of the stock option plan and the stock option
agreement by which it is evidenced. From and after the Effective Date, (i) each
Independent Stock Option assumed by United may be exercised solely for shares of
United Stock, (ii) the number of shares of United Stock subject to such
Independent Stock Option shall be equal to the product of the number of shares
of Independent Stock subject to such Independent Stock Option immediately prior
to the Effective Date multiplied by .4211, and (iii) the per share exercise
price under each such Independent Stock Option shall be adjusted by dividing the
per share exercise price by .4211 and rounding down to the nearest cent.
(d) As soon as practicable after the Effective Date, each
holder as of the Effective Date of any of the shares of Independent Stock, upon
presentation and surrender of the certificates representing such shares to
United, shall be entitled to receive in exchange therefor a certificate
representing the number of shares of United Stock to which such shareholder
shall be entitled according to the terms of this Agreement. Until such
surrender, each such outstanding certificate which prior to the Effective Date
represented Independent Stock shall be deemed for all corporate purposes to
evidence ownership of the number of shares of United Stock into which the same
shall have been converted and the right to receive payment for fractional
shares.
(e) Upon the Effective Date, each share of United Stock issued
and outstanding immediately prior to the Effective Date shall continue unchanged
and shall continue to evidence a share of common stock of the Surviving
Corporation.
6. TERMINATION OF SEPARATE EXISTENCE.
---------------------------------
Upon the Effective Date, the separate existence of the Merged
Corporation shall cease and the Surviving Corporation shall possess all of the
rights, privileges, immunities, powers and franchises, as well of a public
nature as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account, and
all other choses in action, and all and every other interest of or belonging to
or due to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed, and the title to any real estate or any interest therein, vested in either
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger. The Surviving Corporation shall thenceforth be responsible
and liable for all the liabilities, obligations and penalties of each of the
Constituent Corporations; and any claim existing or action or proceeding, civil
or criminal, pending by or against either of said Constituent Corporations may
be prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in its place, and any judgment rendered against either of the
Constituent Corporations may thenceforth be enforced against the Surviving
Corporation; and neither the rights of creditors nor any liens upon the property
of either of the Constituent Corporations shall be impaired by the Merger.
-3-
7. FURTHER ASSIGNMENTS.
-------------------
If at any time the Surviving Corporation shall consider or be
advised that any further assignments or assurances in law or any other things
are necessary or desirable to vest in said corporation, according to the terms
hereof, the title to any property or rights of the Merged Corporation, the
proper officers and directors of the Merged Corporation shall and will execute
and make all such proper assignments and assurances and do all things necessary
and proper to vest title in such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes of this Agreement.
8. CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER.
--------------------------------------------------
This Agreement is subject to, and consummation of the Merger
is conditioned upon, the fulfillment as of the Effective Date of each of the
following conditions:
(a) Approval of this Agreement by the affirmative vote of the
holders of a majority of the outstanding voting shares of Independent Stock; and
(b) All the terms, covenants, agreements, obligations and
conditions of the Agreement and Plan of Reorganization (the "Acquisition
Agreement") of even date herewith by and between Independent and United to be
complied with, satisfied and performed on or prior to the Closing Date (as
defined therein), shall have been complied with, satisfied and performed in all
material respects unless accomplishment of such covenants, agreements,
obligations and conditions has been waived by the party benefited thereby.
9. TERMINATION.
-----------
This Agreement may be terminated and the Merger abandoned in
accordance with the terms of the Acquisition Agreement, at any time before or
after adoption of this Agreement by the directors of either of the Constituent
Corporations, notwithstanding favorable action on the Merger by the shareholders
of the Merged Corporation, but not later than the issuance of the certificate of
merger by the Secretary of State of Georgia with respect to the Merger in
accordance with the provisions of the Georgia Business Corporation Code.
10. COUNTERPARTS; TITLE; HEADINGS.
-----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The title of this Agreement and the
headings herein set out are for the convenience of reference only and shall not
be deemed a part of this Agreement.
-4-
11. AMENDMENTS; ADDITIONAL AGREEMENTS.
---------------------------------
At any time before or after approval and adoption by the
shareholders of Independent, this Agreement may be modified, amended or
supplemented by additional agreements, articles or certificates as may be
determined in the judgment of the respective Boards of Directors of the
Constituent Corporations to be necessary, desirable or expedient to further the
purposes of this Agreement, to clarify the intention of the parties, to add to
or modify the covenants, terms or conditions contained herein or to effectuate
or facilitate any governmental approval of the Merger or this Agreement, or
otherwise to effectuate or facilitate the consummation of the transactions
contemplated hereby; provided, however, that no such modification, amendment or
supplement shall reduce to any extent the consideration into which shares of
Independent Stock shall be converted in the Merger pursuant to Section 5 hereof.
IN WITNESS WHEREOF, the Constituent Corporations have each
caused this Agreement to be executed on their respective behalfs and their
respective corporate seals to be affixed hereto as of the day and year first
above written.
UNITED COMMUNITY BANKS, INC.
(CORPORATE SEAL)
By:_________________________
ATTEST: Jimmy Tallent
President
__________________________
Secretary
INDEPENDENT BANCSHARES, INC.
(CORPORATE SEAL)
By:________________________
Name:__________________
Title:_________________
_____________________________
Secretary
EXHIBIT B
United Community Banks, Inc.
P.O. Box 398
Blairsville, Georgia 30512
Gentlemen:
In connection with the proposed merger (the "Merger") of
Independent Bancshares, Inc. ("Independent") with and into United Community
Banks, Inc. ("United"), pursuant to the Agreement and Plan of Reorganization of
even date herewith among United and Independent (the "Reorganization
Agreement"), the undersigned hereby covenants, represents and warrants as
follows:
1. Recommendation for Merger and Voting of Independent Stock.
The undersigned agrees to recommend to all holders of the capital stock of
Independent ("Independent Stock") that they vote in favor of the Merger. In
addition, the undersigned agrees to vote any and all shares of Independent Stock
owned or controlled by him in favor of the Merger.
2. Compliance with Securities Laws. The undersigned
acknowledges that he will be subject to the restrictions on resales contained in
Rule 145 of the Rules and Regulations of the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended, and agrees to sell,
transfer or otherwise dispose of any shares of capital stock of United ("United
Stock") received by him pursuant to the Merger only in compliance with the
provisions of such Act and Rule. The undersigned acknowledges that United is not
under any obligation to file a registration statement with the SEC covering the
disposition of the undersigned's shares of United Stock to be received pursuant
to the Merger.
3. Restrictive Legend. The undersigned agrees that the
certificates representing shares of United Stock to be issued to the undersigned
pursuant to the Merger will be stamped or otherwise imprinted with a legend in
substantially the following form:
The shares represented by this certificate may not be sold,
transferred or otherwise disposed of except in a transaction
covered by an effective registration statement under the
Securities Act of 1933, as amended, or in accordance with Rule
145 promulgated thereunder, or in accordance with a legal
opinion satisfactory to the Company that such sale or transfer
is otherwise exempt from the requirements of such Act.
4. Initial Restriction on Disposition. The undersigned agrees
that the undersigned will not, except by operation of law, by will or under the
laws of descent and distribution, sell, transfer, or otherwise dispose of the
undersigned's interests in, or reduce the undersigned's risk relative to, any of
the shares of United Stock into which the undersigned's shares of Independent
Stock are converted upon consummation of the Merger until such time as United
notifies the undersigned that the requirements of SEC Accounting Series Release
Nos. 130 and 135 ("ASR 130 and 135") have been met. The undersigned understands
that ASR 130 and 135 relate to publication of financial results of post-Merger
combined operations of United and Independent. United agrees that it will
publish such results within 45 days after the end of the first fiscal quarter of
United containing the required period of post-Merger combined operations and
that it will notify the undersigned promptly following such publication.
Sincerely,
[Director or Executive Officer]
EXHIBIT D
(1) Independent was duly organized as a corporation, and is existing
and in good standing, under the laws of the State of Georgia.
(2) Independent the corporate power to execute and deliver the
Agreement and Plan of Reorganization Agreement (the "Reorganization Agreement")
and the Agreement and Plan of Merger Agreement (the "Merger Agreement"), to
perform its obligations thereunder, to own and use its Assets and to conduct its
business.
(3) Independent has duly authorized the execution and delivery of the
Reorganization Agreement and the Merger Agreement and all performance by
Independent thereunder, and has duly executed and delivered the Reorganization
Agreement and the Merger Agreement.
(4) No consent, approval, authorization or other action filed by, or
filing with, any governmental authority of the United States or the State of
Georgia is required for Independent's execution and delivery of the
Reorganization Agreement and the Merger Agreement and consummation of the
Transaction, which consent, approval or authorization has not been previously
received.
(5) The Reorganization Agreement and the Merger Agreement are
enforceable against Independent.
(6) The authorized capital stock of Independent consists of 10,000,000
shares of Common Stock, $1.00 par value per share, of which 2,067,439 shares are
issued and outstanding. All of the issued and outstanding capital stock of
Independent has been duly authorized and validly issued and are fully paid and
non-assessable and, to such counsel's knowledge, there are no outstanding
options, warrants, rights, calls, commitments, conversion rights, plans or other
agreements providing for the purchase or issuance of any authorized but unissued
shares of such capital stock.
EXHIBIT E
(1) United was duly organized as a corporation, and is existing and in
good standing, under the laws of the State of Georgia.
(2) United has the corporate power to execute and deliver the Agreement
and Plan of Reorganization (the "Reorganization Agreement) and the Agreement and
Plan of Merger (the "Merger Agreement") to perform its obligations thereunder,
to own and use its Assets and to conduct its business.
(3) United has duly authorized the execution and delivery of the
Reorganization Agreement and the Merger Agreement and all performance by United
thereunder, and has duly executed and delivered the Reorganization Agreement and
Merger Agreement:
(4) No consent, approval, authorization or other action filed by, or
filing with, any governmental authority of the United States or the State of
Georgia is required for United's execution and delivery of the Reorganization
Agreement and the Merger Agreement and consummation of the Transaction, which
consent, approval or authorization has not been previously received.
(5) The Reorganization Agreement and the Merger Agreement are
enforceable against United.
(6) The shares of United Stock to be issued upon consummation of the
Merger have been duly authorized and upon issuance as contemplated in the Merger
Agreement, will be validly issued, fully paid and non-assessable.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered into as of this 3rd day of March, 2000, by and between NORTH
POINT BANCSHARES, INC., a Georgia business corporation (hereinafter "North
Point," and unless the context otherwise requires, the term "North Point" shall
include both North Point Bancshares, Inc. and its subsidiary Dawson County Bank
("Dawson Bank")), and UNITED COMMUNITY BANKS, INC., a Georgia business
corporation (hereinafter "United," and unless the context otherwise requires,
the term "United" shall include United Community Banks, Inc. and its
subsidiaries, United Community Bank, a Georgia banking corporation, Peoples Bank
of Fannin County, a Georgia banking corporation, White County Bank, a Georgia
banking corporation, Towns County Bank, a Georgia banking corporation, Bank of
Adairsville, a Georgia banking corporation, Carolina Community Bank, a North
Carolina banking corporation, First Clayton Bank & Trust Company, a Georgia
banking corporation, 1st Floyd Bank, a Georgia banking corporation and United
Family Finance Company, a Georgia business corporation).
R E C I T A L S:
WHEREAS, the respective boards of directors of North Point and
United deem it advisable and in the best interests of each such entity and their
respective shareholders that North Point merge with United (the "Merger"), with
United being the surviving corporation and with all of the issued and
outstanding shares of common stock, $5.00 par value per share, of North Point
("North Point Stock") being converted into the right to receive shares of the
authorized common stock, $1 par value per share, of United ("United Stock"), all
upon the terms and conditions hereinafter set forth and as set forth in the
Agreement and Plan of Merger attached hereto as Exhibit A and incorporated
herein by reference (the "Merger Agreement"); and
WHEREAS, the boards of directors of the respective entities
believe that the merger of North Point and United and the synergies produced
thereby will greatly enhance and strengthen the franchises and future prospects
of both companies;
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, and other good and
valuable consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
CLOSING
The transactions contemplated herein shall be consummated (the
"Closing") at the offices of Kilpatrick Stockton LLP, Suite 2800, 1100 Peachtree
Street, Atlanta, Georgia, on the first business day following receipt of all
approvals from any governmental authorities having jurisdiction over the
transactions contemplated by this Agreement and the Merger Agreement, and the
expiration of any waiting or similar period required by applicable law (the
"Closing Date"), or at such other time and place as may be mutually satisfactory
to the parties hereto.
ARTICLE II
MERGER
Pursuant to the terms and conditions provided herein, on the
Closing Date North Point and United shall be merged in accordance with and in
the manner set forth in the Merger Agreement. The surviving corporation
following the Merger will operate under the Articles of Incorporation of United
and will be the parent holding company of Dawson County Bank, a Georgia banking
corporation, United Community Bank, a Georgia banking corporation, Peoples Bank
of Fannin County, a Georgia banking corporation, White County Bank, a Georgia
banking corporation, Towns County Bank, a Georgia banking corporation, Bank of
Adairsville, a Georgia banking corporation, Carolina Community Bank, a North
Carolina banking corporation, Clayton Bank & Trust Company, a Georgia banking
corporation, 1st Floyd Bank, a Georgia banking corporation and United Family
Finance Company, a Georgia business corporation, the latter nine of which are
currently wholly-owned subsidiaries of United. Upon the terms and conditions of
this Agreement and the Merger Agreement, United shall make available on or
before the Effective Date (as defined in the Merger Agreement) for delivery to
the holders of North Point Stock (i) the number of shares of United Stock to be
issued upon conversion of the shares of North Point Stock and (ii) sufficient
funds to provide for cash payments in lieu of the issuance of fractional shares
as provided in the Merger Agreement, provided, however, that unless and until a
holder of North Point Stock entitled to receive United Stock pursuant to the
Merger shall have surrendered his North Point Stock certificate(s) or unless
otherwise required by law, the holder of such certificate(s) shall not have any
right to receive payment of any dividends or other distributions on the shares
of United Stock or receive any notices sent by United to its shareholders or to
vote such shares.
ARTICLE III
OTHER AGREEMENTS
3.1 Registration of United Stock. United agrees to file with
----------------------------
the Securities and Exchange Commission (the "SEC") as soon as reasonably
practical a registration statement (the "United Registration Statement") under
the Securities Act of 1933, as amended (the "1933 Act"), on Form S-4 or some
other appropriate form covering the issuance of the shares of United Stock to
the shareholders of North Point pursuant to this Agreement and the Merger
Agreement and to use its reasonable best efforts to cause the United
Registration Statement to become effective and to remain effective through the
Closing Date. United agrees to take any action required to be taken under the
applicable state securities laws in connection with the issuance of shares of
United Stock upon consummation of the Merger. North Point agrees to provide
-2-
United reasonable assistance as necessary in the preparation of the United
Registration Statement, including, without limitation, providing United with all
material facts regarding the operations, business, assets, liabilities and
personnel of North Point, together with the audited financial statements of
North Point, all as required by the 1933 Act and the rules, regulations and
practices of the SEC, for inclusion in the United Registration Statement. The
United Registration Statement shall not cover resales of United Stock by any of
the shareholders of North Point, and United shall have no obligation to cause
the United Registration Statement to continue to be effective after the Closing
or to prepare or file any post-effective amendments to the United Registration
Statement after the Closing.
3.2 Meeting of Shareholders of North Point. North Point shall
--------------------------------------
call a special meeting of its shareholders (the "Special Meeting") to be held
not more than forty-five (45) days after the United Registration Statement
becomes effective under the 1933 Act for the purpose of submitting the Merger
Agreement to such shareholders for their approval. In connection with the
Special Meeting, United and North Point shall prepare and submit to the North
Point shareholders a notice of meeting, proxy statement and proxy (the "North
Point Proxy Materials"), which shall include the final prospectus from the
United Registration Statement in the form filed with the SEC.
3.3 Absence of Brokers. Each party hereto represents and
-------------------
warrants to the other that no broker, finder or other financial consultant has
acted on its behalf in connection with this Agreement or the transactions
contemplated hereby. Each party agrees to indemnify the other and hold and save
it harmless from any claim or demand for commissions or other compensation by
any broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party.
3.4 Access to Properties, Books, Etc. Each party hereto shall
---------------------------------
allow the other party and its authorized representatives full access during
normal business hours from and after the date hereof and prior to the Closing
Date to all of the respective properties, books, contracts, commitments and
records of such party and its subsidiaries and shall furnish the other party and
its authorized representatives such information concerning its affairs and the
affairs of its subsidiaries as the other party may reasonably request provided
that such request shall be reasonably related to the transactions contemplated
by this Agreement and shall not interfere unreasonably with normal operations.
Each party shall cause its and its subsidiaries' personnel, employees and other
representatives to assist the other party in making any such investigation.
During such investigation, the investigating party and its authorized
representatives shall have the right to make copies of such records, files, tax
returns and other materials as it may deem advisable and shall advise the other
party of those items of which copies are made. No investigation made heretofore
or hereafter by either party and its authorized representatives shall affect the
representations and warranties of either such party hereunder.
3.5 Confidentiality. Prior to consummation of the Merger, the
---------------
parties to this Agreement will provide one another with information which may be
deemed by the party providing the information to be confidential. Each party
agrees that it will hold confidential and protect all information provided to it
by the other party to this Agreement or such party's affiliates, except that the
obligations contained in this Section 3.5 shall not in any way restrict the
rights of any party or person to use information that (i) was known to such
party prior to the disclosure by the other party; (ii) is or becomes generally
-3-
available to the public other than by breach of this Agreement; (iii) is
provided by one party for disclosure concerning such party in the United
Registration Statement; or (iv) otherwise becomes lawfully available to a party
to this Agreement on a nonconfidential basis from a third party who is not under
an obligation of confidence to the other party to this Agreement. If this
Agreement is terminated prior to the Closing, each party hereto agrees to return
all documents, statements and other written materials, whether or not
confidential, and all copies thereof, provided to it by or on behalf of the
other party to this Agreement. The provisions of this Section 3.5 shall survive
termination, for any reason whatsoever, of this Agreement, and, without limiting
the remedies of the parties hereto in the event of any breach of this Section
3.5, the parties hereto will be entitled to seek injunctive relief against the
other party in the event of a breach or threatened breach of this Section 3.5.
3.6 Full Cooperation. The parties shall cooperate fully with
-----------------
each other in connection with any acts or actions required to be taken as part
of their respective obligations under this Agreement.
3.7 Expenses. All of the expenses incurred by United in
--------
connection with the authorization, preparation, execution and performance of
this Agreement and the Merger Agreement including, without limitation, all fees
and expenses of its agents, representatives, counsel and accountants and the
fees and expenses related to filing the United Registration Statement and all
regulatory applications with state and federal authorities in connection with
the transactions contemplated hereby and thereby, shall be paid by United. All
expenses incurred by North Point in connection with the authorization,
preparation, execution and performance of this Agreement and the Merger
Agreement, including, without limitation, all fees and expenses of its agents,
representatives, counsel and accountants for North Point (except for the cost of
reproducing and mailing the North Point Proxy Materials which shall be equally
divided between United and North Point), shall be paid by North Point.
3.8 Preservation of Goodwill. Each party hereto shall use its
------------------------
best efforts to preserve its business organization and the business organization
of its subsidiaries, to keep available the services of its present employees and
of the present employees of its subsidiaries, and to preserve the goodwill of
customers and others having business relations with such party or its
subsidiaries.
3.9 Approvals and Consents. Each party hereto represents and
----------------------
warrants to and covenants with the other that it will use its best efforts, and
will cause its officers, directors, employees and agents and its subsidiaries
and any subsidiary's officers, directors, employees and agents to use their best
efforts, to obtain as soon as is reasonably practicable all approvals and
consents of state and federal departments or agencies required or deemed
necessary for consummation of the transactions contemplated by this Agreement
and the Merger Agreement.
3.10 Agreement by North Point Executive Officers and
--------------------------------------------------------
Directors. Each of the directors and executive officers of North Point will,
- ---------
contemporaneously with the execution of this Agreement, execute and deliver to
United an agreement, the form of which is attached hereto as Exhibit B, pursuant
to which each of them agrees, subject to their fiduciary duty, (i) to recommend
to North Point shareholders approval of the Merger, (ii) to vote the capital
-4-
stock of North Point owned or controlled by them in favor of the Merger, and
(iii) to transfer or assign shares of United Stock received by them in
connection with the Merger only in compliance with the 1933 Act, applicable
state securities laws and the rules and regulations promulgated under either.
3.11 Press Releases. Prior to the Effective Date, North Point
--------------
and United shall agree with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, however, that nothing in this
Section 3.11 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by law.
3.12 Employee Benefits and Contracts. Following the Effective
-------------------------------
Date, United shall provide generally to officers, employees and former employees
of North Point who continue employment with United employee benefits on terms
and conditions which, when taken as a whole, are substantially similar to those
then currently provided by United to its other similarly situated officers,
employees and former employees. For purposes of eligibility to participate and
any vesting determinations in connection with the provision of any such employee
benefits, service with North Point prior to the Effective Date shall be counted.
United shall also honor in accordance with their terms all employment,
severance, consulting, option and other contracts of a compensatory nature to
the extent disclosed in the North Point Disclosure Memorandum between North
Point and any current or former director, officer or employee thereof and no
other contracts of the types described that are not so disclosed shall be deemed
to be assumed by United by reason of this Section 3.12. If, during the calendar
year in which falls the Effective Date, United shall terminate any "group health
plan", within the meaning of Section 4980B(g)(2) of the Internal Revenue Code,
in which one or more North Point employees participated immediately prior to the
Effective Date (a "North Point Plan"), United shall cause any successor group
health plan to waive any underwriting requirements; to give credit for any such
North Point employee's participation in the North Point Plan prior to the
Effective Date for purposes of applying any pre-existing condition limitations
set forth therein; and to give credit for covered expenses paid by any such
North Point employee under a North Point Plan prior to the Effective Date
towards satisfaction of any annual deductible limitation and out-of pocket
maximum applied under such successor group health plan. United also shall be
considered a successor employer for and shall provide to "qualified
beneficiaries", determined immediately prior to the Effective Date, under any
North Point Plan appropriate "continuation coverage" (as those terms are defined
in Section 4980B of the Internal Revenue Code) following the Effective Date
under either the North Point Plan or any successor group health plan maintained
by United.
-5-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTH POINT
---------------------------------------------
As an inducement to United to enter into this Agreement and to
consummate the transactions contemplated hereby, North Point represents,
warrants, covenants and agrees as follows:
4.1 North Point Disclosure Memorandum. By March 17, 2000,
------------------------------------
North Point will deliver to United a memorandum (the "North Point Disclosure
Memorandum") containing certain information regarding North Point as indicated
at various places in this Agreement. All information set forth in the North
Point Disclosure Memorandum or in documents incorporated by reference in the
North Point Disclosure Memorandum is true, correct and complete, does not omit
to state any fact necessary in order to make the statements therein not
misleading, and shall be deemed for all purposes of this Agreement to constitute
part of the representations and warranties of North Point under this Article IV.
The information contained in the North Point Disclosure Memorandum shall be
deemed to be part of and qualify all representations and warranties contained in
this Article IV and the covenants in Article V to the extent applicable. All
information in each of the documents and other writings furnished to United
pursuant to this Agreement or the North Point Disclosure Memorandum is or will
be true, correct and complete and does not and will not omit to state any fact
necessary in order to make the statements therein not misleading. North Point
shall promptly provide United with written notification of any event, occurrence
or other information necessary to maintain the North Point Disclosure Memorandum
and all other documents and writings furnished to United pursuant to this
Agreement as true, correct and complete in all material respects at all times
prior to and including the Closing. North Point agrees that upon receipt of the
North Point Disclosure Memorandum, United shall have until March 24, 2000 to
review the North Point Disclosure Memorandum and to terminate this Agreement if
for any reason in its sole discretion United believes that proceeding with the
Merger in light of the contents of such memorandum would be detrimental to
United.
4.2 Corporate and Financial.
------------------------
4.2.1 Authority. Subject to the approval of
---------
various state and federal regulators and North Point Shareholders, the
execution, delivery and performance of this Agreement and the other transactions
contemplated or required in connection herewith will not, with or without the
giving of notice or the passage of time, or both, (a) violate any provision of
federal or state law applicable to North Point, the violation of which could be
reasonably expected to have a material adverse effect on the business,
operations, properties, assets, financial condition or prospects of North Point;
(b) violate any provision of the articles of incorporation or bylaws of North
Point; (c) conflict with or result in a breach of any provision of, or
termination of, or constitute a default under any instrument, license,
agreement, or commitment to which North Point is a party, which, singly or in
the aggregate, could reasonably be expected to have a material adverse effect on
the business, operations, properties, assets, financial condition or prospects
of North Point; or (d) constitute a violation of any order, judgment or decree
-6-
to which North Point is a party, or by which North Point or any of its assets or
properties are bound. Assuming this Agreement constitutes the valid and binding
obligation of United, this Agreement constitutes the valid and binding
obligation of North Point, and is enforceable in accordance with its terms,
except as limited by laws affecting creditors' rights generally and by the
discretion of courts to compel specific performance.
4.2.2 Corporate Status. North Point is a business
-----------------
corporation duly organized, validly existing and in good standing under the laws
of the state of Georgia and has no direct or indirect subsidiaries other than
Dawson Bank. Dawson Bank is a banking corporation duly organized and validly
existing under the laws of the State of Georgia. North Point and Dawson Bank
have all of the requisite corporate power and authority and are entitled to own
or lease their respective properties and assets and to carry on their respective
businesses as and in the places where such properties or assets are now owned,
leased or operated and such businesses are now conducted.
4.2.3 Capital Structure. (a) North Point has an
------------------
authorized capital stock consisting of 5,000,000 shares, $5.00 par value of
common stock, of which 428,385 shares of common stock are issued and outstanding
as of the date hereof. Dawson Bank has an authorized capital stock consisting
solely of 5,000,000 shares of Common Stock, par value $5.00 ("Dawson Bank
Stock"), of which 60,000 shares are issued and outstanding as of the date
hereof. All of the outstanding shares of North Point Stock and Dawson Bank Stock
are duly and validly issued, fully paid and non-assessable and were offered,
issued and sold in compliance with all applicable federal and state securities
laws. No person has any right of rescission or claim for damages under federal
or state securities laws with respect to the issuance of any shares of North
Point Stock or Dawson Bank Stock previously issued. None of the shares of North
Point Stock or Dawson Bank Stock has been issued in violation of any preemptive
or other rights of its shareholders. All of the issued and outstanding shares of
Dawson Bank Stock are owned by North Point.
(b) Except as set forth in the North Point
Disclosure Memorandum, North Point does not have outstanding any securities
which are either by their terms or by contract convertible or exchangeable into
capital stock of North Point, or any other securities or debt, of North Point,
or any preemptive or similar rights to subscribe for or to purchase, or any
options or warrants or agreements or understandings for the purchase or the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, its capital stock or securities convertible into its
capital stock. North Point is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire, or to register, any
shares of its capital stock.
(c) There is no agreement, arrangement or
understanding to which North Point is a party restricting or otherwise relating
to the transfer of any shares of capital stock of North Point.
(d) All shares of common stock or other capital
stock, or any other securities or debt, of North Point, which have been
purchased or redeemed by North Point have been purchased or redeemed in
-7-
accordance with all applicable federal, state and local laws, rules, and
regulations, including, without limitation, all federal and state securities
laws and rules and regulations of any securities exchange or system on which
such stock, securities or debt are, or at such time were, traded, and no such
purchase or redemption has resulted or will, with the giving of notice or lapse
of time, or both, result in a default or acceleration of the maturity of, or
otherwise modify, any agreement, note, mortgage, bond, security agreement, loan
agreement or other contract or commitment of North Point.
4.2.4 Corporate Records. The stock records and minute books of
-----------------
North Point, whether heretofore or hereafter furnished or made available to
United by North Point, (a) fully and accurately reflect all issuances, transfers
and redemptions of the Common Stock, (b) correctly show the record addresses and
the number of shares of such stock issued and outstanding on the date hereof
held by the shareholders of North Point, (c) correctly show all corporate action
taken by the directors and shareholders of North Point (including actions taken
by consent without a meeting) and (d) contain true and correct copies or
originals of the respective articles of incorporation and all amendments
thereto, bylaws as amended and currently in force, and the minutes of all
meetings or consent actions of its directors and shareholders. No resolutions,
regulations or bylaws have been passed, enacted, consented to or adopted by such
directors or shareholders except those contained in the minute books. All
corporate records have been maintained in accordance with all applicable
statutory requirements and are complete and accurate.
4.2.5 Tax Returns; Taxes. (a) North Point has duly filed (i)
-------------------
all required federal and state tax returns and reports, and (ii) all required
returns and reports of other governmental units having jurisdiction with respect
to taxes imposed upon its income, properties, revenues, franchises, operations
or other assets or taxes imposed which might create a material lien or
encumbrance on any of such assets or affect materially and adversely its
business or operations. To the knowledge of the officers of North Point (the
"North Point Management"), such returns or reports are, and when filed will be,
true, complete and correct, and North Point has paid, to the extent such taxes
or other governmental charges have become due, all taxes and other governmental
charges set forth in such returns or reports. To the knowledge of the North
Point Management, all federal, state and local taxes and other governmental
charges paid or payable by North Point have been paid, or have been accrued or
reserved on its books in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods. To the knowledge of
the North Point Management, adequate reserves for the payment of taxes have been
established on the books of North Point for all periods through the date hereof,
whether or not due and payable and whether or not disputed. Until the Closing
Date, North Point shall continue to provide adequate reserves for the payment of
expected tax liabilities in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods. North Point has not
received any notice of a tax deficiency or assessment of additional taxes of any
kind and, to the knowledge of the North Point Management, there is no threatened
claim against North Point, or to the knowledge of the North Point Management,
any basis for any such claim, for payment of any additional federal, state,
local or foreign taxes for any period prior to the date of this Agreement in
excess of the accruals or reserves with respect to any such claim shown in the
1998 North Point Financial Statements described in Section 4.2.6 below or
-8-
disclosed in the notes with respect thereto. There are no waivers or agreements
by North Point for the extension of time for the assessment of any taxes. The
federal income tax returns of North Point have not been examined by the Internal
Revenue Service for any period since December 31, 1994.
(b) Except as set forth in the North Point Disclosure
Memorandum, to the knowledge of the North Point Management, proper and accurate
amounts have been withheld by North Point from its employees for all periods in
full and complete compliance with the tax withholding provisions of applicable
federal, state and local tax laws, and proper and accurate federal, state and
local tax returns have been filed by North Point for all periods for which
returns were due with respect to withholding, social security and unemployment
taxes, and the amounts shown thereon to be due and payable have been paid in
full.
4.2.6 Financial Statements. North Point has delivered to
---------------------
United true, correct and complete copies of (i) the audited financial statements
of North Point for the years ended December 31, 1996, 1997 and 1998, including
balance sheets, statements of income, statements of shareholders' equity,
statements of cash flows and related notes (the audited financial statements for
the year ended December 31, 1998 being referred to as the "1998 North Point
Financial Statements") and (ii) unaudited financial statements of North Point
for the period ended September 30, 1999, including a balance sheet, statement of
income and related notes. All of such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and present fairly the assets, liabilities and financial condition of North
Point as of the dates indicated therein and the results of its operations for
the respective periods then ended.
4.2.7 Regulatory Reports. North Point has made available to
-------------------
United for review and inspection the year-end Report of Condition and year-end
Report of Income and Dividends as filed by Dawson Bank with the Federal Deposit
Insurance Corporation (the "FDIC") for each of the three years ended December
31, 1999, 1998 and 1997, together with all such other reports filed for the same
three-year period with the FDIC, and the Department of Banking and Finance of
the State of Georgia (the "Department of Banking"), and other applicable
regulatory agencies and the Form F.R. Y-6 filed by North Point with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") for each of the
three years ended December 31, 1999, 1998 and 1997 (collectively, the "North
Point Reports"). All of the North Point Reports, as amended, have been prepared
in accordance with applicable rules and regulations applied on a basis
consistent with prior periods and contain in all material respects all
information required to be presented therein in accordance with such rules and
regulations.
4.2.8 Accounts. The North Point Disclosure Memorandum contains
-------
a list of each and every bank and other institution in which North Point
maintains an account or safety deposit box, the account numbers, and the names
of all persons who are presently authorized to draw thereon, have access thereto
or give instructions regarding distribution of funds or assets therein.
-9-
4.2.9 Notes and Obligations. (a) Except as set forth in the
----------------------
North Point Disclosure Memorandum or as provided for in the loss reserve
described in subsection (b) below, all notes receivable or other obligations
owned by North Point or due to it shown in the 1998 North Point Financial
Statements and any such notes receivable and obligations on the date hereof and
on the Closing Date are and will be genuine, legal, valid and collectible
obligations of the respective makers thereof and are not and will not be subject
to any offset or counterclaim. Except as set forth in subsection (b) below, all
such notes and obligations are evidenced by written agreements, true and correct
copies of which will be made available to United for examination prior to the
Closing Date. All such notes and obligations were entered into by North Point in
the ordinary course of its business and in compliance with all applicable laws
and regulations.
(b) North Point has established a loss reserve in the 1998
North Point Financial Statements and as of the date of this Agreement and will
establish a loan loss reserve as of the Closing Date which is adequate to cover
anticipated losses which might result from such items as the insolvency or
default of borrowers or obligors on such loans or obligations, defects in the
notes or evidences of obligation (including losses of original notes or
instruments), offsets or counterclaims properly chargeable to such reserve, or
the availability of legal or equitable defenses which might preclude or limit
the ability of North Point to enforce the note or obligation, and the
representations set forth in subsection (a) above are qualified in their
entirety by the aggregate of such loss reserve. Except as described in the North
Point Disclosure Memorandum, at the Closing Date, the ratio of the loss reserve,
established on such date in good faith by North Point, to total loans
outstanding at such time shall not exceed the ratio of the loan loss reserve to
the total loans outstanding as reflected in the 1998 North Point Financial
Statements, established on or before such date in good faith by North Point, in
accordance with generally accepted accounting principles.
4.2.10 Liabilities. North Point has no debt, liability or
-----------
obligation of any kind required to be shown pursuant to generally accepted
accounting principles on the consolidated balance sheet of North Point, whether
accrued, absolute, known or unknown, contingent or otherwise, including, but not
limited to (a) liability or obligation on account of any federal, state or local
taxes or penalty, interest or fines with respect to such taxes, (b) liability
arising from or by virtue of the distribution, delivery or other transfer or
disposition of goods, personal property or services of any type, kind or
variety, (c) unfunded liabilities with respect to any pension, profit sharing or
employee stock ownership plan, whether operated by North Point or any other
entity covering employees of North Point, or (d) environmental liabilities,
except (i) those reflected in the 1998 North Point Financial Statements, and
(ii) as disclosed in the North Point Disclosure Memorandum.
4.2.11 Absence of Changes. Except as specifically provided for
------------------
in this Agreement or specifically set forth in the North Point Disclosure
Memorandum, since December 31, 1998:
(a) there has been no change in the business, assets,
liabilities, results of operations or financial condition of North Point, or in
any of its relationships with customers, employees, lessors or others, other
-10-
than changes in the ordinary course of business, none of which individually or
in the aggregate has had, or which the North Point Management believes may have,
a material adverse effect on such businesses or properties;
(b) there has been no material damage, destruction or loss to
the assets, properties or business of North Point, whether or not covered by
insurance, which has had, or which the North Point Management believes may have,
an adverse effect thereon;
(c) the business of North Point has been operated in the
ordinary course, and not otherwise;
(d) the properties and assets of North Point used in its
business have been maintained in good order, repair and condition, ordinary wear
and tear excepted;
(e) the books, accounts and records of North Point have been
maintained in the usual, regular and ordinary manner;
(f) there has been no declaration, setting aside or payment of
any dividend or other distribution on or in respect of the capital stock of
North Point;
(g) there has been no increase in the compensation or in the
rate of compensation or commissions payable or to become payable by North Point
to any director or executive officer, or to any employee earning $35,000 or more
per annum, or any general increase in the compensation or in the rate of
compensation payable or to become payable to employees of North Point earning
less than $35,000 per annum ("general increase" for the purpose hereof meaning
any increase generally applicable to a class or group of employees, but not
including increases granted to individual employees for merit, length of
service, change in position or responsibility or other reasons applicable to
specific employees and not generally to a class or group thereof), or any
director, officer, or employee hired at a salary in excess of $35,000 per annum,
or any increase in any payment of or commitment to pay any bonus, profit sharing
or other extraordinary compensation to any employee;
(h) there has been no change in the articles of incorporation
or bylaws of North Point;
(i) there has been no labor dispute, unfair labor practice
charge or employment discrimination charge, nor, to the knowledge of North
Point, any organizational effort by any union, or institution or threatened
institution, of any effort, complaint or other proceeding in connection
therewith, involving North Point, or affecting its operations;
(j) there has been no issuance, sale, repurchase, acquisition,
or redemption by North Point of any of its capital stock, bonds, notes, debt or
other securities, and there has been no modification or amendment of the rights
of the holders of any outstanding capital stock, bonds, notes, debt or other
securities thereof;
-11-
(k) there has been no mortgage, lien or other encumbrance or
security interest (other than liens for current taxes not yet due or purchase
money security interests arising in the ordinary course of business) created on
or in (including without limitation, any deposit for security consisting of) any
asset or assets of North Point or assumed by it with respect to any asset or
assets;
(l) there has been no indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise) incurred by
North Point which would be required to be reflected on a balance sheet of North
Point prepared as of the date hereof in accordance with generally accepted
accounting principles applied on a consistent basis, except as incurred in the
ordinary course of business;
(m) no obligation or liability of North Point has been
discharged or satisfied, other than in the ordinary course of business;
(n) there have been no sales, transfers or other dispositions
of any asset or assets of North Point, other than sales in the ordinary course
of business; and
(o) there has been no amendment, termination or waiver of any
right of North Point under any contract or agreement or governmental license,
permit or permission which has had or may have an adverse effect on its business
or properties.
4.2.12 Litigation and Proceedings. Except as set forth on the
--------------------------
North Point Disclosure Memorandum, there are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or investigations,
pending or, to the knowledge of North Point, threatened against, by or affecting
North Point, or any officer, director, employee or agent in such person's
capacity as an officer, director, employee or agent of North Point or relating
to the business or affairs of North Point, in any court or before any arbitrator
or governmental agency, and no judgment, award, order or decree of any nature
has been rendered against or with respect thereto by any agency, arbitrator,
court, commission or other authority, nor does North Point have any unasserted
contingent liabilities which might have an adverse effect on its assets or on
the operation of its businesses or which might prevent or impede the
consummation of the transactions contemplated by this Agreement.
4.2.13 Proxy Materials. Neither the North Point Proxy
-----------------
Materials nor other materials furnished by North Point to the North Point
shareholders in connection with the transactions contemplated by this Agreement
or the Merger Agreement, or in any amendments thereof or supplements thereto,
will, at the times such documents are distributed to the holders of shares of
North Point Stock and through the acquisition of shares of North Point Stock by
United pursuant to the Merger, contain with respect to North Point any untrue
statement of a material fact or omit to state any information required to be
stated therein or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made with
respect to North Point, not misleading.
-12-
4.3 Business Operations.
-------------------
4.3.1 Customers. North Point has no knowledge of any presently
---------
existing facts which could reasonably be expected to result in the loss of any
material borrower or depositor or in North Point's inability to collect amounts
due therefrom or to return funds deposited thereby, except as set forth on the
North Point Disclosure Memorandum.
4.3.2 Permits; Compliance with Law. (a) North Point has all
------------------------------
permits, licenses, approvals, authorizations and registrations under all
federal, state, local and foreign laws required for North Point to carry on its
business as presently conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect, and no suspension
or cancellation of any of them is pending or, to the knowledge of North Point,
threatened.
(b) North Point has complied with all laws, regulations, and
orders applicable to it or its business, except for any non-compliance which
would not have a material adverse effect on North Point. The North Point
Disclosure Memorandum contains a list of any known violations of such laws,
regulations, ordinances or rules by any present officer, director, or employee
of North Point which occurred since December 31, 1994, and which resulted in any
order, proceeding, judgment or decree which would be required to be disclosed
pursuant to Item 401(f) of Regulation S-K promulgated by the Securities and
Exchange Commission if North Point had been subject to the reporting
requirements under the 1933 Act or the Securities Exchange Act of 1934. No past
violation of any such law, regulation, ordinance or rule has occurred which
could impair the right or ability of North Point to conduct its business.
(c) Except as set forth in the North Point Disclosure
Memorandum, no notice or warning from any governmental authority with respect to
any failure or alleged failure of North Point to comply in any respect with any
law, regulation or order has been received, nor is any such notice or warning
proposed or, to the knowledge of North Point, threatened.
4.3.3 Environmental. (a) Except as set forth in the North
-------------
Point Disclosure Memorandum, North Point
(i) has not caused or permitted, and has no knowledge
of any claim regarding the environmental condition of the
property or the generation, manufacture, use, or handling or
the release or presence of, any Hazardous Material on, in,
under or from any properties or facilities currently owned or
leased by North Point or adjacent to any properties so owned
or leased; and
(ii) has complied in all material respects with, and
has kept all records and made all filings or reports required
by, and is otherwise in substantial compliance with all
applicable federal, state and local laws, regulations, orders,
permits and licenses relating to the generation, treatment,
manufacture, use, handling, release or presence of any
Hazardous Material on, in, under or from any properties or
facilities currently owned or leased by North Point.
-13-
(b) To North Point's knowledge, except as set forth in the
North Point Disclosure Memorandum, neither North Point nor any of its officers,
directors, employees or agents, in the course of such individual's employment by
North Point, has given advice with respect to, or participated in any respect
in, the decisions regarding Hazardous Material handling or disposal of any
entity or concern whose business relates in any way to the generation, storage,
handling, disposal, transfer, production, use or processing of Hazardous
Material, nor to North Point's knowledge has North Point foreclosed on any
property on which there is a threatened release of any Hazardous Material, or on
which there has been such a release and full remediation has not been completed.
(c) Except as set forth in the North Point Disclosure
Memorandum, neither North Point, nor any of its officers, directors, employees,
or agents, is aware of, has been told of, or has observed, the presence of any
Hazardous Material on, in, under, or around property on which North Point holds
a legal or security interest, in violation of, or creating a material liability
under, federal, state, or local environmental statutes, regulations, or
ordinances.
(d) The term "Hazardous Material" means any substance whose
nature, use, manufacture, or effect render it subject to federal, state or local
regulation governing that material's investigation, remediation or removal as a
threat or potential threat to human health or the environment and includes,
without limitation, any substance within the meaning of "hazardous substances"
under the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. ss. 9601, "hazardous wastes" within the meaning of the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6921, any petroleum product,
including any fraction of petroleum, or any asbestos containing materials.
However, the term "Hazardous Material" shall not include those substances which
are normally and reasonably used in connection with the occupancy or operation
of office buildings (such as cleaning fluids, and supplies normally used in the
day to day operation of business offices).
4.3.4 Insurance. The North Point Disclosure Memorandum
---------
contains a complete list and description (including the expiration date, premium
amount and coverage thereunder) of all policies of insurance and bonds presently
maintained by, or providing coverage for, North Point or any of its officers,
directors and employees, all of which are, and will be maintained through the
Closing Date, in full force and effect, together with a complete list of all
pending claims under any of such policies or bonds. All terms, obligations and
provisions of each of such policies and bonds have been complied with, all
premiums due thereon have been paid, and no notice of cancellation with respect
thereto has been received. Except as set forth in the North Point Disclosure
Memorandum, such policies and bonds provide adequate coverage to insure the
properties and businesses of North Point and the activities of its officers,
directors and employees against such risks and in such amounts as are prudent
and customary. North Point will not as of the Closing Date have any liability
for premiums or for retrospective premium adjustments for any period prior to
the Closing Date. North Point has heretofore made, or will hereafter make,
available to United a true, correct and complete copy of each insurance policy
and bond in effect since December 31, 1994 with respect to the business and
affairs of North Point.
-14-
4.4 Properties and Assets.
---------------------
4.4.1 Contracts and Commitments. The North Point Disclosure
--------------------------
Memorandum contains a list identifying and briefly describing all written
contracts, purchase orders, agreements, security deeds, guaranties or
commitments to which North Point is a party or by which it may be bound
involving the payment or receipt, actual or contingent, of more than $25,000 or
having a term or requiring performance over a period of more than ninety (90)
days. Each such contract, agreement, guaranty and commitment of North Point is
in full force and effect and is valid and enforceable in accordance with its
terms, and constitutes a legal and binding obligation of the respective parties
thereto and is not the subject of any notice of default, termination, partial
termination or of any ongoing, pending, completed or threatened investigation,
inquiry or other proceeding or action that may give rise to any notice of
default, termination or partial termination. North Point has complied in all
material respects with the provisions of such contracts, agreements, guaranties
and commitments. A true and complete copy of each such document has been or will
be made available to United for examination.
4.4.2 Licenses; Intellectual Property. North Point has all
---------------------------------
patents, trademarks, trade names, service marks, copyrights, trade secrets and
know-how reasonably necessary to conduct its business as presently conducted
and, except as described in the North Point Disclosure Memorandum, North Point
is not a party, either as licensor or licensee, to any agreement for any patent,
process, trademark, service mark, trade name, copyright, trade secret or other
confidential information and there are no rights of third parties with respect
to any trademark, service mark, trade secrets, confidential information, trade
name, patent, patent application, copyright, invention, device or process owned
or used by North Point or presently expected to be used by either of them in the
future. All patents, copyrights, trademarks, service marks, trade names, and
applications therefor or registrations thereof, owned or used by North Point,
are listed in the North Point Disclosure Memorandum. North Point has complied
with all applicable laws relating to the filing or registration of "fictitious
names" or trade names.
4.4.3 Personal Property. North Point has good and marketable
------------------
title to all of its personalty, tangible and intangible, reflected in the 1998
North Point Financial Statements (except as since sold or otherwise disposed of
by it in the ordinary course of business), free and clear of all encumbrances,
liens or charges of any kind or character, except (i) those referred to in the
notes to the 1998 North Point Financial Statements as securing specified
liabilities (with respect to which no default exists or, to the knowledge of
North Point, is claimed to exist), (ii) those described in the North Point
Disclosure Memorandum and (iii) liens for taxes not due and payable.
4.4.4 North Point Leases. (a) All leases (the "North Point
--------------------
Leases") pursuant to which North Point is lessor or lessee of any real or
personal property (such property, the "Leased Property") are valid and
enforceable in accordance with their terms; there is not under any of the North
Point Leases any default or, to the knowledge of North Point, any claimed
default by North Point, or event of default or event which with notice or lapse
of time, or both, would constitute a default by North Point and in respect of
-15-
which adequate steps have not been taken to prevent a default on its part from
occurring.
(b) The copies of the North Point Leases heretofore or
hereafter furnished or made available by North Point to United are true, correct
and complete, and the North Point Leases have not been modified in any respect
other than pursuant to amendments, copies of which have been concurrently
delivered or made available to United, and are in full force and effect in
accordance with their terms.
(c) Except as set forth in the North Point Disclosure
Memorandum, there are no contractual obligations, agreements in principle or
present plans for North Point to enter into new leases of real property or to
renew or amend existing North Point Leases prior to the Closing Date.
4.4.5 Real Property. (a) North Point does not own any interest
-------------
in any real property (other than as lessee) except as set forth in the North
Point Disclosure Memorandum (such properties being referred to herein as "North
Point Realty"). Except as disclosed in the North Point Disclosure Memorandum,
North Point has good title to the North Point Realty and the titles to the North
Point Realty are covered by title insurance policies providing coverage in the
amount of the original purchase price, true, correct and complete copies of
which have been or will be furnished to United with the North Point Disclosure
Memorandum. North Point has not encumbered the North Point Realty since the
effective dates of the respective title insurance policies.
(b) Except as set forth in the North Point Disclosure
Memorandum, the interests of North Point in the North Point Realty and in and
under each of the North Point Leases are free and clear of any and all liens and
encumbrances and are subject to no present claim, contest, dispute, action or,
to the knowledge of North Point, threatened action at law or in equity.
(c) The present and past use and operations of, and
improvements upon, the North Point Realty and all real properties leased by
North Point (the "North Point Leased Real Properties") are in compliance in all
material respects with all applicable building, fire, zoning and other
applicable laws, ordinances and regulations and with all deed restrictions of
record, no notice of any violation or alleged violation thereof has been
received, and to the knowledge of North Point there are no proposed changes
therein that would affect the North Point Realty, the North Point Leased Real
Properties or their uses.
(d) Except as set forth in the North Point Disclosure
Memorandum, no rent has been paid in advance and no security deposit has been
paid by, nor is any brokerage commission payable by or to, North Point with
respect to any Lease pursuant to which it is lessor or lessee.
(e) North Point is not aware of any proposed or pending change
in the zoning of, or of any proposed or pending condemnation proceeding with
respect to, any of the North Point Realty or the North Point Leased Real
Properties which may adversely affect the North Point Realty or the North Point
Leased Real Properties or the current or currently contemplated use thereof.
-16-
(f) The buildings and structures owned, leased or used by
North Point are, taken as a whole, in good operating order (except for ordinary
wear and tear), usable in the ordinary course of business, and are sufficient
and adequate to carry on the business and affairs of North Point.
4.5 Employees and Benefits.
----------------------
4.5.1 Directors or Officers of Other Corporations. Except as
--------------------------------------------
set forth in the North Point Disclosure Memorandum, no director, officer, or
employee of North Point serves, or in the past five years has served, as a
director or officer of any other corporation on behalf of or as a designee of
North Point or any of its subsidiaries.
4.5.2 Employee Benefits. (a) Except as set forth in the North
-----------------
Point Disclosure Memorandum, North Point does not provide and is not obligated
to provide, directly or indirectly, any benefits for employees of a material
nature, including, without limitation, any pension, profit sharing, stock
option, retirement bonus, hospitalization, medical, insurance or vacation under
any practice, agreement or understanding.
(b) The North Point Disclosure Memorandum lists separately any
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") sponsored by North
Point (collectively, "ERISA Plans"). True, correct and complete copies of all
ERISA Plans and, to the extent applicable, all related trust agreements,
insurance contracts, summary plan descriptions, Internal Revenue Service
determination letters and filings, the past three years of actuarial reports and
valuations, annual reports and Form 5500 filings (including attachments), and
any other related documents requested by United or its counsel have been, or
prior to the Closing Date will be, made available to United.
(c) North Point is not currently and has never been in the
past required to contribute to a multiemployer plan as defined in Section
3(37)(A) of ERISA. North Point does not maintain or contribute to, nor within
the past six years has it maintained or contributed to, an employee pension
benefit plan as defined in Section 3(2) of ERISA that is or was subject to Title
IV of ERISA.
(d) Except as set forth in the North Point Disclosure
Memorandum, each ERISA Plan has been operated and administered in all material
respects in accordance with, and has been amended to comply with (unless such
amendment is not yet required), all applicable laws, rules and regulations,
including, without limitation, ERISA, the Internal Revenue Code of 1986, as
amended ("Code"), and the regulations issued under ERISA and the Code. With
respect to each ERISA Plan, other than routine claims for benefits submitted in
the ordinary course of the benefits process, no litigation or administrative or
other proceeding is pending or, to the knowledge of North Point, threatened
involving such ERISA Plan or any of its fiduciaries. With respect to each ERISA
Plan, neither North Point nor any of its directors, officers, employees or
-17-
agents, nor to North Point's knowledge, any "party in interest" or "disqualified
person" (as such terms are defined in Section 3(14) of ERISA and Section 4975 of
the Code) has been engaged in or been a party to any transaction relating to the
ERISA Plan which would constitute a breach of fiduciary duty under ERISA or a
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code), unless such transaction is specifically permitted
under Sections 407 or 408 of ERISA, Section 4975 of the Code or a class or
administrative exemption issued by the Department of Labor. Except as disclosed
in the North Point Disclosure Memorandum, each ERISA Plan that is a group health
plan within the meaning of Section 607(l) of ERISA and Section 4980B of the Code
is in material compliance with the continuation coverage requirements of Section
501 of ERISA and Section 4980B of the Code.
(e) Of the ERISA Plans, the "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA (collectively, the "Employee Pension
Benefit Plans") are separately identified on the North Point Disclosure
Memorandum. With respect to each Employee Pension Benefit Plan, except as set
forth on the North Point Disclosure Memorandum: (i) such Employee Pension
Benefit Plan is intended to constitute a qualified plan within the meaning of
Section 401(a) of the Code and the trust is intended to be exempt from federal
income tax under Section 501(a) of the Code; (ii) all contributions required by
such plan have been made or will be made on a timely basis; and (iii) no
termination, partial termination or discontinuance of contributions has occurred
without a determination by the IRS that such action does not affect the
tax-qualified status of such plan.
(f) As of the Closing Date, with respect to each ERISA Plan,
North Point will have provided adequate reserves, or insurance or qualified
trust funds, to provide for all payments and contributions required, or
reasonably expected to be required, to be made under the provisions of such
ERISA Plan or required to be made under applicable laws, rules and regulations,
with respect to any period prior to the Closing Date to the extent reserves are
required under generally accepted accounting principles, based on an actuarial
valuation satisfactory to the actuaries of North Point representing a projection
of claims expected to be incurred under such ERISA Plan.
(g) Except as disclosed on the North Point Disclosure
Memorandum, North Point does not provide and has no obligation to provide
benefits, including, without limitation, death, health or medical benefits
(whether or not insured) with respect to current or former employees of North
Point beyond their retirement or other termination of service with North Point
other than (i) coverage mandated by applicable Law, (ii) benefits under the
Employee Pension Benefit Plans, or (iii) benefits the full cost of which is
borne by the current or former employee or his beneficiary.
(h) Except as disclosed in the North Point Disclosure
Memorandum, neither this Agreement nor any transaction contemplated hereby will
(i) entitle any current or former employee, officer or director of North Point
to severance pay, unemployment compensation or any similar or other payment, or
(ii) accelerate the time of payment or vesting of, or increase the amount of
compensation or benefits due any such employee, officer or director.
-18-
4.5.3 Labor-Related Matters. Except as described in the North
---------------------
Point Disclosure Memorandum, North Point is not, and has not been, a party to
any collective bargaining agreement or agreement of any kind with any union or
labor organization or to any agreement with any of its employees which is not
terminable at will or upon ninety (90) days notice at the election of, and
without cost or penalty to, North Point. North Point has not received at any
time in the past five (5) years, any demand for recognition from any union, and
no attempt has been made, or will have been made as of the Closing Date, to
organize any of its employees. North Point has complied in all material respects
with all obligations under the National Labor Relations Act, as amended, the Age
Discrimination in Employment Act, as amended, and all other federal, state and
local labor laws and regulations applicable to employees. There are no unfair
labor practice charges pending or threatened against North Point, and there are,
and in the past three (3) years there have been, no charges, complaints, claims
or proceedings, no slowdowns or strikes pending or threatened against, or
involving, as the case may be, North Point with respect to any alleged violation
of any legal duty (including but not limited to any wage and hour claims,
employment discrimination claims or claims arising out of any employment
relationship) by North Point as to any of its employees or as to any person
seeking employment therefrom, and no such violations exist.
4.5.4 Related Party Transactions. Except for (a) loans and
----------------------------
extensions of credit made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions by North Point with other persons who are not affiliated with North
Point, and which do not involve more than the normal risk of repayment or
present other unfavorable features, (b) deposits, all of which are on terms and
conditions identical to those made available to all customers of North Point at
the time such deposits were entered into, and (c) transactions specifically
described in the North Point Disclosure Memorandum, there are no contracts with
or commitments to present or former 5% or greater shareholders, directors,
officers, or employees involving the expenditure after December 31, 1994 of more
than $60,000 as to any one individual, including with respect to any business
directly or indirectly controlled by any such person, or $100,000 for all such
contracts or commitments in the aggregate for all such individuals (other than
contracts or commitments relating to services to be performed by any officer,
director or employee as a currently-employed employee of North Point).
4.6 Other Matters.
-------------
4.6.1 Regulatory Reports. North Point will make available to
-------------------
United for review and inspection all applications, reports or other documents
filed by it for each of its past three full fiscal years with any regulatory or
governmental agencies. All of such applications, reports and other documents
have been prepared in accordance with applicable rules and regulations of the
regulatory agencies with which they were filed.
-19-
4.6.2 Approvals, Consents and Filings. Except for the approval
-------------------------------
of the Federal Reserve and the Department of Banking, or as set forth in the
North Point Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
thereby will (a) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, or (b)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to North Point, or any of North Point's assets.
4.6.3 Default. (a) Except for those consents described in or
-------
set forth pursuant to Section 4.6.2 above, neither the execution of this
Agreement nor consummation of the transactions contemplated herein (i)
constitutes a breach of or default under any contract or commitment to which
North Point is a party or by which North Point or its properties or assets are
bound, (ii) does or will result in the creation or imposition of any security
interest, lien, encumbrance, charge, equity or restriction of any nature
whatsoever in favor of any third party upon any assets of North Point, or (iii)
constitutes an event permitting termination of any agreement or the acceleration
of any indebtedness of North Point.
(b) North Point is not in default under its articles of
incorporation or bylaws or under any term or provision of any security deed,
mortgage, indenture or security agreement or of any other contract or instrument
to which North Point is a party or by which it or any of its property is bound.
4.6.4 Representations and Warranties. No representation or
-------------------------------
warranty contained in this Article IV or in any written statement delivered by
or at the direction of North Point pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of all
documents that have been or will be furnished to United in connection with this
Agreement or pursuant hereto are or shall be true, correct and complete.
ARTICLE V
---------
CONDUCT OF BUSINESS OF NORTH POINT PENDING CLOSING
--------------------------------------------------
Except as expressly otherwise provided herein, North Point
covenants and agrees that, without the prior written consent of United between
the date hereof and the Closing Date:
5.1 Conduct of Business. North Point will conduct its business
-------------------
only in the ordinary course, without the creation of any indebtedness for
borrowed money (other than deposit and similar accounts and customary credit
arrangements between banks in the ordinary course of business). North Point will
not engage in or undertake any action that would lead to the disqualification of
the pooling of interests method of accounting. North Point knows of no reason
that the proposed transaction would not qualify for pooling of interests
accounting treatment.
-20-
5.2 Maintenance of Properties. North Point will maintain
--------------------------
its properties and assets in good operating condition, ordinary wear and tear
excepted.
5.3 Insurance. North Point will maintain and keep in full
---------
force and effect all of the insurance referred to in Section 4.3.4 hereof or
other insurance equivalent thereto in all material respects.
5.4 Capital Structure. No change will be made in the
------------------
authorized or issued capital stock or other securities of North Point, and North
Point will not issue or grant any right or option to purchase or otherwise
acquire any of the capital stock or other securities of North Point.
5.5 Dividends. Except for quarterly dividends paid in
---------
accordance with previous practices, no dividend, distribution or payment will be
declared or made in respect to the North Point Stock and North Point will not,
directly or indirectly, redeem, purchase or otherwise acquire any of its capital
stock.
5.6 Amendment of Articles; Corporate Existence. North Point
-------------------------------------------
will not amend its articles of incorporation or bylaws, and North Point will
maintain its corporate existence and powers.
5.7 No Acquisitions. North Point shall not, without the
----------------
express written consent of United, acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other entity or
division thereof or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to it.
5.8 No Dispositions. North Point will not sell, mortgage,
lease, buy or otherwise acquire, transfer or dispose of any real property or
interest therein (except for sales in the ordinary course of business) and North
Point will not, except in the ordinary course of business, sell or transfer,
mortgage, pledge or subject to any lien, charge or other encumbrance any other
tangible or intangible asset.
5.9 Banking Arrangements. No change will be made in the
---------------------
banking and safe deposit arrangements referred to in Section 4.2.8 hereof.
5.10 Contracts. Except for renewals of existing contracts in
---------
effect as of the date hereof, or entering into a contract for the purpose of
substituting a vendor under any such existing contract, North Point will not,
without the express written consent of United, enter into any contract of the
kind described in Section 4.4.1 hereof.
5.11 Books and Records. The books and records of North Point
------------------
will be maintained in the usual, regular and ordinary course.
-21-
5.12 Advice of Changes. North Point shall promptly advise
-----------------
United orally and in writing of any change or event having, or which the North
Point Management believes could have, a material adverse effect on the assets,
liabilities, business, operations or financial condition of North Point.
5.13 Reports. North Point shall file all reports required to
-------
be filed with any regulatory or governmental agencies between the date of this
Agreement and the Closing Date and shall deliver to United copies of all such
reports promptly after the same are filed.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF UNITED
----------------------------------------
As an inducement to North Point to enter into this Agreement
and to consummate the transactions contemplated hereby, United represents,
warrants, covenants and agrees as follows:
6.1 Corporate Status. United is a business corporation duly
-----------------
organized, validly existing and in good standing under the laws of the State of
Georgia and has no direct or indirect subsidiaries, which are material to
United, other than United Community Bank, Blairsville, Georgia ("United Bank"),
Towns County Bank, Hiawassee, Georgia ("Towns"), Peoples Bank of Fannin County,
Blue Ridge, Georgia ("Fannin"), White County Bank, Cleveland, Georgia ("White"),
Carolina Community Bank, Murphy, North Carolina ("Carolina"), Bank of
Adairsville, Adairsville, Georgia ("Adairsville"), First Clayton Bank & Trust
Company, Clayton, Georgia ("Clayton"), 1st Floyd Bank, Rome, Georgia ("Floyd")
and United Family Finance Company, Blairsville, Georgia (the "Finance Company")
(collectively the "United Subsidiaries.") The United Subsidiaries are banking
corporations, except for the Finance Company, which is a business corporation,
all of which are duly organized, validly existing and in good standing under the
laws of the State of Georgia with respect to United Bank, Towns, Fannin, White,
Adairsville, Floyd, Clayton, and the Finance Company, and the State of North
Carolina with respect to Carolina. United and the United Subsidiaries are
entitled to own or lease their respective properties and to carry on their
respective businesses in the places where such properties are now owned, leased
or operated and such businesses are now conducted.
6.2 Authority. Subject to the approval of various state and
---------
federal regulators, the execution, delivery and performance of this Agreement
and the other transactions contemplated or required in connection herewith will
not, with or without the giving of notice or the passage of time, or both, (a)
violate any provision of federal or state law applicable to United, the
violation of which could be reasonably expected to have a material adverse
effect on the business, operations, properties, assets, financial condition or
prospects of United; (b) violate any provision of the articles of incorporation
or bylaws of United; (c) conflict with or result in a breach of any provision
of, or termination of, or constitute a default under any instrument, license,
agreement, or commitment to which United is a party, which, singly or in the
aggregate, could reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, financial condition or prospects of
-22-
United; or (d) constitute a violation of any order, judgment or decree to which
United is a party, or by which United or any of its assets or properties are
bound. Assuming this Agreement constitutes the valid and binding obligation of
North Point, this Agreement constitutes the valid and binding obligation of
United, and is enforceable in accordance with its terms, except as limited by
laws affecting creditors' rights generally and by the discretion of courts to
compel specific performance.
6.3 Capital Structure. (a) As of the date of this Agreement,
------------------
United has authorized capital stock consisting solely of 10,000,000 shares of
common stock, par value $1.00 per share, of which 8,429,090 shares are issued
and outstanding as of the date hereof including 140,000 deemed outstanding
pursuant to United's prime plus 1/4% Convertible Subordinated Debentures due
December 31, 2006 (the "2006 Debentures") and presently exercisable options to
acquire 254,822 shares (the "Stock Options") and 10,000,000 shares of Preferred
Stock, none of which is outstanding. All of the issued and outstanding shares of
United Stock and the United Subsidiaries capital stock (the "United Subsidiaries
Stock") is duly and validly issued, fully paid and nonassessable and was
offered, issued and sold in compliance with all applicable federal or state
securities laws. No person has any right of rescission or claim for damages
under federal or state securities laws with respect to the issuance of shares of
United Stock or any of the shares of United Subsidiaries Stock previously
issued. None of the shares of United Stock has been issued in violation of the
preemptive or other rights of any shareholder of United. None of the shares of
the United Subsidiaries Stock was issued in violation of the preemptive or other
rights of any shareholder of the United Subsidiaries. All of the issued and
outstanding shares of the United Subsidiaries Stock are owned by United.
(b) Except for the 2006 Debentures and the Stock Options,
United does not have outstanding any securities which are either by their terms
or by contract convertible or exchangeable into United Stock, or any other
securities or debt, of United, or any preemptive or similar rights to subscribe
for or to purchase, or any options or warrants or agreements or understandings
for the purchase or the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock or
securities convertible into its capital stock. United is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(c) There is no agreement, arrangement or understanding to
which United is a party restricting or otherwise relating to the transfer of any
shares of United Stock.
(d) All shares of common stock or other capital stock, or any
other securities or debt, of United, which have been purchased or redeemed by
United have been purchased or redeemed in accordance with all applicable
federal, state and local laws, rules, and regulations, including, without
limitation, all federal and state securities laws and rules and regulations of
any securities exchange or system on which such stock, securities or debt are,
or at such time were, traded, and no such purchase or redemption has resulted or
will, with the giving of notice or lapse of time, or both, result in a default
or acceleration of the maturity of, or otherwise modify, any agreement, note,
mortgage, bond, security agreement, loan agreement or other contract or
commitment of United.
-23-
6.4 Financial Statements. United has delivered to North Point
--------------------
true, correct and complete copies of the audited financial statements of United
for the years ended December 31, 1997, 1998 and 1999, including balance sheets,
statements of income, statements of shareholders' equity, statements of cash
flows and related notes (the audited financial statements for the year ended
December 31, 1999 being referred to as the "1999 United Financial Statements").
All of such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and present fairly the
assets, liabilities and financial condition of United as of the dates indicated
therein and the results of its operations for the respective periods then ended.
6.5 Permits; Compliance with Law. (a) United has all permits,
-----------------------------
licenses, approvals, authorizations and registrations under all federal, state,
local and foreign laws required for United to carry on its business as presently
conducted, and all of such permits, licenses, approvals, authorizations and
registrations are in full force and effect, and no suspension or cancellation of
any of them is pending or, to the knowledge of United, threatened.
(b) United has complied with all laws, regulations, and orders
applicable to it or its business, except for any non-compliance which would not
have a material adverse effect on United, and United has received no notice or
warning from any governmental authority with respect to any failure or alleged
failure of United to comply in any respect with any law, regulation or order has
been received, nor is any such notice or warning proposed or, to the knowledge
of United, threatened.
6.6 Litigation and Proceedings. There are no actions, decrees,
--------------------------
suits, counterclaims, claims, proceedings or governmental actions or
investigations, pending or, to the knowledge of United, threatened against, by
or affecting United, any officer, director, employee or agent in such person's
capacity as an officer, director, employee or agent of United or relating to the
business or affairs of United, in any court or before any arbitrator or
governmental agency, and no judgment, award, order or decree of any nature has
been rendered against or with respect thereto by any agency, arbitrator, court,
commission or other authority, nor does United have any unasserted contingent
liabilities which may have an adverse effect on its assets or on the operation
of its businesses or which might prevent or impede the consummation of the
transactions contemplated by this Agreement.
6.7 Default. (a) Except for those consents described in or set
-------
forth pursuant to Section 6.2 above, neither the execution of this Agreement nor
consummation of the transactions contemplated herein (i) constitutes a breach of
or default under any contract or commitment to which United is a party or by
which United or its properties or assets are bound, (ii) does or will result in
the creation or imposition of any security interest, lien, encumbrance, charge,
equity or restriction of any nature whatsoever in favor of any third party upon
any assets of United, or (iii) constitutes an event permitting termination of
any agreement or the acceleration of any indebtedness of United.
-24-
(b) United is not in default under its articles of
incorporation or bylaws or under any term or provision of any security deed,
mortgage, indenture or security agreement or of any other contract or instrument
to which United is a party or by which it or any of its property is bound.
6.8 Disclosure Reports. United has a class of securities
-------------------
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and has delivered to North Point copies of:
(a) its Annual Report on Form 10-K for its fiscal year
ended December 31, 1998 (and those portions of its 1998 Annual Report to
Shareholders incorporated therein by reference) filed pursuant to Section 13 of
the Act; and
(b) the Proxy Statement for its Annual Meeting of
Shareholders held on April 15, 1999, filed pursuant to Section 14 of the Act;
and
(c) its Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1999, June 30, 1999, and September 30, 1999, filed pursuant to
Section 13 of the Act.
The report, proxy statement and quarterly reports include all of the regular and
periodic reports and proxy statements required to be filed by United with the
Securities and Exchange Commission since September 30, 1999, and are herein
collectively referred to as the "United SEC Reports." The United SEC Reports
taken together correctly describe, among other things, the business, operations
and principal properties of United in accordance with the requirements of the
applicable report forms. As of the respective dates of filing, none of the
United SEC Reports contained any untrue statement of material fact necessary to
make the statements therein not misleading. The financial statements contained
in the United SEC Reports have been prepared in accordance with generally
accepted accounting principals consistently applied and present fairly the
financial condition of United as of the dates thereof and the results of
operations for the periods covered thereby.
6.9 No Material Adverse Change. Since the date of its latest
---------------------------
published financial statements included in the United SEC Reports, there has not
been any change in the condition of United, any contracts entered into by
United, or other changes in the operations of United which, in any case, would
have a material adverse effect on United on a consolidated basis taken as a
whole.
6.10 Representations and Warranties. No representation or
-------------------------------
warranty contained in this Article VI or in any written statement delivered by
or at the direction of United pursuant hereto or in connection with the
transactions contemplated hereby contains or shall contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement not misleading. Copies of all
documents that have been or will be furnished to North Point in connection with
this Agreement or pursuant hereto are or shall be true, correct and complete.
-25-
ARTICLE VII
-----------
CONDITIONS TO OBLIGATIONS OF UNITED
-----------------------------------
All of the obligations of United under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by United:
7.1 Veracity of Representations and Warranties. The
-------------------------------------------------
representations and warranties of North Point contained herein or in any
certificate, schedule or other document delivered pursuant to the provisions
hereof, or in connection herewith, shall be true in all material respects as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true in all material respects at and as of such time, except
as a result of changes or events expressly permitted or contemplated herein.
7.2 Performance of Agreements. North Point shall have
---------------------------
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
7.3 Certificates, Resolutions, Opinion. North Point shall
----------------------------------
have delivered to United:
(a) a certificate executed by the President and
Secretary of North Point, dated as of the Closing Date, and certifying
in such detail as United may reasonably request to the fulfillment of
the conditions specified in Sections 7.1 and 7.2 hereof;
(b) duly adopted resolutions of the Board of
Directors and shareholders of North Point certified by the Secretary
thereof, dated the Closing Date, (i) authorizing and approving the
execution of this Agreement (with respect to the directors of North
Point) and the Merger Agreement (with respect to the directors and
shareholders of North Point) and the consummation of the transactions
contemplated herein and therein in accordance with their respective
terms and (ii) authorizing all other necessary and proper corporate
action to enable North Point to comply with the terms hereof and
thereof;
(c) certificates of the valid existence of North
Point and Dawson Bank under the laws of the State of Georgia, executed
by the Secretary of State and the Department of Banking, respectively,
and dated not more than five (5) business days prior to the Closing
Date;
(d) certificates from the appropriate public
officials of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date, certifying that North Point has filed
all corporate tax returns required by the laws of such state and has
paid all taxes shown thereon to be due; and
-26-
(e) an opinion of Powell, Goldstein, Frazer & Murphy,
counsel for North Point, dated the Closing Date, in the form attached
hereto as Exhibit D.
7.4 Shareholder Approval. The Merger Agreement shall have
---------------------
been approved by the vote of the holders of at least a majority of North Point
Stock.
7.5 Regulatory Approvals. United shall have received from any
-------------------
and all governmental authorities, bodies or agencies having jurisdiction over
the transactions contemplated by this Agreement and the Merger Agreement,
including, but not limited to the Federal Reserve and the Department of Banking,
such consents, authorizations and approvals as are necessary for the
consummation thereof and all applicable waiting or similar periods required by
law shall have expired.
7.6 Effective Registration Statement. The United Registration
----------------------------------
Statement shall have been declared effective by the SEC and no stop order shall
have been entered with respect thereto.
7.7 Certificate of Merger. The Secretary of State of the State
---------------------
of Georgia shall have issued a certificate of merger with regard to the Merger
in accordance with the provisions of the Georgia Business Corporation Code.
7.8 Accountants' Letter. United shall have received a letter
--------------------
from Mauldin & Jenkins, dated the Closing Date, to the effect that: At the
request of North Point they have carried out procedures to a specified date not
more than five business days prior to the Closing Date, which procedures did not
constitute an examination in accordance with generally accepted auditing
standards, of the financial statements of North Point, as follows: (a) read the
unaudited balance sheets and statements of income of North Point from December
31, 1998 through the date of the most recent monthly financial statements
available in the ordinary course of business; (b) read the minutes of the
meetings of shareholders and Board of Directors of North Point from December 31,
1998 to said date nor more than five business days prior to the Closing Date;
and (c) consulted with certain officers and employees of North Point responsible
for financial and accounting matters and, based on such procedures, nothing has
come to their attention which would cause them to believe that (i) such
unaudited interim balance sheets and statements of income are not fairly
presented in conformity with generally accepted accounting principles applied on
a basis consistent with that of the 1998 North Point Financial Statements, (ii)
as of said date not more than five business days prior to the Closing Date, the
shareholders' equity, long-term debt, reserve for possible loan losses and total
assets of North Point, in each case as compared with the amounts shown in the
1998 North Point Financial Statements, are not different except as set forth in
such letter, or (iii) for the period from December 31, 1998 to said date not
more than five business days prior to the Closing Date, the net interest income,
total and per-share amounts of consolidated income (before extraordinary items)
and net income of North Point, as compared with the corresponding portion of the
preceding 12-month period, are not different except as set forth in such letter.
-27-
7.9 Pooling of Interests. United shall have received an
----------------------
opinion of Porter, Keadle, Moore LLP, certified public accountants, to the
effect that the Merger will be accounted for as a "pooling of interests," which
opinion will be subject only to such qualifications, exceptions and factual
assumptions as are satisfactory to United.
7.10 Increase in Authorized Capital Stock. An increase in the
-------------------------------------
number of authorized shares United common stock, from 10,000,000 shares to
50,000,000 shares, shall have been approved by a vote of the shareholders of
United.
ARTICLE VIII
------------
CONDITIONS TO OBLIGATIONS OF NORTH POINT
----------------------------------------
All of the obligations of North Point under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by it:
8.1 Veracity of Representations and Warranties. The
-------------------------------------------------
representations and warranties of United contained herein or in any certificate,
schedule or other document delivered pursuant to the provisions hereof, or in
connection herewith, shall be true in all material respects as of the date when
made and shall be deemed to be made again at and as of the Closing Date and
shall be true in all material respects at and as of such time, except as a
result of changes or events expressly permitted or contemplated herein (provided
that representations and warranties which are confined to a specific date shall
speak only as of such date).
8.2 Performance of Agreements. United shall have performed and
--------------------------
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
8.3 Certificates, Resolutions, Opinion. United shall have
----------------------------------
delivered to North Point:
(a) a certificate executed by the President and
Secretary of United, dated the Closing Date, certifying in such detail
as North Point may reasonably request to the fulfillment of the
conditions specified in Sections 8.1 and 8.2 hereof;
(b) duly adopted resolutions of the board of
directors of United, certified by the Secretary thereof, dated the
Closing Date, (i) authorizing and approving the execution of this
Agreement and the Merger Agreement on behalf of United, and the
consummation of the transactions contemplated herein and therein in
accordance with their respective terms, and (ii) authorizing all other
necessary and proper corporate actions to enable United to comply with
the terms hereof and thereof;
-28-
(c) a certificate of the valid existence of United,
under the laws of the State of Georgia executed by the Secretary of
State of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date;
(d) certificates from the appropriate public
officials of the State of Georgia, dated not more than five (5) business
days prior to the Closing Date, certifying that United has filed all
corporate tax returns required by the laws of such state and has paid
all taxes shown thereon to be due; and
(e) an opinion of Kilpatrick Stockton LLP, counsel
for United, dated the Closing Date, in the form attached hereto as
Exhibit E.
8.4 Shareholder Approval. The Merger Agreement shall have
---------------------
been approved by the vote of the holders of at least a majority of North Point
Stock.
8.5 Regulatory Approvals. Any and all governmental
----------------------
authorities, bodies or agencies having jurisdiction over the transactions
contemplated by this Agreement and the Merger Agreement, including, but not
limited to the Federal Reserve and the Department of Banking, shall have granted
such consents, authorizations and approvals as are necessary for the
consummation hereof and thereof, and all applicable waiting or similar periods
required by law shall have expired.
8.6 Effective Registration Statement. The United
----------------------------------
Registration Statement shall have been declared effective by the SEC and no stop
order shall have been entered with respect thereto.
8.7 Tax Opinion. North Point shall have received from
-----------
Kilpatrick Stockton LLP its opinion, in form and substance reasonably
satisfactory to North Point, to the effect that:
(1) The Merger and the issuance of shares of United
Stock in connection therewith, as described herein and in the Merger
Agreement, will constitute a tax-free reorganization under Section
368(a)(1)(A) of the Code;
(2) No gain or loss will be recognized by holders of
North Point Stock upon the exchange of such stock solely for United
Stock as a result of the Merger;
(3) Gain or loss will be recognized pursuant to
Section 302 of the Code by holders of North Point Stock upon their
receipt of cash in lieu of fractional shares of United Stock and upon
their exercise of dissenters' rights;
(4) No gain or loss will be recognized by North
Point as a result of the Merger;
(5) The aggregate tax basis of United Stock received
by shareholders of North Point pursuant to the Merger will be the same
as the tax basis of the shares of North Point Stock exchanged therefor
-29-
decreased by any portion of such tax basis allocated to fractional
shares of United Stock that are treated as redeemed by United; and
(6) The holding period of the shares of United Stock
received by the shareholders of North Point will include the holding
period of the shares of North Point Stock exchanged therefor, provided
that the stock of North Point is held as a capital asset on the date of
the consummation of the Merger.
8.8 Certificate of Merger. The Secretary of State of the State
---------------------
of Georgia shall have issued a certificate of merger with regard to the Merger
in accordance with the provisions of the Georgia Business Corporation Code.
8.9 Increase in Authorized Capital Stock. An increase in the
-------------------------------------
number of authorized shares United common stock, from 10,000,000 shares to
50,000,000 shares, shall have been approved by a vote of the shareholders of
United.
ARTICLE IX
----------
WARRANTIES, NOTICES, ETC.
-------------------------
9.1 Warranties. All statements contained in any certificate or
----------
other instrument delivered by or on behalf of North Point or United pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed representations and warranties hereunder by them. Unless the context
otherwise requires, the representations and warranties required of North Point
shall be required to be made, and shall be considered made, on behalf of both
North Point and its subsidiary Dawson Bank, and the representations and
warranties required of United, shall be required to be made, and shall be
considered made, on behalf of United and the United Subsidiaries.
9.2 Survival of Representations. All representations,
------------------------------
warranties, covenants, and agreements made by either party hereto in or pursuant
to this Agreement or in any instrument, exhibit, or certificate delivered
pursuant hereto shall be deemed to have been material and to have been relied
upon by the party to which made, but, except as set forth hereafter or
specifically stated in this Agreement, such representations, warranties,
covenants, and agreements shall expire and be of no further force and effect
upon the consummation of the Merger; provided, however, that the following shall
survive consummation of the Merger and the transactions contemplated hereby:
(a) the opinions of counsel referred to in Sections
7.3(f) and 8.3(e) of this Agreement;
(b) any intentional misrepresentation of any material
fact made by either party hereto in or pursuant to this Agreement or in
any instrument, document or certificate delivered pursuant hereto; and
-30-
(c) the covenant with respect to the confidentiality of
certain information contained in Section 3.5 hereof.
9.3 Notices. All notices or other communications required or
-------
permitted to be given or made hereunder shall be in writing and delivered
personally or sent by pre-paid, first class certified or registered mail, return
receipt requested, or by facsimile transmission, to the intended recipient
thereof at its address or facsimile number set out below. Any such notice or
communication shall be deemed to have been duly given immediately (if given or
made in person or by facsimile confirmed by mailing a copy thereof to the
recipient in accordance with this Paragraph 9.3 on the date of such facsimile),
or five days after mailing (if given or made by mail), and in proving same it
shall be sufficient to show that the envelope containing the same was delivered
to the delivery service and duly addressed, or that receipt of a facsimile was
confirmed by the recipient as provided above. Either party may change the
address to which notices or other communications to such party shall be
delivered or mailed by giving notice thereof to the other party hereto in the
manner provided herein.
(a) To North Point: North Point Bancshares, Inc.
109 Highway 53 West
Dawsonville, Georgia 30534-3414
Attention: Don D. Gordon
Facsimile:
With copies to: Powell, Goldstein, Frazer &
Murphy LLP
191 Peachtree Street, N.E.
Suite 1600
Atlanta, Georgia 30303
Attention: Walter G. Moeling,
IV
Facsimile: (404) 572-6999
(b) To United: United Community Banks, Inc.
P.O. Box 398
Blairsville, Georgia 30512
Attention: Jimmy Tallent
President
Facsimile: (706) 745-1335
With copies to: Kilpatrick Stockton LLP
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 303039-4530
Attention: Richard R. Cheatham
Facsimile: (404) 815-6555
-31-
9.4 Entire Agreement. This Agreement and the Merger Agreement
----------------
supersede all prior discussions and agreements between North Point and United
with respect to the Merger and the other matters contained herein and therein,
and this Agreement and the Merger Agreement contain the sole and entire
agreement between North Point and United with respect to the transactions
contemplated herein and therein.
9.5 Waiver; Amendment. Prior to or on the Closing Date, United
-----------------
shall have the right to waive any default in the performance of any term of this
Agreement by North Point, to waive or extend the time for the fulfillment by
North Point of any or all of North Point' obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of United
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any law or applicable governmental regulation. Prior to or
on the Closing Date, North Point shall have the right to waive any default in
the performance of any term of this Agreement by United, to waive or extend the
time for the fulfillment by United of any or all of United's obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of North Point under this Agreement, except any condition which, if
not satisfied, would result in the violation of any law or applicable
governmental regulation. This Agreement may be amended by a subsequent writing
signed by the parties hereto, provided, however, that the provisions of Sections
7.5 and 8.5 requiring regulatory approval shall not be amended by the parties
hereto without regulatory approval.
ARTICLE X
---------
TERMINATION
-----------
This Agreement may be terminated at any time prior to or on
the Closing Date upon written notice to the other party as follows, and, upon
any such termination of this Agreement, neither party hereto shall have any
liability to the other, except that the provisions of Section 3.5 hereof shall
survive the termination of this Agreement for any reason.
10.1 Material Adverse Change. (a) By United, if, after the
-------------------------
date hereof, a material adverse change in the financial condition or business of
North Point shall have occurred which change would reasonably be expected to
have a material adverse affect on the market price of North Point Stock, or if
North Point shall have suffered a material loss or damage to any of its
properties or assets, which change, loss or damage materially affects or impairs
its ability to conduct its business. (b) By North Point, if, after the date
hereof, a material adverse change in the financial condition or business of
United shall have occurred which change would reasonably be expected to have a
material adverse affect on the market price of United Stock, or if United shall
have suffered a material loss or damage to any its properties or assets, which
change, loss or damage materially affects or impairs its ability to conduct its
business.
10.2 Noncompliance. (a) By United, if the terms, covenants or
-------------
conditions of this Agreement to be complied with or performed by North Point
before the Closing shall not have been substantially complied with or
substantially performed at or before the Closing Date and such noncompliance or
nonperformance shall not have been waived by United. (b) By North Point, if the
-32-
terms, covenants or conditions of this Agreement to be complied with or
performed by United before the Closing shall not have been substantially
complied with or substantially performed at or before the Closing Date and such
noncompliance or nonperformance shall not have been waived by North Point.
10.3 Failure to Disclose. (a) By United, if it learns of any
-------------------
fact or condition not disclosed in this Agreement, the North Point Disclosure
Memorandum, or the 1998 North Point Financial Statements, which was required to
be disclosed by North Point pursuant to the provisions of this Agreement at or
prior to the date of execution hereof with respect to the business, properties,
assets or earnings of North Point which materially and adversely affects such
business, properties, assets or earnings or the ownership, value or continuance
thereof. (b) By North Point, if it learns of any fact or condition not disclosed
in this Agreement or the 1999 United Financial Statements, which was required to
be disclosed by United pursuant to the provisions of this Agreement at or prior
to the date of execution hereof with respect to the business, properties, assets
or earnings of United which materially and adversely affect such business,
properties, assets or earnings or the ownership, value or continuance thereof.
10.4 Adverse Proceedings. By either party, if any action, suit
-------------------
or proceeding shall have been instituted or threatened against either party to
this Agreement to restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the consummation of the transactions contemplated
herein, which, in the good faith opinion of North Point or United makes
consummation of the transactions herein contemplated inadvisable.
10.5 Termination Date. By either party, if the Closing Date
----------------
shall not have occurred on or before August 31, 2000.
10.6 Dissenters. By United, if the holders of more than 32,128
-----------
shares of the outstanding North Point Stock elect to exercise this statutory
right to dissent from the Merger and demand payment in cash for the "fair value"
of their shares.
10.7 Shareholders Vote. By either party, if the Merger
------------------
Agreement is not approved by the Vote of the holders of North Point Stock as
required by applicable law.
10.8 Environmental Liability of North Point. By United, if it
---------------------------------------
learns of any potential liability of North Point arising from noncompliance with
any federal, state or local environmental law by North Point, or any potential
liability of North Point arising from any environmental condition of the
properties or assets of North Point, including any properties or assets in which
North Point holds a security interest.
-33-
ARTICLE XI
----------
COUNTERPARTS, HEADINGS, ETC.
----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The headings herein set out are for
convenience of reference only and shall not be deemed a part of this Agreement.
A pronoun in one gender includes and applies to the other genders as well.
ARTICLE XII
-----------
BINDING EFFECT
--------------
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement may not be assigned by either party
without the prior written consent of the other.
ARTICLE XIII
------------
GOVERNING LAW
-------------
The validity and effect of this Agreement and the Merger
Agreement and the rights and obligations of the parties hereto and thereto shall
be governed by and construed and enforced in accordance with the laws of the
State of Georgia.
-34-
IN WITNESS WHEREOF, North Point and United have caused this
Agreement to be executed by their respective duly authorized corporate officers
and their respective corporate seals to be affixed hereto as of the day and year
first above written.
NORTH POINT BANCSHARES, INC.
(CORPORATE SEAL) By: /s/ Don D. Gordon
-----------------------
Name:
Title:
Attest:
/s/ Jimmy C. Bruce
- ---------------------------
Secretary
UNITED COMMUNITY BANKS, INC.
(CORPORATE SEAL) By: /s/ Jimmy C. Tallent
--------------------------
Name: Jimmy Tallent
Title: President
Attest:
/s/ Billy M. Decker
- ----------------------------
Secretary
-35-
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made
and entered into as of this _____ day of ____, 2000, by and between UNITED
COMMUNITY BANKS, INC. ("United") and NORTH POINT BANCSHARES, INC. ("North
Point"), both Georgia corporations (said corporations are hereinafter
collectively referred to as the "Constituent Corporations").
R E C I T A L S:
- - - - - - - -
WHEREAS, the authorized capital stock of United consists of
10,000,000 shares of Common Stock, $1.00 par value per share (the "United
Stock"), of which 8,429,090 shares are issued and outstanding; and
WHEREAS, the authorized capital stock of North Point consists
of __________ shares of Common Stock, $_____ par value per share, of which
428,385 shares are issued and outstanding ("North Point Stock"); and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations deem it advisable and in the best interests of each such
corporation and its shareholders that North Point merge with United, with United
being the surviving corporation; and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations, by resolutions duly adopted, have unanimously approved and adopted
this Agreement, and the Board of Directors of North Point, by resolution duly
adopted, has directed that this Agreement be submitted to the shareholders of
North Point for their approval; and
WHEREAS, United has agreed to issue shares of United Stock
which shareholders of North Point will be entitled to receive, according to the
terms and conditions contained herein, on or after the Effective Date (as
defined herein) of the merger provided for herein.
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements herein contained, and other good and valuable
consideration, the receipt and adequacy of which as legally sufficient
consideration are hereby acknowledged, the parties hereto have agreed and do
hereby agree, as follows:
1. MERGER.
------
Pursuant to and with the effects provided in the applicable
provisions of Article 11 of the Georgia Business Corporation Code, as amended
(Chapter 2 of Title 14 of the Official Code of Georgia), North Point
(hereinafter sometimes referred to as the "Merged Corporation") shall be merged
with and into United (the "Merger"). United shall be the surviving corporation
(the "Surviving Corporation") and shall continue under the name "United
Community Banks, Inc." On the Effective Date (as defined herein) of the Merger,
the individual existence of the Merged Corporation shall cease and terminate.
2. ACTIONS TO BE TAKEN.
-------------------
The acts and things required to be done by the Georgia
Business Corporation Code in order to make this Agreement effective, including
the submission of this Agreement to the shareholders of the Merged Corporation
and the filing of the Certificate of Merger relating hereto in the manner
provided in said Code, shall be attended to and done by the proper officers of
the Constituent Corporations with the assistance of counsel as soon as
practicable.
3. EFFECTIVE DATE.
--------------
The Merger shall be effective upon the approval of this
Agreement by the shareholders of the Merged Corporation and the filing of the
Certificate of Merger relating hereto in the manner provided in the Georgia
Business Corporation Code (the "Effective Date").
4. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION.
-----------------------------------------------------------------
(a) The Articles of Incorporation of United, as heretofore
amended, shall on the Effective Date be the Articles of Incorporation of the
Surviving Corporation.
(b) Until altered, amended or repealed, as therein provided,
the Bylaws of United as in effect on the Effective Date shall be the Bylaws of
the Surviving Corporation.
5. MANNER AND BASIS OF CONVERTING SHARES OF CAPITAL STOCK; CAPITAL
STRUCTURE OF THE SURVIVING CORPORATION.
- --------------------------------------------------------------------------------
The manner and basis of converting the shares of capital stock
of each of the Constituent Corporations into shares of the Surviving Corporation
shall be as follows:
(a) Upon the Effective Date each of the shares of North Point
Stock outstanding on the Effective Date shall be converted into fully paid and
nonassessable shares of United Stock at the rate of 2.2368 shares of United
Stock for each outstanding share of North Point Stock. If either party should
change the number of its outstanding shares as a result of a stock split, stock
dividend, or similar recapitalization with respect to such shares prior to the
Effective Date then the shares to be issued hereunder to holders of North Point
Stock shall be proportionately adjusted.
(b) No scrip or fractional share certificates of United Stock
shall be issued in connection with the Merger and an outstanding fractional
share interest will not entitle the owner thereof to vote, to receive dividends
or to have any of the rights of a shareholder with respect to such fractional
interest. In lieu of any fractional interest, there shall be paid in cash an
amount (computed to the nearest cent) equal to such fraction multiplied by
$38.00.
-2-
(c) As soon as practicable after the Effective Date, each
holder as of the Effective Date of any of the shares of North Point Stock, upon
presentation and surrender of the certificates representing such shares to
United, shall be entitled to receive in exchange therefor a certificate
representing the number of shares of United Stock to which such shareholder
shall be entitled according to the terms of this Agreement. Until such
surrender, each such outstanding certificate which prior to the Effective Date
represented North Point Stock shall be deemed for all corporate purposes to
evidence ownership of the number of shares of United Stock into which the same
shall have been converted and the right to receive payment for fractional
shares.
(d) Upon the Effective Date, each share of United Stock issued
and outstanding immediately prior to the Effective Date shall continue unchanged
and shall continue to evidence a share of common stock of the Surviving
Corporation.
6. TERMINATION OF SEPARATE EXISTENCE.
---------------------------------
Upon the Effective Date, the separate existence of the Merged
Corporation shall cease and the Surviving Corporation shall possess all of the
rights, privileges, immunities, powers and franchises, as well of a public
nature as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account, and
all other choses in action, and all and every other interest of or belonging to
or due to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed, and the title to any real estate or any interest therein, vested in either
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger. The Surviving Corporation shall thenceforth be responsible
and liable for all the liabilities, obligations and penalties of each of the
Constituent Corporations; and any claim existing or action or proceeding, civil
or criminal, pending by or against either of said Constituent Corporations may
be prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in its place, and any judgment rendered against either of the
Constituent Corporations may thenceforth be enforced against the Surviving
Corporation; and neither the rights of creditors nor any liens upon the property
of either of the Constituent Corporations shall be impaired by the Merger.
7. FURTHER ASSIGNMENTS.
-------------------
If at any time the Surviving Corporation shall consider or be
advised that any further assignments or assurances in law or any other things
are necessary or desirable to vest in said corporation, according to the terms
hereof, the title to any property or rights of the Merged Corporation, the
proper officers and directors of the Merged Corporation shall and will execute
and make all such proper assignments and assurances and do all things necessary
and proper to vest title in such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes of this Agreement.
-3-
8. CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER.
--------------------------------------------------
This Agreement is subject to, and consummation of the Merger
is conditioned upon, the fulfillment as of the Effective Date of each of the
following conditions:
(a) Approval of this Agreement by the affirmative vote of the
holders of a majority of the outstanding voting shares of North Point Stock; and
(b) All the terms, covenants, agreements, obligations and
conditions of the Agreement and Plan of Reorganization (the "Acquisition
Agreement") of even date herewith by and between North Point and United to be
complied with, satisfied and performed on or prior to the Closing Date (as
defined therein), shall have been complied with, satisfied and performed in all
material respects unless accomplishment of such covenants, agreements,
obligations and conditions has been waived by the party benefited thereby.
9. TERMINATION.
-----------
This Agreement may be terminated and the Merger abandoned in
accordance with the terms of the Acquisition Agreement, at any time before or
after adoption of this Agreement by the directors of either of the Constituent
Corporations, notwithstanding favorable action on the Merger by the shareholders
of the Merged Corporation, but not later than the issuance of the certificate of
merger by the Secretary of State of Georgia with respect to the Merger in
accordance with the provisions of the Georgia Business Corporation Code.
10. COUNTERPARTS; TITLE; HEADINGS.
-----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The title of this Agreement and the
headings herein set out are for the convenience of reference only and shall not
be deemed a part of this Agreement.
11. AMENDMENTS; ADDITIONAL AGREEMENTS.
---------------------------------
At any time before or after approval and adoption by the
shareholders of North Point, this Agreement may be modified, amended or
supplemented by additional agreements, articles or certificates as may be
determined in the judgment of the respective Boards of Directors of the
Constituent Corporations to be necessary, desirable or expedient to further the
purposes of this Agreement, to clarify the intention of the parties, to add to
or modify the covenants, terms or conditions contained herein or to effectuate
or facilitate any governmental approval of the Merger or this Agreement, or
otherwise to effectuate or facilitate the consummation of the transactions
contemplated hereby; provided, however, that no such modification, amendment or
supplement shall reduce to any extent the consideration into which shares of
North Point Stock shall be converted in the Merger pursuant to Section 5 hereof.
-4-
IN WITNESS WHEREOF, the Constituent Corporations have each
caused this Agreement to be executed on their respective behalfs and their
respective corporate seals to be affixed hereto as of the day and year first
above written.
UNITED COMMUNITY BANKS, INC.
(CORPORATE SEAL)
By:______________________________
ATTEST: Jimmy Tallent
President
_________________________________
Secretary
NORTH POINT BANCSHARES, INC.
(CORPORATE SEAL)
By:_____________________________
Name:________________________
Title:_______________________
__________________________________
Secretary
-5-
EXHIBIT B
United Community Banks, Inc.
P.O. Box 398
Blairsville, Georgia 30512
Gentlemen:
In connection with the proposed merger (the "Merger") of North
Point Bancshares, Inc. ("North Point") with and into United Community Banks,
Inc. ("United"), pursuant to the Agreement and Plan of Reorganization of even
date herewith among United and North Point (the "Reorganization Agreement"), the
undersigned hereby covenants, represents and warrants as follows:
1. Recommendation for Merger and Voting of North Point Stock.
----------------------------------------------------------
The undersigned agrees to recommend to all holders of the capital stock of North
Point ("North Point Stock") that they vote in favor of the Merger. In addition,
the undersigned agrees to vote any and all shares of North Point Stock owned or
controlled by him in favor of the Merger.
2. Compliance with Securities Laws. The undersigned
-------------------------------------
acknowledges that he will be subject to the restrictions on resales contained in
Rule 145 of the Rules and Regulations of the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended, and agrees to sell,
transfer or otherwise dispose of any shares of capital stock of United ("United
Stock") received by him pursuant to the Merger only in compliance with the
provisions of such Act and Rule. The undersigned acknowledges that United is not
under any obligation to file a registration statement with the SEC covering the
disposition of the undersigned's shares of United Stock to be received pursuant
to the Merger.
3. Restrictive Legend. The undersigned agrees that the
---------------------
certificates representing shares of United Stock to be issued to the undersigned
pursuant to the Merger will be stamped or otherwise imprinted with a legend in
substantially the following form:
The shares represented by this certificate may not be sold,
transferred or otherwise disposed of except in a transaction
covered by an effective registration statement under the
Securities Act of 1933, as amended, or in accordance with Rule
145 promulgated thereunder, or in accordance with a legal
opinion satisfactory to the Company that such sale or transfer
is otherwise exempt from the requirements of such Act.
4. Initial Restriction on Disposition. The undersigned agrees
----------------------------------
that the undersigned will not, except by operation of law, by will or under the
laws of descent and distribution, sell, transfer, or otherwise dispose of the
undersigned's interests in, or reduce the undersigned's risk relative to, any of
the shares of United Stock into which the undersigned's shares of North Point
Stock are converted upon consummation of the Merger until such time as United
notifies the undersigned that the requirements of SEC Accounting Series Release
Nos. 130 and 135 ("ASR 130 and 135") have been met. The undersigned understands
that ASR 130 and 135 relate to publication of financial results of post-Merger
combined operations of United and North Point. United agrees that it will
publish such results within 45 days after the end of the first fiscal quarter of
United containing the required period of post-Merger combined operations and
that it will notify the undersigned promptly following such publication.
Sincerely,
[Director or Executive Officer]
EXHIBIT D
(1) North Point was duly organized as a corporation, and is existing
and in good standing, under the laws of the State of Georgia.
(2) North Point the corporate power to execute and deliver the
Agreement and Plan of Reorganization Agreement (the "Reorganization Agreement")
and the Agreement and Plan of Merger Agreement (the "Merger Agreement"), to
perform its obligations thereunder, to own and use its Assets and to conduct its
business.
(3) North Point has duly authorized the execution and delivery of the
Reorganization Agreement and the Merger Agreement and all performance by North
Point thereunder, and has duly executed and delivered the Reorganization
Agreement and the Merger Agreement.
(4) No consent, approval, authorization or other action filed by, or
filing with, any governmental authority of the United States or the State of
Georgia is required for North Point's execution and delivery of the
Reorganization Agreement and the Merger Agreement and consummation of the
Transaction, which consent, approval or authorization has not been previously
received.
(5) The Reorganization Agreement and the Merger Agreement are
enforceable against North Point.
(6) The authorized capital stock of North Point consists of __________
shares of Common Stock, $_____ par value per share, of which __________ shares
are issued and outstanding. All of the issued and outstanding capital stock of
North Point has been duly authorized and validly issued and are fully paid and
non-assessable and, to such counsel's knowledge, there are no outstanding
options, warrants, rights, calls, commitments, conversion rights, plans or other
agreements providing for the purchase or issuance of any authorized but unissued
shares of such capital stock.
EXHIBIT E
(1) United was duly organized as a corporation, and is existing and in
good standing, under the laws of the State of Georgia.
(2) United has the corporate power to execute and deliver the Agreement
and Plan of Reorganization (the "Reorganization Agreement) and the Agreement and
Plan of Merger (the "Merger Agreement") to perform its obligations thereunder,
to own and use its Assets and to conduct its business.
(3) United has duly authorized the execution and delivery of the
Reorganization Agreement and the Merger Agreement and all performance by United
thereunder, and has duly executed and delivered the Reorganization Agreement and
Merger Agreement:
(4) No consent, approval, authorization or other action filed by, or
filing with, any governmental authority of the United States or the State of
Georgia is required for United's execution and delivery of the Reorganization
Agreement and the Merger Agreement and consummation of the Transaction, which
consent, approval or authorization has not been previously received.
(5) The Reorganization Agreement and the Merger Agreement are
enforceable against United.
(6) The shares of United Stock to be issued upon consummation of the
Merger have been duly authorized and upon issuance as contemplated in the Merger
Agreement, will be validly issued, fully paid and non-assessable.
May 4, 2000
United Community Banks, Inc.
Post Office Box 398
59 Highway 515
Blairsville, Georgia 30512
Re: United Community Banks, Inc.
Registration Statement on Form S-3
Gentlemen:
At your request, we have examined the Registration Statement on Form
S-3 filed by United Community Banks, Inc. (the "Company"), a Georgia
corporation, with the Securities and Exchange Commission with respect to the
registration under the Securities Act of 1933, as amended, of a minimum of
350,000 shares and a maximum of 450,000 shares of common stock, par value $1.00
per share, of the Company (the "Common Stock"), to be sold to the public.
As your counsel, and in connection with the preparation of the
Registration Statement, we have examined the originals or copies of such
documents, corporate records, certificates of public officials, officers of the
Company and other instruments related to the authorization and issuance of the
common stock as we deemed relevant or necessary for the opinions expressed
herein. Based upon the foregoing, it is our opinion that the shares of common
stock to be issued and sold by the Company to the public will be, upon issuance,
sale and delivery in the manner and under the terms and conditions described in
the Registration Statement, validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name in the "Legal
Matters" section of the Registration Statement, including the Prospectus
constituting a part thereof, and any amendments thereto.
Very truly yours,
KILPATRICK STOCKTON LLP
By: /s/ Richard R. Cheatham
Richard R. Cheatham,
a Partner
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 25, 2000, except for note 20 as to
which the date is March 3, 2000, accompanying the financial statements of United
Community Banks, Inc. and Subsidiaries incorporated by reference in the
Registration Statement on Form S-3 and Prospectus. We consent to the
incorporation by reference of the aforementioned report in the Registration
Statement on Form S-3 and Prospectus, and to the use of our name as it appears
under the caption "Experts".
/s/ Porter Keadle Moore, LLP
Atlanta, Georgia
May 4, 2000