<PAGE> 1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE COLONIAL BANCGROUP, INC.
AND
FFLC BANCORP, INC.
DATED AS OF
JANUARY 14, 2005
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S>
<C>
CAPTION
PAGE
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ARTICLE 1 NAME
1.1
Name............................................................................................1
ARTICLE 2 -- MERGER -- TERMS AND
CONDITIONS
2.1 Applicable
Law..................................................................................1
2.2 Corporate
Existence.............................................................................1
2.3 Articles
of Incorporation and
Bylaws............................................................2
2.4 Resulting
Corporation's Officers and
Board......................................................2
2.5
Shareholder
Approval............................................................................2
2.6 Further
Acts....................................................................................2
2.7 Effective
Date and
Closing......................................................................2
2.8 Merger of
Subsidiary
Bank.......................................................................3
ARTICLE 3 -- CONVERSION OF ACQUIRED
CORPORATION STOCK
3.1 Conversion
of Acquired Corporation
Stock........................................................3
3.2 Fractional
Shares...............................................................................5
3.3
Adjustments.....................................................................................5
3.4 BancGroup
Stock.................................................................................5
3.5 Dissenting
Rights...............................................................................5
3.6 Election and
Exchange
Procedures................................................................5
3.7 Exchange
Procedures.............................................................................6
ARTICLE 4 -- REPRESENTATIONS, WARRANTIES
AND
COVENANTS OF BANCGROUP
4.1
Organization...................................................................................10
4.2 Capital
Stock..................................................................................10
4.3 Financial
Statements;
Taxes....................................................................10
4.4 No
Conflict with Other
Instrument..............................................................12
4.5 Absence of
Material Adverse
Change.............................................................12
4.6 Approval
of
Agreement..........................................................................12
4.7 Tax
Treatment..................................................................................12
4.8 Title and
Related
Matters......................................................................12
4.9
Subsidiaries...................................................................................12
4.10
Contracts......................................................................................13
4.11
Litigation.....................................................................................13
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4.12
Compliance.....................................................................................13
4.13
Registration
Statement.........................................................................13
4.14
SEC Filings
...................................................................................14
4.15
Form
S-4.......................................................................................14
4.16
Brokers........................................................................................14
4.17
Government
Authorization.......................................................................14
4.18
Absence of Regulatory
Communications...........................................................14
4.19
Disclosure.....................................................................................15
ARTICLE 5 -- REPRESENTATIONS, WARRANTIES
AND
COVENANTS OF ACQUIRED CORPORATION
5.1
Organization...................................................................................15
5.2 Capital
Stock..................................................................................15
5.3
Subsidiaries...................................................................................16
5.4 Financial
Statements;
Taxes....................................................................16
5.5 Absence of
Certain Changes or
Events...........................................................17
5.6 Title and
Related
Matters......................................................................19
5.7
Commitments....................................................................................20
5.8 Charter
and
Bylaws.............................................................................20
5.9
Litigation.....................................................................................20
5.10
Material Contract
Defaults.....................................................................20
5.11
No Conflict with Other
Instrument..............................................................21
5.12
Governmental
Authorization.....................................................................21
5.13 Absence of Regulatory
Communications...........................................................21
5.14
Absence of Material Adverse
Change.............................................................21
5.15
Insurance......................................................................................21
5.16
Pension and Employee Benefit
Plans.............................................................22
5.17
Buy-Sell
Agreements............................................................................22
5.18
Brokers........................................................................................22
5.19
Approval of
Agreements.........................................................................22
5.20
Disclosure.....................................................................................22
5.21
Registration
Statement.........................................................................23
5.22
Loans; Adequacy of Allowance for Loan
Losses...................................................23
5.23
Environmental
Matters..........................................................................23
5.24
Collective
Bargaining..........................................................................24
5.25
Labor
Disputes.................................................................................24
5.26
Derivative
Contracts...........................................................................24
5.27
SEC
Filings....................................................................................24
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ARTICLE 6 -- ADDITIONAL COVENANTS
6.1 Additional
Covenants of
BancGroup..............................................................24
6.2 Additional
Covenants of Acquired Corporation
..................................................28
ARTICLE 7 -- MUTUAL COVENANTS AND
AGREEMENTS
7.1 Best
Efforts;
Cooperation......................................................................31
7.2 Press
Release..................................................................................32
7.3 Mutual
Disclosure..............................................................................32
7.4 Access to
Properties and
Records...............................................................32
7.5 Notice of
Adverse
Changes......................................................................32
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF
ALL PARTIES
8.1 Approval
by
Shareholders.......................................................................33
8.2 Regulatory
Authority
Approval..................................................................33
8.3
Litigation.....................................................................................33
8.4
Registration
Statement.........................................................................33
8.5 Tax
Opinion....................................................................................34
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF
ACQUIRED CORPORATION
9.1
Representations and
Warranties.................................................................34
9.2
Performance of Obligations of
BancGroup........................................................35
9.3 Closing
Certificate............................................................................35
9.4 Opinion of
Counsel.............................................................................35
9.5 NYSE
Listing...................................................................................35
9.6 Other
Matters..................................................................................35
9.7 Material
Events................................................................................35
9.8 Fairness
Opinion...............................................................................36
9.9 Merger
Consideration...........................................................................36
ARTICLE 10 -- CONDITIONS TO OBLIGATIONS OF
BANCGROUP
10.1
Representations and
Warranties.................................................................36
10.2
Performance of Obligations of the Acquired
Corporation.........................................36
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10.3
Closing
Certificate............................................................................36
10.4
Opinion of
Counsel.............................................................................37
10.5
Controlling
Shareholders.......................................................................37
10.6
Other
Matters..................................................................................37
10.7
Dissenters.....................................................................................37
10.8
Material
Events................................................................................37
10.9
Landlord's
Consents............................................................................38
ARTICLE 11 -- TERMINATION OF
REPRESENTATIONS
AND
WARRANTIES...................................................................................38
ARTICLE 12 --
NOTICES............................................................................................38
ARTICLE 13 -- AMENDMENT OR TERMINATION
13.1
Amendment......................................................................................39
13.2
Termination....................................................................................39
13.3
Damages
.......................................................................................40
ARTICLE 14 --
DEFINITIONS........................................................................................40
ARTICLE 15 -- MISCELLANEOUS
15.1
Expenses.......................................................................................46
15.2
Benefit and
Assignment.........................................................................46
15.3
Governing
Law..................................................................................47
15.4
Counterparts...................................................................................47
15.5
Headings.......................................................................................47
15.6
Severability...................................................................................47
15.7
Construction...................................................................................47
15.8
Return of
Information..........................................................................47
15.9
Equitable
Remedies.............................................................................47
15.10
Attorneys'
Fees................................................................................48
15.11 No
Waiver......................................................................................48
15.12
Remedies
Cumulative............................................................................48
15.13
Entire
Contract................................................................................48
Exhibit
A...............................................................................................50
Exhibit
B...............................................................................................55
Exhibit
C...............................................................................................60
</TABLE>
iv
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of
this
the 14th day of January, 2005, by and
between FFLC BANCORP, INC. ("Acquired
Corporation"), a Delaware corporation, and
THE COLONIAL BANCGROUP, INC.
("BancGroup"), a Delaware corporation.
WITNESSETH
WHEREAS, Acquired Corporation operates as a savings and loan
holding
company for its wholly owned subsidiary,
First Federal Savings Bank of Lake
County (referred to herein as the "Bank"),
with its principal office in
Leesburg, Florida; and
WHEREAS, BancGroup is a bank holding company with a Subsidiary
bank,
Colonial Bank, N.A., operating in Alabama,
Florida, Georgia, Nevada, Tennessee
and Texas; and
WHEREAS, Acquired Corporation wishes to merge with BancGroup;
and
WHEREAS, it is the intention of BancGroup and Acquired Corporation
that
such Merger shall qualify for federal
income tax purposes as a "reorganization"
within the meaning of section 368(a) of the
Code, as defined herein;
NOW, THEREFORE, in consideration of the mutual covenants
contained
herein, the Parties hereto agree as
follows:
ARTICLE 1
NAME
1.1 NAME. The
name of the
corporation resulting
from the Merger
----
shall be "The Colonial BancGroup, Inc."
ARTICLE 2
MERGER -- TERMS AND CONDITIONS
2.1 APPLICABLE LAW. On
the Effective Date, Acquired Corporation shall
--------------
be merged with and into BancGroup (herein
referred to as the "Resulting
Corporation" whenever reference is made to
it as of the time of merger or
thereafter). The Merger shall be undertaken
pursuant to the provisions of and
with the effect provided in the Delaware
General Corporation Law (the "DGCL").
The offices and facilities of Acquired
Corporation and of BancGroup shall become
the offices and facilities of the Resulting
Corporation.
2.2 CORPORATE
EXISTENCE. On the Effective Date, the corporate existence
-------------------
of Acquired Corporation and of BancGroup
shall, as provided in the DGCL, be
merged into and continued in the Resulting
Corporation, and the Resulting
Corporation shall be deemed to be the same
corporation as Acquired Corporation
and BancGroup. All rights, franchises and
interests of Acquired Corporation and
1
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BancGroup, respectively, in and to every
type of property (real, personal and
mixed) and choses in action shall be
transferred to and vested in the Resulting
Corporation by virtue of the Merger without
any deed or other transfer. The
Resulting Corporation on the Effective
Date, and without any order or other
action on the part of any court or
otherwise, shall hold and enjoy all rights of
property, franchises and interests,
including appointments, designations and
nominations and all other rights and
interests as trustee, executor,
administrator, transfer agent and registrar
of stocks and bonds, guardian of
estates, assignee, and receiver and in
every other fiduciary capacity and in
every agency, and capacity, in the same
manner and to the same extent as such
rights, franchises and interests were held
or enjoyed by Acquired Corporation
and BancGroup, respectively, on the
Effective Date.
2.3 ARTICLES OF
INCORPORATION AND BYLAWS. On the Effective Date, the
------------------------------------
certificate of incorporation and bylaws of
the Resulting Corporation shall be
the restated certificate of incorporation
and bylaws of BancGroup as they exist
immediately before the Effective Date.
2.4 RESULTING
CORPORATION'S OFFICERS AND BOARD. The board of directors
------------------------------------------
and the officers of the Resulting
Corporation on the Effective Date shall
consist of those persons serving in such
capacities of BancGroup as of the
Effective Date.
2.5 SHAREHOLDER
APPROVAL. This Agreement shall be submitted to the
--------------------
shareholders of Acquired Corporation at the
Shareholders' Meeting to be held as
promptly as practicable consistent with the
satisfaction of the conditions set
forth in this Agreement. Upon approval by
the requisite vote of the shareholders
of Acquired Corporation as required by
applicable Law, and the satisfaction of
such other conditions as set forth herein,
the Merger shall become effective as
soon as practicable thereafter in the
manner provided in section 2.7 hereof.
2.6 FURTHER ACTS. If,
at any time after the Effective Date, the
------------
Resulting Corporation shall consider or be
advised that any further assignments
or assurances in law or any other acts are
necessary or desirable (i) to vest,
perfect, confirm or record, in the
Resulting Corporation, title to and
possession of any property or right of
Acquired Corporation or BancGroup,
acquired as a result of the Merger, or (ii)
otherwise to carry out the purposes
of the Merger and this Agreement, BancGroup
and its officers and directors shall
execute and deliver all such proper deeds,
assignments and assurances in law and
do all acts necessary or proper to vest,
perfect or confirm title to, and
possession of, such property or rights in
the Resulting Corporation and
otherwise to carry out the purposes of this
Agreement; and the proper officers
and directors of the Resulting Corporation
are fully authorized in the name of
Acquired Corporation or BancGroup, or
otherwise, to take any and all such
action.
2.7 EFFECTIVE DATE AND
CLOSING. Subject to the terms of all
--------------------------
requirements of Law and the conditions
specified in this Agreement, the Merger
shall become effective on the date
specified in the Certificate of Merger to be
issued by the Secretary of State of the
State of Delaware (such time being
herein called the "Effective Date").
Assuming all other conditions stated in
this Agreement have been or will be
satisfied as of the Closing, the Closing
shall take place at the offices of
BancGroup, in Montgomery, Alabama, at 2:00
p.m. on a date specified by BancGroup that
shall be as soon as reasonably
2
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practicable after the later to occur of the
Shareholder Meeting or all required
regulatory approvals under Section 8.2, or
at such other place and time that the
Parties may mutually agree.
2.8 MERGER OF
SUBSIDIARY BANK. BancGroup and Acquired Corporation
-------------------------
anticipate the possibility that on or after
the Effective Date, the Bank will
merge with and into Colonial Bank, N.A.,
BancGroup's Subsidiary bank (the "Bank
Merger"). The exact timing and structure of
the Bank Merger have not been
finalized at this time, and BancGroup in
its discretion will determine if such
Bank Merger shall proceed and will finalize
such timing and structure at a later
date. Acquired Corporation will cooperate
with BancGroup in consummating the
Bank Merger, including the calling of any
special meetings of the board of
directors of the Bank and the filing of any
regulatory applications.
ARTICLE 3
CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 CONVERSION
OF ACQUIRED CORPORATION STOCK.
----------------------------------------
(a) (i) On the Effective Date, and subject to sections
3.1(a)(ii), 3.1(a)(iii), 3.1(a)(iv), 3.3
and 3.5, each share of common stock of
Acquired Corporation outstanding and held
by Acquired Corporation's shareholders
("Acquired Corporation Stock"), shall be
converted into the right to receive
shares of BancGroup Common Stock and/or
cash (the "Merger Consideration") as
specified below. Each outstanding share of
Acquired Corporation Stock on the
Effective Date shall be converted into the
right to receive either (A) 2.0
shares (subject to section 3.3 hereof) of
BancGroup Common Stock or (B) $42.00
in cash in accordance with sections
3.1(a)(ii), (iii) and (iv) of this
Agreement.
(ii) A holder of Acquired Corporation Stock may, prior to the
Shareholders Meeting, file a written
election form (an "Election Form") with the
Acquired Corporation specifying whether
such holder (an "Electing Shareholder")
prefers to have the Merger Consideration
paid to such holder in shares of
BancGroup Common Stock only, cash only, or
any proportion of cash and whole
share of BancGroup Common Stock that such
holder desires to receive, subject to
the limitation on cash consideration in
sections 3.1(a)(iii) and (iv) of this
Agreement.
(iii) Notwithstanding section 3.1(a)(ii) of this Agreement and
notwithstanding any elections made pursuant
to the Election Forms, the aggregate
amount of cash to be distributed in the
Merger (the "Maximum Cash Amount") shall
not be more than the amount of 35% of the
outstanding Acquired Corporation Stock
at the time of the Closing times $42
($79,501,819 assuming 5,408,287 shares of
Acquired Corporation Stock are outstanding
at the time of the Closing) even if
the aggregate amount of cash elected by
stockholders (the "Aggregate Cash
Amount") exceeds the Maximum Cash Amount.
If the Aggregate Cash Amount exceeds
the Maximum Cash Amount, the Merger
Consideration distributable to each holder
of Acquired Corporation Stock shall be
adjusted by taking the following steps:
(1) determine the amount by which the
Aggregate Cash Amount exceeds the Maximum
Cash Amount; (2) reduce the amount of cash
that each Electing Shareholder
electing cash will receive on a pro rata
basis until the Aggregate Cash Amount
is equal to the Maximum Cash Amount (the
aggregate amount of this reduction
shall be referred to as the "Excess Cash
Election"); (3) determine the number of
3
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shares of Acquired Corporation Stock that
each Acquired Corporation
Shareholder's pro rata portion of the
Excess Cash Election represents (which
will be the pro rata portion of the Excess
Cash Election divided by $42); (4)
increase such Electing Shareholder's stock
component of such Electing
Shareholder's Merger Consideration by 2.0
shares of BancGroup Common Stock for
each share of Acquired Corporation Stock
determined in step (3) above.
(iv) Elections made shall apply to all shares of record of
Acquired Corporation Stock held by a record
holder making the election. If an
Acquired Corporation shareholder does not
submit an Election Form, then such
holder will receive BancGroup Common Stock
and no cash as his or her Merger
Consideration. For purposes of this section
3.1(a), and in accordance with
section 3.6, cash to be paid to holders
exercising dissenter's rights of
appraisal under section 3.5 hereof shall be
included as part of the Merger
Consideration for determining the amount of
cash to be paid under section
3.1(a). Interest will not be paid on any
cash to be paid as part of the Merger
Consideration.
(b)(i) On the Effective Date, BancGroup shall assume all
Acquired Corporation Options outstanding,
and each such option shall cease to
represent a right to acquire Acquired
Corporation common stock and shall,
instead, represent the right to acquire
BancGroup Common Stock on substantially
the same terms applicable to the Acquired
Corporation Options except as
specified below in this section. The number
of shares of BancGroup Common Stock
to be issued pursuant to such options shall
equal the number of shares of
Acquired Corporation common stock subject
to such Acquired Corporation Options
multiplied by the Option Exchange Ratio
(defined below), provided that no
fractions of shares of BancGroup Common
Stock shall be issued and the number of
shares of BancGroup Common Stock to be
issued upon the exercise of Acquired
Corporation Options, if a fractional share
exists, shall equal the number of
whole shares obtained by rounding to the
nearest whole number, giving account to
such fraction, or by paying for such
fraction in cash, based upon a value of
$42.00 per share. The exercise price for
the acquisition of BancGroup Common
Stock shall be the exercise price for each
share of Acquired Corporation common
stock subject to such options divided by
the Option Exchange Ratio, adjusted
appropriately for any rounding to whole
shares that may be done. The Option
Exchange Ratio shall be 2.0 shares of
BancGroup Common Stock for each share of
Acquired Corporation Stock. It is intended
that the assumption by BancGroup of
the Acquired Corporation Options shall be
undertaken in a manner that will not
constitute a "modification" as defined in
Section 424 of the Code as to any
stock option which is an "incentive stock
option." Schedule 3.1(b) hereto sets
forth the names of all persons holding
Acquired Corporation Options, the number
of shares of Acquired Corporation common
stock subject to such options, the
exercise price and the expiration date of
such options.
(ii) BancGroup shall file at its expense a
registration statement with the SEC on Form
S-8 or such other appropriate form
(including the Form S-4 to be filed in
connection with the Merger) with respect
to the shares of BancGroup Common Stock to
be issued pursuant to such options
and shall use its reasonable best efforts
to maintain the effectiveness of such
registration statement for so long as such
options remain outstanding. Such
shares shall also be registered or
qualified for sale under the securities laws
of any state in which registration or
qualification is necessary.
(c) In lieu of the conversion specified in paragraph (b)(i) of
Section 3.1 of this Agreement, no later
than five days prior to the Effective
Date, each holder of outstanding Acquired
Corporation Options may provide
written notice to Acquired Corporation (in
form and substance reasonably
4
<PAGE> 10
satisfactory to BancGroup) that he or she
wishes to exchange his or her Acquired
Corporation Options, as of the Effective
Date, and, to receive an amount of cash
in exchange therefore. The amount of cash
to be received shall be determined by
calculating the difference between (i) the
number obtained by multiplying the
number of shares of Acquired Corporation
Stock issuable pursuant to his or her
Acquired Corporation Options times $42.00
less (ii) the number obtained by
multiplying the number of shares of
Acquired Corporation Stock issuable pursuant
to his or her Acquired Corporation Options
times the exercise price per share
(as determined pursuant to the applicable
stock option plan and stock option
agreement of the Acquired Corporation). In
the event that the exercise prices of
all Acquired Corporation Options are not
the same, the above calculation shall
be made for each series of options. The
amount of cash paid to Option holders
shall not be included in the Maximum Cash
Amount. Acquired Corporation shall
inform all holders of Acquired Corporation
Options of their ability to exchange
their options for cash as described in this
Section 3.1(c).
3.2 FRACTIONAL SHARES.
No fractional shares of BancGroup Common Stock
-----------------
shall be issued, and each holder of shares
of Acquired Corporation Stock having
a fractional interest arising upon the
conversion of such shares into shares of
BancGroup Common Stock shall, at the time
of surrender of the certificates
previously representing Acquired
Corporation Stock, be paid by BancGroup an
amount in cash equal to $42.00 per
share.
3.3 ADJUSTMENTS. In
the event that prior to the Effective Date
-----------
BancGroup Common Stock shall be changed
into a different number of shares or a
different class of shares by reason of any
recapitalization or reclassification,
stock dividend, combination, stock split,
or reverse stock split of the
BancGroup Common Stock, an appropriate and
proportionate adjustment shall be
made in the number of shares of BancGroup
Common Stock into which the Acquired
Corporation Stock shall be converted.
3.4 BANCGROUP STOCK.
The shares of Common Stock of BancGroup issued
---------------
and outstanding immediately before the
Effective Date shall continue to be
issued and outstanding shares of the
Resulting Corporation.
3.5 DISSENTING RIGHTS.
Any shareholder of Acquired Corporation who
-----------------
shall not have voted in favor of this
Agreement and who has complied with the
applicable procedures set forth in the
DGCL, relating to rights of dissenting
shareholders, shall be entitled to receive
payment for the fair value of his
Acquired Corporation Stock. If after the
Effective Date a dissenting shareholder
of Acquired Corporation fails to perfect,
or effectively withdraws or loses his
right to appraisal and payment for his
shares of Acquired Corporation Stock,
BancGroup shall issue and deliver the
consideration to which such holder of
shares of Acquired Corporation Stock is
entitled under Section 3.1 (without
interest) upon surrender by such holder of
the certificate or certificates
representing shares of Acquired Corporation
Stock held by him or her.
3.6 ELECTION AND
EXCHANGE PROCEDURES. Each holder of record of shares
--------------------------------
of the Acquired Corporation Common Stock
(other than Dissenting Shares)
("Holder") shall have the right, subject to
the limitations set forth in this
Article 3, to submit an election in
accordance with the following procedures:
5
<PAGE> 11
(a) Each Holder may specify in a request made in accordance with
the
provisions of this Section 3.6 (herein
called an "Election") (x) the number of
shares of Acquired Corporation Common Stock
owned by such Holder with respect to
which such Holder desires to make a Stock
Election and (y) the number of shares
of Acquired Corporation Common Stock owned
by such Holder with respect to which
such Holder desires to make a Cash
Election.
(b) BancGroup shall prepare a form reasonably acceptable to the
Acquired Corporation (the "Form of
Election") which shall be mailed to the
Acquired Corporation's stockholders
entitled to vote at the meeting of the
stockholders of the Acquired Corporation at
which the stockholders of the
Acquired Corporation consider and vote on
this Agreement (the "Acquired
Corporation Stockholders Meeting") so as to
permit the Acquired Corporation's
stockholders to exercise their right to
make an Election prior to the Election
Deadline.
(c) BancGroup shall make the Form of Election initially available
at
the time that the Proxy Statement (as
defined herein) is made available to the
stockholders of the Acquired Corporation,
to such stockholders, and shall use
all reasonable efforts to make available as
promptly as possible a Form of
Election to any stockholder of the Acquired
Corporation who requests such Form
of Election following the initial mailing
of the Forms of Election and prior to
the Election Deadline. In no event shall
the Form of Election be made available
less than twenty (20) days prior to the
Election Deadline.
(d) Any Election shall
have been made properly only if the Person
authorized to receive the Elections and to
act as Exchange Agent under this
Agreement, which Person shall be designated
by BancGroup and not reasonably
objected to by the Acquired Corporation
(the "Exchange Agent"), pursuant to an
agreement entered into prior to Closing and
not reasonably objected to by the
Acquired Corporation, shall have received,
by 5:00 p.m. local time in the city
in which the principal office of such
Exchange Agent is located, on the date of
the Election Deadline, a Form of Election
properly completed and signed and
accompanied by certificates of the shares
of Acquired Corporation Common Stock
(the "Company Stock Certificates") to which
such Form of Election relates or by
an appropriate customary guarantee of
delivery of such certificates, as set
forth in such Form of Election from a
member of any registered national
securities exchange or a commercial bank or
trust company in the United States;
provided, that such certificates are in
fact delivered to the Exchange Agent by
the time required in such guarantee of
delivery. Failure to deliver shares of
Acquired Corporation Common Stock covered
by such a guarantee of delivery within
the time set forth on such guarantee shall
be deemed to invalidate any otherwise
properly made Election, unless otherwise
determined by BancGroup, in its sole
discretion. As used herein, "Election
Deadline" means 5:00 p.m. on the date that
is the day prior to the date of the
Acquired Corporation Stockholder Meeting.
The Acquired Corporation and BancGroup
shall cooperate to issue a press release
reasonably satisfactory to each of them
announcing the date of the Election
Deadline not more than fifteen (15)
business days before and at least five (5)
Business Days prior to, the Election
Deadline.
6
<PAGE> 12
(e) Any Acquired Corporation stockholder may, at any time prior to
the
Election Deadline, change or revoke his or
her Election by written notice
received by the Exchange Agent prior to the
Election Deadline accompanied by a
properly completed and signed, revised Form
of Election. If BancGroup shall
determine in its reasonable discretion that
any Election is not properly made
with respect to any shares of Acquired
Corporation Common Stock, such Election
shall be deemed to be not in effect, and
the shares of Acquired Corporation
Common Stock covered by such Election
shall, for purposes hereof, be deemed to
be Non-Election Shares, unless a proper
Election is thereafter timely made.
(f) Any Acquired Corporation stockholder may, at any time prior to
the
Election Deadline, revoke his or her
Election by written notice received by the
Exchange Agent prior to the Election
Deadline or by withdrawal prior to the
Election Deadline of his or her Acquired
Corporation Stock Certificate, or of
the guarantee of delivery of such
certificates, previously deposited with the
Exchange Agent. All Elections shall be
revoked automatically if the Exchange
Agent is notified in writing by BancGroup
or the Acquired Corporation that this
Agreement has been terminated in accordance
with Article 13.
(g) If any portion of the Merger Consideration is to be paid to
a
Person other than the Person in whose name
an Acquired Corporation Stock
Certificate so surrendered is registered,
it shall be a condition to such
payment that such Acquired Corporation
Stock Certificate shall be properly
endorsed or otherwise be in proper form for
transfer and the Person requesting
such payment shall pay to the Exchange
Agent any transfer or other similar Taxes
required as a result of such payment to a
Person other than the registered
holder of such Acquired Corporation Stock
Certificate, or establish to the
reasonable satisfaction of the Exchange
Agent that such Tax has been paid or is
not payable. The Exchange Agent (or,
subsequent to the six month anniversary of
the Effective Time, BancGroup) shall be
entitled to deduct and withhold from the
Merger Consideration (including cash in
lieu of fractional shares of BancGroup
Common Stock) otherwise payable pursuant to
this Agreement to any holder of
Acquired Corporation Common Stock such
amounts as the Exchange Agent or
BancGroup, as the case may be, is required
to deduct and withhold under the
Code, or any provision of state, local or
foreign Tax law, with respect to the
making of such payment. To the extent the
amounts are so withheld by the
Exchange Agent or BancGroup, as the case
may be, such withheld amounts shall be
treated for all purposes of this Agreement
as having been paid to the holder of
shares of Acquired Corporation Common Stock
in respect of whom such deduction
and withholding was made by the Exchange
Agent or BancGroup, as the case may be.
(h) BancGroup, in the exercise of its reasonable discretion, shall
have
the right to make all determinations, not
inconsistent with the terms of this
Agreement, governing (A) the validity of
the Forms of Election and compliance by
any Acquired Corporation Stockholder with
the Election procedures set forth
herein, (B) the manner and extent to which
Elections are to be taken into
account in making the determinations
prescribed by this Article 3, (C) the
issuance and delivery of BancGroup Stock
Certificates into which shares of
Acquired Corporation Common Stock are
converted in the Merger and (D) the method
of payment of cash for shares of Acquired
Corporation Common Stock converted
into the right to receive the Cash
Consideration and cash in lieu of fractional
shares of BancGroup Common Stock where the
holder of the applicable Acquired
Corporation Stock Certificate has no right
to receive whole shares of BancGroup
Common Stock.
7
<PAGE> 13
(i) Upon surrender to the Exchange Agent of its Acquired
Corporation
Stock Certificate or Acquired Corporation
Stock Certificates, accompanied by a
properly completed Form of Election a
Holder of Acquired Corporation Common
Stock will be entitled to receive promptly
after the Effective Time the Merger
Consideration (elected or deemed elected by
it) in respect of the shares of
Acquired Corporation Common Stock
represented by its Acquired Corporation Stock
Certificate. Until so surrendered, each
such Acquired Corporation Stock
Certificate shall represent after the
Effective Time, for all purposes, only the
right to receive the Merger Consideration
and any cash in lieu of fractional
shares of BancGroup Common Stock to be
issued or paid in consideration therefor
upon surrender of such certificate in
accordance with Section 3.1 and any
dividends or distributions to which such
holder is entitled under this
Agreement.
3.7 EXCHANGE
PROCEDURES.
-------------------
(a) Exchange
Agent. Prior to the Effective Time, BancGroup shall
--------------
appoint an exchange agent (the "Exchange
Agent") for the purpose of exchanging
certificates (other than Dissenting Shares)
which immediately prior to the
Effective Time evidenced shares of Acquired
Corporation Common Stock (the
"Acquired Corporation Certificates") for
the Merger Consideration.
(b) Exchange Fund.
BancGroup or the Resulting Corporation, as the case
-------------
may be, agrees to make available to the
Exchange Agent from time to time as
needed, certificates representing the
BancGroup Common Stock, cash sufficient to
pay the Cash Consideration, cash in lieu of
fractional shares and any dividends
and other distributions. Any cash and
certificates of BancGroup Common Stock
deposited with the Exchange Agent shall
hereinafter be referred to as the
"Exchange Fund."
(c) Exchange
Procedures. Within five (5) Business Days after the
-------------------
Effective Time, the Resulting Corporation
shall cause the Exchange Agent to mail
to each holder of an Acquired Corporation
Certificate: (i) a letter of
transmittal ("Letter of Transmittal") which
shall specify that delivery shall be
effected and risk of loss and title to the
Acquired Corporation Certificates
shall pass only upon delivery of the
Acquired Corporation Certificates to the
Exchange Agent and which Letter of
Transmittal shall be in customary form and
have such other provisions as BancGroup or
the Resulting Corporation, as the
case may be, may reasonably specify and
(ii) instructions for effecting the
surrender of such Acquired Corporation
Certificates in exchange for the Merger
Consideration. Upon surrender of an
Acquired Corporation Certificate to the
Exchange Agent together with such Letter of
Transmittal, duly executed and
completed in accordance with the
instructions thereto, and such other documents
as may reasonably be required by the
Exchange Agent, the holder of such Acquired
Corporation Certificate shall be entitled
to receive in exchange therefor (i)
one or more shares of BancGroup Common
Stock (which may be in uncertificated
book-entry form unless a physical
certificate is requested) representing, in the
aggregate, the whole number of shares that
such holder has the right to receive
pursuant to this Agreement and (ii) a check
for any cash portion of the Merger
Consideration and for the cash that such
holder has the right to receive
pursuant to this Agreement, including cash
in lieu of any fractional shares of
BancGroup Common Stock and dividends and
other distributions required or
permitted by this Agreement. No interest
will be paid or will accrue on any cash
payable for the cash portion of the Merger
Consideration. In the event of a
transfer of ownership of Acquired
Corporation Common Stock which is not
registered in the transfer records of
Acquired Corporation, one or more shares
of BancGroup Common Stock evidencing, in
the aggregate, the proper number of
shares of BancGroup Common Stock and a
check for the cash portion of the Merger
Consideration, the cash in lieu of any
fractional shares of BancGroup Common
Stock and any dividends or other
distributions to which such holder is entitled
pursuant to this Agreement, may be issued
with respect to such Acquired
Corporation Common Stock to such a
transferee if the Acquired Corporation
Certificate representing such shares of
Acquired Corporation Common Stock is
presented to the Exchange Agent,
accompanied by all documents required to
evidence and effect such transfer and to
evidence that any applicable stock
transfer taxes have been paid.
8
<PAGE> 14
(d) No Further
Ownership Rights in Acquired Corporation Common Stock.
----------------------------------------------------------------
All shares of BancGroup Common Stock issued
and cash paid upon conversion of
shares of Acquired Corporation Common Stock
in accordance with the terms of this
Article 3 (including any cash paid pursuant
to this Agreement) shall be deemed
to have been issued or paid in full
satisfaction of all rights pertaining to the
shares of Acquired Corporation Common
Stock. Until surrendered as contemplated
by this Section 3.7, each Acquired
Corporation Certificate shall be deemed at
any time after the Effective Time to
represent only the right to receive upon
such surrender the Merger Consideration
(and any cash to be paid pursuant to
this Agreement).
(e) Termination of
Exchange Fund. Any portion of the Exchange Fund
----------------------------
which remains undistributed to the holders
of the Acquired Corporation
Certificate six months after the Effective
Time shall be delivered to the
Resulting Corporation and any holders of
the Acquired Corporation Certificates
who have not theretofore complied with this
Section 3.7 shall thereafter look
only to the Resulting Corporation for the
Merger Consideration with respect to
the shares of Acquired Corporation Common
Stock formerly represented thereby to
which such holders are entitled pursuant to
this Agreement, any cash in lieu of
fractional shares of BancGroup Common Stock
to which such holders are entitled
pursuant to this Agreement and any
dividends or distributions with respect to
shares of BancGroup Common Stock to which
such holders are entitled pursuant to
this Agreement.
(f) No Liability.
Neither BancGroup, Acquired Corporation, the
------------
Resulting Corporation nor the Exchange
Agent shall be liable to any Person in
respect of any Merger Consideration from
the Exchange Fund delivered to a public
official pursuant to any applicable
abandoned property, escheat or similar law.
(g) Lost Certificates.
If any Acquired Corporation Certificate shall
-----------------
have been lost, stolen, destroyed, upon the
making of an affidavit of that fact
by the Person claiming such Acquired
Corporation Certificate to be lost, stolen,
or destroyed and, if required by the
Resulting Corporation that posting by such
Person of a bond in such reasonable amount
as the Resulting Corporation may
direct as indemnity against any claim that
may be made against it with respect
to such Certificate, the Exchange Agent
will deliver in exchange for such lost,
stolen or destroyed Acquired Corporation
Certificate the applicable Merger
Consideration with respect to the shares of
Acquired Corporation Common Stock
formerly represented thereby, any cash in
lieu of fractional shares of BancGroup
Common Stock, and unpaid dividends and
distributions on shares of BancGroup
Common Stock deliverable in respect
thereof, in each case, pursuant to this
Agreement.
9
<PAGE> 15
(h) Stock Transfer
Books. The stock transfer books of the Acquired
--------------------
Corporation shall be closed immediately
upon the Effective Time and there shall
be no further registration of transfers of
shares of Acquired Corporation Common
Stock thereafter on the records of Acquired
Corporation. On or after the
Effective Time, any Acquired Corporation
Certificates presented to the Exchange
Agent or the Resulting Corporation for any
reason shall be converted into the
Merger Consideration with respect to the
shares of Acquired Corporation Common
Stock formerly represented thereby, any
cash in lieu of fractional shares of
BancGroup Common Stock to which the holders
thereof are entitled pursuant to
this Agreement and any dividends or other
distributions to which the holders
thereof are entitled pursuant to this
Agreement.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP
BancGroup represents, warrants and covenants to and with
Acquired
Corporation as follows:
4.1 ORGANIZATION.
BancGroup is a corporation duly organized, validly
------------
existing and in good standing under the
Laws of the State of Delaware. BancGroup
has the necessary corporate powers to carry
on its business as presently
conducted and is qualified to do business
in every jurisdiction in which the
character and location of the Assets owned
by it or the nature of the business
transacted by it requires qualification or
in which the failure to qualify
could, individually or in the aggregate,
have a Material Adverse Effect.
BancGroup is duly registered as a financial
holding company under the Bank
Holding Company Act of 1956, as
amended.
4.2 CAPITAL
STOCK.
-------------
(a) The authorized capital stock of BancGroup consists of (i)
200,000,000 shares of Common Stock, $2.50
par value per share, of which as of
September 30, 2004, 133,617,232 shares were
validly issued and outstanding,
fully paid and nonassessable and are not
subject to preemptive rights (not
counting additional shares subject to issue
pursuant to stock option and other
plans and convertible debentures), and (ii)
1,000,000 shares of Preference
Stock, $2.50 par value per share, none of
which are issued and outstanding. The
shares of BancGroup Common Stock to be
issued in the Merger are duly authorized
and, when so issued, will be validly issued
and outstanding, fully paid and
nonassessable, will have been registered
under the 1933 Act, and will have been
registered or qualified under the
securities laws of all jurisdictions in which
such registration or qualification is
required, based upon information provided
by Acquired Corporation.
(b) The authorized capital stock of each Subsidiary of
BancGroup is validly issued and
outstanding, fully paid and nonassessable, and
each Significant Subsidiary (as defined in
Section 1-02 of Regulation S-X under
the Securities Act of 1933, as amended) is
wholly owned, directly or indirectly,
by BancGroup.
4.3 FINANCIAL
STATEMENTS;
TAXES. (a) BancGroup
has delivered to
-----------------------------
Acquired Corporation copies of the
following financial statements of BancGroup:
10
<PAGE> 16
(i) Consolidated balance sheets as of December 31,
2002, December 31, 2003, and September 30,
2004;
(ii) Consolidated statements of operations for each
of the three years ended December 31, 2001,
2002 and 2003, and for the nine
months ended September 30, 2004;
(iii) Consolidated
statements of cash flows for each
of the three years ended December 31, 2001,
2002 and 2003, and for the nine
months ended September 30, 2004; and
(iv) Consolidated statements of changes in
shareholders' equity for the three years
ended December 31, 2001, 2002 and 2003,
and for the nine months ended September 30,
2004.
All such financial statements are in all
material respects in accordance with
the books and records of BancGroup and have
been prepared in accordance with
GAAP applied on a consistent basis
throughout the periods indicated unless
otherwise stated, all as more particularly
set forth in the notes to such
statements. Each of the consolidated
balance sheets presents fairly as of its
date the consolidated financial condition
of BancGroup and its Subsidiaries.
Except as and to the extent reflected or
reserved against in such balance sheets
(including the notes thereto), BancGroup
did not have, as of the dates of such
balance sheets, any material Liabilities or
obligations (absolute or contingent)
of a nature customarily reflected in a
balance sheet or the notes thereto. The
consolidated statements of operations, cash
flows and changes in shareholders'
equity present fairly the results of
operations and changes in financial
position of BancGroup and its Subsidiaries
for the periods indicated. The
foregoing representations, insofar as they
relate to the unaudited interim
financial statements of BancGroup for the
nine months ended September 30, 2004,
are subject in all cases to normal
recurring year-end adjustments and the
omission of footnote disclosure.
(b) All Tax returns required to be filed by or on behalf of
BancGroup have been timely filed (or
requests for extensions therefore have been
timely filed and granted and have not
expired), and all returns filed are
complete and accurate in all material
respects. All Taxes shown on these returns
to be due and all additional assessments
received have been paid. The amounts
recorded for Taxes on the balance sheets
provided under section 4.3(a) are, to
the Knowledge of BancGroup, sufficient in
all material respects for the payment
of all unpaid federal, state, county,
local, foreign or other Taxes (including
any interest or penalties) of BancGroup
accrued for or applicable to the period
ended on the dates thereof, and all years
and periods prior thereto and for
which BancGroup may at such dates have been
liable in its own right or as
transferee of the Assets of, or as
successor to, any other corporation or other
party. No audit, examination or
investigation is presently being conducted or,
to the Knowledge of BancGroup, threatened
by any taxing authority which is
likely to result in a material Tax
Liability, no material unpaid Tax
deficiencies or additional liabilities of
any sort have been proposed by any
governmental representative and no
agreements for extension of time for the
assessment of any material amount of Tax
have been entered into by or on behalf
of BancGroup. BancGroup has withheld from
its employees (and timely paid to the
appropriate governmental entity) proper and
accurate amounts for all periods in
material compliance with all Tax
withholding provisions of applicable federal,
state, foreign and local Laws (including
without limitation, income, social
security and employment Tax withholding for
all types of compensation).
11
<PAGE> 17
4.4 NO CONFLICT WITH
OTHER INSTRUMENT. The consummation of the
---------------------------------
transactions contemplated by this Agreement
will not result in a breach of or
constitute a Default (without regard to the
giving of notice or the passage of
time) under any material Contract,
indenture, mortgage, deed of trust or other
material agreement or instrument to which
BancGroup or any of its Subsidiaries
is a party or by which they or their Assets
may be bound; will not conflict with
any provision of the restated certificate
of incorporation or bylaws of
BancGroup or the articles of incorporation
or bylaws of any of its Subsidiaries;
and will not violate any provision of any
Law, regulation, judgment or decree
binding on them or any of their Assets.
4.5 ABSENCE OF
MATERIAL ADVERSE CHANGE. Since the date of the most
----------------------------------
recent balance sheet provided under section
4.3(a)(i) above, there have been no
events, changes or occurrences which have
had or are reasonably likely to have,
individually or in the aggregate, a
Material Adverse Effect on BancGroup.
4.6 APPROVAL OF
AGREEMENT. The board of directors of BancGroup, or its
---------------------
Executive Committee, has approved this
Agreement and the transactions
contemplated by it and has authorized the
execution and delivery by BancGroup of
this Agreement. This Agreement constitutes
the legal, valid and binding
obligation of BancGroup, enforceable
against it in accordance with its terms.
Approval of this Agreement by the
stockholders of BancGroup is not required by
applicable Law. Subject to the matters
referred to in section 8.2, BancGroup has
full power, authority and legal right to
enter into this Agreement and to
consummate the transactions contemplated by
this Agreement. BancGroup has no
Knowledge of any fact or circumstance under
which the appropriate regulatory
approvals required by section 8.2 will not
be granted without the imposition of
material conditions or material delays.
4.7 TAX TREATMENT.
BancGroup has no present plan to sell or otherwise
-------------
dispose of any of the Assets of Acquired
Corporation, subsequent to the Merger,
and BancGroup intends to continue the
historic business of Acquired Corporation.
4.8 TITLE AND RELATED
MATTERS. BancGroup has good and marketable title
-------------------------
to all the properties, interests in
properties and Assets, real and personal,
that are material to the business of
BancGroup, reflected in the most recent
balance sheet referred to in section
4.3(a), or acquired after the date of such
balance sheet (except properties, interests
and Assets sold or otherwise
disposed of since such date, in the
ordinary course of business), free and clear
of all mortgages, Liens, pledges, charges
or encumbrances except (i) mortgages
and other encumbrances referred to in the
notes of such balance sheet, (ii)
liens for current Taxes not yet due and
payable and (iii) such imperfections of
title and easements as do not materially
detract from or interfere with the
present use of the properties subject
thereto or affected thereby, or otherwise
materially impair present business
operations at such properties. To the
Knowledge of BancGroup, the material
structures and equipment of BancGroup
comply in all material respects with the
requirements of all applicable Laws.
4.9 SUBSIDIARIES. Each
Subsidiary of BancGroup has been duly
------------
incorporated and is validly existing as a
corporation in good standing under the
Laws of the jurisdiction of its
incorporation and each Subsidiary has been duly
12
<PAGE> 18
qualified as a foreign corporation to
transact business and is in good standing
under the Laws of each other jurisdiction
in which it owns or leases properties,
or conducts any business so as to require
such qualification and in which the
failure to be duly qualified could have a
Material Adverse Effect upon BancGroup
and its Subsidiaries considered as one
enterprise; BancGroup's banking
subsidiary has its deposits fully insured
by the Federal Deposit Insurance
Corporation to the extent provided by the
Federal Deposit Insurance Act; and the
businesses of the non-bank Subsidiaries of
BancGroup are permitted businesses of
registered bank holding companies that are
financial holding companies.
4.10 CONTRACTS.
Neither BancGroup nor any of its Subsidiaries is in
---------
violation of its respective certificate of
incorporation or bylaws or in Default
in the performance or observance of any
material obligation, agreement, covenant
or condition contained in any Contract,
indenture, mortgage, loan agreement,
note, lease or other instrument to which it
is a party or by which it or its
property may be bound except where such
violation could not be reasonably
expected to have a Material Adverse Effect
on BancGroup.
4.11 LITIGATION.
Except as disclosed in or reserved for in BancGroup's
----------
financial statements, there is no
Litigation before or by any court or Agency,
domestic or foreign, now pending, or, to
the Knowledge of BancGroup, threatened
against or affecting BancGroup or any of
its Subsidiaries (nor is BancGroup
aware of any facts which could give rise to
any such Litigation) which is
required to be disclosed in the
Registration Statement (other than as disclosed
therein), or which is likely to have any
Material Adverse Effect or prospective
Material Adverse Effect, or which is likely
to materially and adversely affect
the properties or Assets thereof or which
is likely to materially affect or
delay the consummation of the transactions
contemplated by this Agreement; all
pending legal or governmental proceedings
to which BancGroup or any Subsidiary
is a party or of which any of their
properties is the subject which are not
described in the Registration Statement,
including ordinary routine litigation
incidental to the business, are, considered
in the aggregate, not material; and
neither BancGroup nor any of its
Subsidiaries have any contingent obligations
which could be considered material to
BancGroup and its Subsidiaries considered
as one enterprise which are not disclosed
in the Registration Statement as it
may be amended or supplemented.
4.12 COMPLIANCE.
BancGroup and its Subsidiaries, in the conduct of
----------
their businesses, are to the Knowledge of
BancGroup, in compliance with all
federal, state or local Laws applicable to
the conduct of their businesses
except where non-compliance could not be
reasonably expected to have a Material
Adverse Effect on BancGroup.
4.13 REGISTRATION
STATEMENT. At the time the Registration Statement
----------------------
becomes effective and at the time of the
Shareholders' Meeting, the Registration
Statement, including the Proxy Statement
which shall constitute a part thereof,
will comply in all material respects with
the requirements of the 1933 Act and
the rules and regulations thereunder, will
not contain an untrue statement of a
material fact or omit to state a material
fact necessary in order to make the
statements therein, in the light of the
circumstances under which they were
made, not misleading; provided, however,
that the representations and warranties
in this subsection shall not apply to
statements in or omissions from the Proxy
Statement made in reliance upon and in
conformity with information furnished in
writing to BancGroup by Acquired
Corporation or any of its representatives
13
<PAGE> 19
expressly for use in the Proxy Statement or
information included in the Proxy
Statement regarding the business of
Acquired Corporation, its operations, Assets
and capital.
4.14 SEC FILINGS. (a) BancGroup has heretofore delivered to
Acquired
-----------
Corporation copies of BancGroup's: (i)
Annual Report on Form 10-K for the fiscal
year ended December 31, 2003; (ii) 2003
Annual Report to Shareholders; (iii)
Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2004, June 30,
2004 and September 30, 2004 and (iv) any
reports on Form 8-K, filed by BancGroup
with the SEC since September 30, 2004.
Since December 31, 2002, BancGroup has
timely filed all reports and registration
statements and the documents required
to be filed with the SEC under the rules
and regulations of the SEC and all such
reports and registration statements or
other documents have complied in all
material respects, as of their respective
filing dates and effective dates, as
the case may be, with all the applicable
requirements of the 1933 Act, the 1934
Act and the Sarbanes-Oxley Act of 2002. As
of the respective filing and
effective dates, none of such reports or
registration statements or other
documents contained any untrue statement of
a material fact or omitted to state
a material fact required to be stated
therein or necessary in order to make the
statements therein, in light of the
circumstances under which they were made,
not misleading.
(b) The documents to be incorporated by reference into the
Registration Statement, at the time they
were filed with the SEC, complied in
all material respects with the requirements
of the 1934 Act and Regulations
thereunder and when read together and with
the other information in the
Registration Statement will not contain an
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
at the time the Registration
Statement becomes effective or at the time
of the Shareholders' Meeting.
4.15 FORM S-4. The
conditions for use of a registration statement on
--------
SEC Form S-4 set forth in the General
Instructions on Form S-4 have been or will
be satisfied with respect to BancGroup and
the Registration Statement.
4.16 BROKERS. Except
for negotiations with Keefe, Bruyette & Woods,
-------
Inc. as referenced in Section 5.18 of this
Agreement, all negotiations relative
to this Agreement and the transactions
contemplated by this Agreement have been
carried on by BancGroup directly with
Acquired Corporation and without the
intervention of any other person, either as
a result of any act of BancGroup or
otherwise in such manner as to give rights
to any valid claim against BancGroup
for finders fees, brokerage commissions or
other like payments.
4.17 GOVERNMENT
AUTHORIZATION. BancGroup and its Subsidiaries have all
------------------------
Permits that are or will be legally
required to enable BancGroup or any of its
Subsidiaries to conduct their businesses in
all material respects as now
conducted by each of them.
4.18 ABSENCE OF REGULATORY COMMUNICATIONS. Neither BancGroup nor
any of
------------------------------------
its Subsidiaries is subject to, or has
received during the past three (3) years,
any written communication directed
specifically to it from any Agency to which
it is subject or pursuant to which such
Agency has imposed or has indicated it
may impose any material restrictions on the
operations of it or the business
conducted by it or in which such Agency has
raised a material question
concerning the condition, financial or
otherwise, of such company.
14
<PAGE> 20
4.19 DISCLOSURE. No
representation or warranty, or any statement or
----------
certificate furnished or to be furnished to
Acquired Corporation by BancGroup,
contains or will contain any untrue
statement of a material fact, or omits or
will omit to state a material fact
necessary to make the statements contained in
this Agreement or in any such statement or
certificate not misleading.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED
CORPORATION
Except as set forth in a disclosure schedule delivered by the
Acquired
Corporation to BancGroup (the "Acquired
Corporation Disclosure Schedule") prior
to the date hereof (which sets forth, among
other things, items the disclosure
of which is necessary or appropriate either
in response to an express provision
of this Agreement or as an exception to one
or more of its representations and
warranties set forth below or its covenants
in Articles 6 and 7, provided, that
(i) no such item is required to be set
forth in the Acquired Corporation
Disclosure Schedule as an exception to any
representation or warranty of the
Acquired Corporation if its absence (in
combination with any other undisclosed
information) would not be reasonably likely
to result in the related
representation or warranty being deemed
untrue or incorrect under the standard
set forth in Section 9.1 and (ii) the mere
inclusion of an item in the Acquired
Corporation Disclosure Schedule as an
exception to a representation or warranty
shall not be deemed an admission by the
Acquired Corporation that such item
represents a material exception or fact,
event or circumstance or that such item
is or would be reasonably likely to result
in a Material Adverse Effect with
respect to the Acquired Corporation.
Acquired Corporation represents, warrants and covenants to and
with
BancGroup, as follows:
5.1 ORGANIZATION.
Acquired Corporation is a Delaware corporation, and
------------
the Bank is a federally chartered savings
and loan association. Each Acquired
Corporation Company is duly organized,
validly existing and in active status
under the respective Laws of its
jurisdiction of incorporation or association
and has all requisite power and authority
to carry on its business as it is now
being conducted and is qualified to do
business in every jurisdiction in which
the character and location of the Assets
owned by it or the nature of the
business transacted by it requires
qualification and in which the failure to
qualify could, individually, or in the
aggregate, have a Material Adverse
Effect.
5.2 CAPITAL STOCK. As
of the date of this Agreement, the authorized
-------------
capital stock of Acquired Corporation
consisted of 10,000,000 shares of common
stock, $0.01 par value per share, 5,408,287
shares of which are issued and
outstanding. All of such shares which are
outstanding are validly issued, fully
paid and nonassessable and not subject to
preemptive rights. Acquired
Corporation has 199,891 shares of its
common stock subject to issuance pursuant
to the exercise of stock options under its
stock option plans. Except for the
foregoing, Acquired Corporation does not
have any other arrangements or
commitments obligating it to issue shares
of its capital stock or any securities
convertible into or having the right to
purchase shares of its capital stock,
including the grant or issuance of Acquired
Corporation Options.
15
<PAGE> 21
5.3 SUBSIDIARIES. Acquired Corporation has no direct Subsidiaries
other
------------
than the Bank and FFLC Statutory Trust I
(the "Trust"), and there are no
Subsidiaries of the Bank other than Lake
County Service Corporation ("LCSC").
Acquired Corporation owns all of the issued
and outstanding capital stock of the
Bank free and clear of any liens, claims or
encumbrances of any kind. All of the
issued and outstanding shares of capital
stock of each Acquired Corporation
Company have been validly issued and are
fully paid and non-assessable. As of
the date of this Agreement, there were
(i)with respect to the Bank, 10,000,000
shares of common stock, par value $1.00 per
share, authorized and 1,000 shares
outstanding and 1,000,000 shares of
preferred stock, par value $1.00 per share
authorized, none of which is outstanding,
(ii) with respect to the Trust, 155
shares of common stock, par value $1,000
per share, authorized and 155 shares
outstanding, (iii) with respect to LCSC
6,500 shares of common stock, par value
$1.00 per share, authorized and 6,500
shares outstanding, all of which are
wholly owned by Acquired Corporation (or
the Bank in the case of LCSC). Other
than as listed above, no Acquired
Corporation Company has any other form of
stock authorized or outstanding. The Bank
has no arrangements or commitments
obligating it to issue shares of any of its
capital stock or any securities
convertible into or having the right to
purchase shares of any of its capital
stock.
5.4 FINANCIAL STATEMENTS; TAXES (a) Acquired Corporation has
delivered
---------------------------
to BancGroup copies of the following
financial statements of Acquired
Corporation:
(i) Consolidated balance sheets as of December 31,
2002, December 31, 2003 and September 30,
2004;
(ii) Consolidated statements of income for each of
the three years ended December 31, 2001,
2002 and 2003, and for the nine months
ended September 30, 2004;
(iii) Consolidated statements of cash flows for each
of the three years ended December 31, 2001,
2002, and 2003, and for the nine
months ended September 30, 2004; and
(iv) Consolidated statements of changes in
shareholders' equity for the three years
ended December 31, 2001, 2002 and 2003,
and for the nine months ended September 30,
2004.
All of the foregoing financial statements are in all material
respects
in accordance with the books and records of
Acquired Corporation and have been
prepared in accordance with GAAP applied on
a consistent basis throughout the
periods indicated, except for changes
required by GAAP, all as more particularly
set forth in the notes to such statements.
Each of such balance sheets presents
fairly as of its date the financial
condition of Acquired Corporation. Except as
and to the extent reflected or reserved
against in such balance sheets
(including the notes thereto), Acquired
Corporation did not have, as of the date
of such balance sheets, any material
Liabilities or obligations (absolute or
contingent) of a nature customarily
reflected in a balance sheet or the notes
thereto. The statements of income,
shareholders' equity and cash flows present
16
<PAGE> 22
fairly the results of operation, changes in
shareholders' equity and cash flows
of Acquired Corporation for the periods
indicated. The foregoing
representations, insofar as they relate to
the unaudited interim financial
statements of Acquired Corporation for the
nine months ended September 30, 2004,
are subject in all cases to normal
recurring year-end adjustments and the
omission of footnote disclosure.
(b) Except as set forth on Schedule 5.4(b), all Tax returns
required to be filed by or on behalf of
Acquired Corporation have been timely
filed (or requests for extensions therefore
have been timely filed and granted
and have not expired), and all returns
filed are complete and accurate in all
material respects. All Taxes shown on these
returns to be due and all additional
assessments received have been paid. The
amounts recorded for Taxes on the
balance sheets provided under section
5.4(a) are, to the Knowledge of Acquired
Corporation, sufficient in all material
respects for the payment of all unpaid
federal, state, county, local, foreign and
other Taxes (including any interest
or penalties) of Acquired Corporation
accrued for or applicable to the period
ended on the dates thereof, and all years
and periods prior thereto and for
which Acquired Corporation may at such
dates have been liable in its own right
or as a transferee of the Assets of, or as
successor to, any other corporation
or other party. No audit, examination or
investigation is presently being
conducted or, to the Knowledge of Acquired
Corporation, threatened by any taxing
authority which is likely to result in a
material Tax Liability, no material
unpaid Tax deficiencies or additional
liability of any sort has been proposed by
any governmental representative and no
agreements for extension of time for the
assessment of any material amount of Tax
have been entered into by or on behalf
of Acquired Corporation. Acquired
Corporation has not executed an extension or
waiver of any statute of limitations on the
assessment or collection of any Tax
due that is currently in effect.
(c) Each Acquired Corporation Company has withheld from its
employees (and timely paid to the
appropriate governmental entity) proper and
accurate amounts for all periods in
material compliance with all Tax withholding
provisions of applicable federal, state,
foreign and local Laws (including
without limitation, income, social security
and employment Tax withholding for
all types of compensation). Each Acquired
Corporation Company is in compliance
with, and its records contain all
information and documents (including properly
completed IRS Forms W-9) necessary to
comply with, all applicable information
reporting and Tax withholding requirements
under federal, state and local Tax
Laws, and such records identify with
specificity all accounts subject to backup
withholding under section 3406 of the
Code.
5.5 ABSENCE OF
CERTAIN CHANGES OR
EVENTS. Except as set
forth on
-------------------------------------
Schedule 5.5, since the date of the most recent
balance sheet provided under
section 5.4(a)(i) above, no Acquired
Corporation Company has
(a) issued, delivered or agreed to issue or deliver any stock,
bonds or other corporate securities
(whether authorized and unissued or held in
the treasury) except shares of common stock
issued upon the exercise of existing
Acquired Corporation Options and shares
issued as director's qualifying shares;
17
<PAGE> 23
(b) borrowed or agreed to borrow any funds or incurred, or
become subject to, any Liability (absolute
or contingent) except borrowings,
obligations (including purchase of federal
funds) and Liabilities incurred in
the ordinary course of business and
consistent with past practice;
(c) paid any material obligation or Liability (absolute or
contingent) other than current Liabilities
reflected in or shown on the most
recent balance sheet referred to in section
5.4(a)(i) and current Liabilities
incurred since that date in the ordinary
course of business and consistent with
past practice;
(d) declared or made, or agreed to declare or make, any
payment of dividends or distributions of
any Assets of any kind whatsoever to
shareholders, or purchased or redeemed, or
agreed to purchase or redeem,
directly or indirectly, or otherwise
acquire, any of its outstanding securities;
provided, however, that Acquired
Corporation may continue to make quarterly cash
--------
dividends of no more than $0.14 per share
and at times consistent with past
practices and as set forth on Schedule
5.5(d) to this Agreement;
(e) except in the ordinary course of business, sold or
transferred, or agreed to sell or transfer,
any of its Assets, or canceled, or
agreed to cancel, any debts or claims;
(f) except in the ordinary course of business, entered or
agreed to enter into any agreement or
arrangement granting any preferential
rights to purchase any of its Assets, or
requiring the consent of any party to
the transfer and assignment of any of its
Assets;
(g) suffered any Losses or waived any rights of value which in
either event in the aggregate are material
considering its business as a whole;
(h) except in the ordinary course of business, made or
permitted any amendment or termination of
any Contract, agreement or license to
which it is a party if such amendment or
termination is material considering its
business as a whole;
(i) except in accordance with normal and usual practice, made
any accrual or arrangement for or payment
of bonuses or special compensation of
any kind or any severance or termination
pay to any present or former officer or
employee;
(j) except in accordance with normal and usual practice,
increased the rate of compensation payable
to or to become payable to any of its
officers or employees or made any material
increase in any profit sharing,
bonus, deferred compensation, savings,
insurance, pension, retirement or other
employee benefit plan, payment or
arrangement made to, for or with any of its
officers or employees;
(k) received notice or had Knowledge or reason to believe that
any of its substantial customers has
terminated or intends to terminate its
relationship, which termination would have
a Material Adverse Effect on its
financial condition, results of operations,
business, Assets or properties;
18
<PAGE> 24
(l) failed to operate its business in the ordinary course so
as to preserve its business intact and to
preserve the goodwill of its customers
and others with whom it has business
relations;
(m) entered into any other material transaction other than in
the ordinary course of business; or
(n) agreed in writing, or otherwise, to take any action
described in clauses (a) through (m)
above.
Between the date hereof and the Effective Date, no Acquired
Corporation
Company, without the express written
approval of BancGroup, will do any of the
things listed in clauses (a) through (n) of
this section 5.5 except as permitted
therein or as contemplated in this
Agreement, and no Acquired Corporation
Company will enter into or amend any
material Contract, other than Loans or
renewals thereof entered into in the
ordinary course of business, without the
express written consent of BancGroup.
5.6 TITLE AND
RELATED MATTERS.
-------------------------
(a) Title. Each Acquired Corporation Company has good and
-----
marketable title to all the properties,
interest in properties and Assets, real
and personal, that are material to the
business of such Acquired Corporation
Company, reflected in the most recent
balance sheet referred to in section
5.4(a)(i), or acquired after the date of
such balance sheet (except properties,
interests and Assets sold or otherwise
disposed of since such date, in the
ordinary course of business), free and
clear of all mortgages, Liens, pledges,
charges or encumbrances except (i)
mortgages and other encumbrances referred to
in the notes to such balance sheet, (ii)
Liens for current Taxes not yet due and
payable and (iii) such imperfections of
title and easements as do not materially
detract from or interfere with the present
use of the properties subject thereto
or affected thereby, or otherwise
materially impair present business operations
at such properties. To the Knowledge of
Acquired Corporation, the material
structures and equipment of each Acquired
Corporation Company comply in all
material respects with the requirements of
all applicable Laws.
(b) Leases. Schedule 5.6(b) sets forth a list and description
------
of all real and personal property owned or
leased by any Acquired Corporation
Company, either as lessor or lessee.
Complete and accurate copies of all such
leases have been attached to a Schedule to
this Agreement.
(c) Personal Property. Schedule 5.6(c) sets forth a
-----------------
depreciation schedule of each Acquired
Corporation Company's fixed Assets as of
September 30, 2004.
(d) Computer Hardware and Software. Schedule 5.6(d) contains a
------------------------------
description of all agreements relating to
data processing computer software and
hardware now being used in the business
operations of any Acquired Corporation
Company. Acquired Corporation is not aware
of any defects, irregularities or
problems with any of its computer hardware
or software which renders such
hardware or software unable to
satisfactorily perform the tasks and functions to
be performed by them in the business of any
Acquired Corporation Company.
Complete and accurate copies of all
Contracts, plans and other items so listed
have been attached to a Schedule to this
Agreement.
19
<PAGE> 25
5.7 COMMITMENTS. Except as set forth in Schedule 5.7, no
Acquired
-----------
Corporation Company is a party to any oral
or written (i) Contract for the
employment of any officer or employee which
is not terminable on 30 days' (or
less) notice, (ii) profit sharing, bonus,
deferred compensation, savings, stock
option, severance pay, pension or
retirement plan, agreement or arrangement,
(iii) loan agreement, indenture or similar
agreement relating to the borrowing
of money by such party, (iv) guaranty of
any obligation for the borrowing of
money or otherwise, excluding endorsements
made for collection, and guaranties
made in the ordinary course of business,
(v) consulting or other similar
material Contracts, (vi) collective
bargaining agreement, (vii) agreement with
any present or former officer, director or
shareholder of such party, (viii) any
contract that is not terminable within
ninety (90) days or (ix) other Contract,
agreement or other commitment which is
material to the business, operations,
property, prospects or Assets or to the
condition, financial or otherwise, of
any Acquired Corporation Company. Complete
and accurate copies of all Contracts,
plans and other items so listed have been
attached to a Schedule to this
Agreement.
5.8 CHARTER AND
BYLAWS. Schedule 5.8 contains true and correct copies
------------------
of the articles of incorporation and bylaws
of each Acquired Corporation
Company, including all amendments thereto,
as currently in effect. There will be
no changes in such articles of
incorporation or bylaws prior to the Effective
Date, without the prior written consent of
BancGroup.
5.9 LITIGATION. Other
than as set forth on Schedule 5.9, there is no
----------
Litigation (whether or not purportedly on
behalf of Acquired Corporation)
pending or, to the Knowledge of Acquired
Corporation, threatened against or
affecting any Acquired Corporation Company
(nor does Acquired Corporation have
Knowledge of any facts which are likely to
give rise to any such Litigation) at
law or in equity, or before or by any
governmental department, commission,
board, bureau, agency or instrumentality,
domestic or foreign, or before any
arbitrator of any kind, which involves the
possibility of any judgment or
Liability not fully covered by insurance in
excess of a reasonable deductible
amount or which may have a Material Adverse
Effect on Acquired Corporation, and
no Acquired Corporation Company is in
Default with respect to any judgment,
order, writ, injunction, decree, award,
rule or regulation of any court,
arbitrator or governmental department,
commission, board, bureau, agency or
instrumentality, which Default would have a
Material Adverse Effect on Acquired
Corporation. To the Knowledge of Acquired
Corporation, each Acquired Corporation
Company has complied in all material
respects with all material applicable Laws
and Regulations including those impos
