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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
------- ----
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
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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
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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
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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 includi
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