COMMERCIAL BANKSHARES, INC. - AGREEMENT AND PLAN OF MERGER WITH THE COLONIAL BANCGROUP, INC.Agreement and Plan of Merger |
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AGREEMENT AND PLAN OF MERGER
by and between
THE COLONIAL BANCGROUP, INC.
and
COMMERCIAL BANKSHARES, INC.
dated as of
January 23, 2007
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is
made and entered into as of this the 23rd day of January, 2007, by
and between
COMMERCIAL BANKSHARES, INC. (“Acquired
Corporation”), a Florida corporation, and
THE COLONIAL BANCGROUP, INC. (“BancGroup”),
a Delaware corporation.
WITNESSETH
WHEREAS ,
Acquired Corporation operates as a bank holding company for its
wholly owned subsidiary, Commercial Bank of Florida (referred to
herein as the “Bank”), with its principal office in
Miami, Florida; and
WHEREAS ,
BancGroup is a bank holding company with a Subsidiary bank,
Colonial Bank, N.A., operating in Alabama, Florida, Georgia,
Nevada, 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:
NAME
1.1
Name
. The
name of the corporation resulting from the Merger shall be
“The Colonial BancGroup, Inc.”
MERGER -- TERMS AND CONDITIONS
2.1
Applicable Law .
At the Effective Time, 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”), and the
applicable provisions of the Florida Business Corporation Act (the
“FBCA”). The offices and facilities of Acquired
Corporation and of BancGroup shall become the offices and
facilities of the Resulting Corporation.
1
2.2
Corporate Existence .
As of the Effective Time, the corporate existence of Acquired
Corporation and of BancGroup shall, as provided in the DGCL and the
FBCA, 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 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 as of the Effective
Time, 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, immediately prior to the Effective
Time.
2.3
Articles of Incorporation and Bylaws
. At the Effective Time, 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 Time.
2.4
Resulting Corporation's Officers and Board
. The board of directors and the officers of the Resulting
Corporation as of the Effective Time shall consist of those persons
serving in such capacities of BancGroup as of the Effective
Time.
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.
2.6
Further Acts
. If, at any time after the Effective Time, 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 instruments, 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 as may be necessary to effect the terms of this
Agreement and Plan of Merger.
2.7
Effective Time and Closing
. The Merger shall become effective as of the date and
time the Certificate of Merger is accepted for filing by the
Secretary of State of the State of Delaware (such time being herein
called the “Effective Time”). Assuming all other
conditions stated in this Agreement have been or will be satisfied
or waived as of the Closing, the Closing shall take place at the
offices of Akerman Senterfitt & Eidson, P.A., One Southeast
Third Avenue, Miami, Florida on a date specified by BancGroup and
agreeable to Acquired Corporation that shall be as soon as
reasonably practicable after the later to occur of the Shareholder
Meeting or all required regulatory approvals (including waiting
periods) under Section 8.2, or at such other place and time that
the Parties may mutually agree.
2
2.8
Merger of Subsidiary Bank
. BancGroup and Acquired Corporation anticipate the
possibility that after the Effective Time, 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 reasonably 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, at BancGroup’s sole cost and
expense.
A
RTICLE
3
CONVERSION OF ACQUIRED CORPORATION STOCK
3.1
Conversion of Acquired Corporation Stock
.
(a)
(i)
At the Effective Time, and subject to sections 3.1(a)(ii),
3.1(a)(iii), 3.1(a)(iv), and 3.3, 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 at the
Effective Time shall be converted into the right to receive
either (A) 2.0214 shares (subject to section 3.3 hereof) of
BancGroup Common Stock or (B) $49.00 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 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 shares of BancGroup Common Stock that such holder
desires to receive, subject to the limitation on cash and
share 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 for Acquired Corporation Stock shall be the amount of
50% of the number of shares of outstanding Acquired
Corporation Stock at the time of the Closing times $49.00 (the
“Cash Consideration”) (approximately $148,480,658
assuming 6,060,435 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”) is less than or exceeds the Cash
Consideration. Notwithstanding section 3.1(a)(ii) of this
Agreement and notwithstanding any elections made pursuant to
the Election Forms, the aggregate number of shares of
BancGroup Common Stock to be distributed in the Merger shall
be 50% of the number of shares of the outstanding Acquired
Corporation Stock at the time of the Closing times 2.0214 (the
“Stock Consideration”) (approximately 6,125,281
shares of BancGroup Common Stock assuming 6,060,435 shares of
Acquired Corporation Stock are outstanding at the time of the
Closing), even if the aggregate number of shares of BancGroup
Common Stock elected by stockholders (the “Aggregate
Stock Amount”) is less than or exceeds the Stock
Consideration. I f
the aggregate of all Acquired Corporation shareholders’
Cash Elections (or Stock Elections) exceeds the Cash
Consideration (or the Stock Consideration), 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 (or Aggregate Stock Amount) exceeds the Cash
Consideration (or Stock Consideration); (2) reduce the amount
of cash (or BancGroup Common Stock) that each such Shareholder
who elects, or is deemed to elect, cash (or BancGroup Common
Stock) will receive on a pro rata basis until the Aggregate
Cash Amount (or the Aggregate Stock Amount) is equal to the
Cash Consideration (or the Stock Consideration) (the aggregate
amount of this reduction shall be referred to as the
“Excess Election”); (3) determine the number of
shares of Acquired Corporation Stock that each Acquired
Corporation Shareholder’s pro rata portion of the Excess
Election represents (which will be the pro rata portion of the
Excess Election divided by $49.00 in the case of a Cash Excess
Election (or the pro-rata portion of the Excess Election
divided by 2.0214 in the case of a BancGroup Common Stock
Excess Election)); (4) increase such Shareholder’s stock
(or cash) component of such Shareholder’s Merger
Consideration by 2.0214 shares of BancGroup Common Stock (or
$49.00) for each share of Acquired Corporation Stock
determined in step (3) above.
3
(iv)
Elections
made shall apply to all shares of record of Acquired
Corporation Stock held immediately prior to the Effective Time
by a record holder making the election. If an Acquired
Corporation shareholder does not submit an Election Form, then
such holder shall be deemed to have elected to receive $24.50
in cash and 1.0107 shares of BancGroup Common Stock for each
share of Acquired Corporation Stock
as
his or her portion of the Merger Consideration. Interest will not
be paid on any cash to be paid as part of the Merger
Consideration.
(b)
Promptly
after the execution of this Agreement, the Acquired
Corporation shall inform all holders of employee stock options
to purchase Acquired Corporation Stock (“Employee Plan
Options”) (whether or not such options are vested or
exercisable) of their ability to exercise their options within
(30) days of such notice, and after such thirty (30) day
period, of their ability to exercise their Employee Plan
Options for cash as described in subparagraph (c) of this
Section 3.1; provided that the election or non-election by the
option holders to so exchange their Employee Plan options for
cash as described in this section shall not be a condition to
the Closing.
(c)
Each
holder of Employee Plan Options and each holder of Acquired
Corporation Options granted under the outside director stock
option plans of Acquired Corporation (“Outside Director
Options”), in each case may, no later than five days
prior to the Effective Date, may exercise his or her Acquired
Corporation Options (in each case whether then or not vested
or exercisable) through a cashless exercise with such
exercised stock being exchanged for cash payable on or within
five (5) business days after the Effective Time. As a result
of this cashless exercise, 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 $49.00 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 considered as part of the Cash
Consideration.
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 $49.00 per
share.
4
3.3
Adjustments .
In the event that prior to the Effective Time 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 Time shall continue to be issued
and outstanding shares of the Resulting Corporation.
3.5
[Reserved].
3.6
Election and Exchange Procedures
. Each
holder of record of shares of the Acquired Corporation Stock
(“Holder”) shall have the right, subject to the
limitations set forth in this Article 3, to submit an election and
exchange his or her Acquired Corporation stock certificates (the
“Acquired Corporation Stock Certificates”) in
accordance with the following procedures:
(a)
The Election .
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 Stock owned by such Holder with respect to which such
Holder desires to receive a portion of the Stock Consideration (a
“Stock Election”) and (y) the number of shares of
Acquired Corporation Stock owned by such Holder with respect to
which such Holder desires to receive a portion of the Cash
Consideration (a “Cash Election”).
(b)
Form of Election .
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 (as defined in
Section 3.6(d)).
5
(c)
Distribution of Forms of Election .
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 for the first time less than twenty (20)
calendar days prior to the Election Deadline.
(d)
Proper Election and Exchange Agent .
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 as soon as reasonably practicable after the execution of this
Agreement 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 Acquired
Corporation 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 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 thirty (30) business days before and at
least five (5) Business Days prior to, the Election Deadline. If
BancGroup shall determine in its reasonable discretion that any
Election is not properly made with respect to any shares of
Acquired Corporation Stock, such Election shall be deemed to be not
in effect, and the shares of Acquired Corporation Stock covered by
such Election shall, for purposes hereof, be treated as if no
Election had been made, unless a proper Election is thereafter
timely made.
(e)
Modification and Revocation of Form of Election
.
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 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.
6
(f)
Proper Designation and Taxes .
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) and from payments made to holders of
Acquired Corporation Employee Plan Options and Outside Directors
Plan Options (“Acquired Corporation Options”) otherwise
payable pursuant to this Agreement to any holder of Acquired
Corporation Stock or of Acquired Corporation Options 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 Stock or of
Acquired Corporation Options in respect of whom such deduction and
withholding was made by the Exchange Agent or BancGroup, as the
case may be.
(g)
Power of Determination .
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 issuance and delivery of
BancGroup Stock Certificates into which shares of Acquired
Corporation Stock are converted in the Merger and (B) the method of
payment for shares of Acquired Corporation 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.
(h)
Exchange Fund .
BancGroup agrees to make available to the Exchange Agent from time
to time as needed, certificates representing the BancGroup Common
Stock, and agrees to deliver in escrow to the Exchange Agent, at
least one (1) Business Day prior to the Closing, for the benefit of
the holders of the shares of Acquired Corporation Stock and
Acquired Corporation Options, and cash sufficient to pay the cash
component of the Merger Consideration, the cash payable hereunder
to the holders of Acquired Corporation Options, 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.” For six months following the Effective
Time, the Exchange Fund shall not be used for any other
purpose.
7
(i)
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, and Resulting
Corporation shall instruct Exchange Agent to transmit as promptly
as commercially practicable, (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 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 Stock to such a
transferee if the Acquired Corporation Certificate representing
such shares of Acquired Corporation 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.
(j)
No Further Ownership Rights in Acquired Corporation
Stock .
All shares of BancGroup Common Stock issued and cash paid upon
conversion of shares of Acquired Corporation 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 Stock. Until surrendered as contemplated by
this Section 3.6, 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 dividends or distributions to which a holder of Acquired
Corporation Stock on or prior to the Effective Time is entitled to
receive under this Agreement.
(k)
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 3.6 shall thereafter
look only to the Resulting Corporation for the Merger Consideration
with respect to the shares of Acquired Corporation 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.
8
(l)
No Liability .
None of BancGroup, the Acquired Corporation, the Resulting
Corporation or 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.
(m)
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 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.
(n)
Stock Transfer Books .
The stock transfer books of the Acquired Corporation shall be
closed immediately at the Effective Time and there shall be no
further registration of transfers of shares of Acquired Corporation
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 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.
(o)
Investment of Exchange Fund .
The Exchange Agent shall invest any cash included in the Exchange
Fund, as directed by the Resulting Corporation, on a daily basis.
Any interest and other income resulting from such investments shall
be paid to Resulting Corporation. To the extent that there are
losses with respect to such investments, or the Exchange Fund
diminishes for other reasons below the level required to make
prompt payments of the Merger Consideration as contemplated hereby,
Resulting Corporation shall promptly replace or restore the portion
of the Exchange Fund lost through investments or other events so as
to ensure that the Exchange Fund is, at all times, maintained at a
level sufficient to make such payments.
9
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
BANCGROUP
No
representation or warranty contained in this Article 4 shall
be deemed untrue or incorrect, and BancGroup shall not be
deemed to have breached a representation or warranty as a
consequence of the existence or absence of any fact, event or
circumstance, unless such fact, event or circumstance is not
set forth in BancGroup’s disclosure schedules to this
Agreement and, whether individually or in the aggregate with
all other facts, events or circumstances that have not been
set forth in BancGroup disclosure schedules to this Agreement,
has had or is reasonably likely to have a Material Adverse
Effect. Except
as disclosed in any BancGroup disclosure schedule to this
Agreement, 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)
400,000,000 shares of Common Stock, $2.50 par value per share,
of which as of September 30, 2006, 156,196,005 shares were
validly issued and 153,244,378 were 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), (ii) 50,000,000 shares of
Preferred stock, $2.50 par value per share, none of which are
issued and outstanding, and (iii) 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:
(i)
Consolidated statements of condition as of December 31, 2004,
December 31, 2005, and September 30, 2006;
10
(ii)
Consolidated statements of income for each of the three years
ended December 31, 2005, and for the three and nine months
ended September 30, 2006;
(iii)
Consolidated statements of cash flows for each of the three
years ended December 31, 2005, and for the nine months ended
September 30, 2006; and
(iv)
Consolidated statements of changes in shareholders' equity for
each of the three years ended December 31, 2005, and for the
nine months ended September 30, 2006.
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 statements of
condition 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 and
its Subsidiaries 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
income, 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 three and nine months ended September 30,
2006, 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
and its Subsidiaries 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 and
its Subsidiaries accrued for or applicable to the period ended
on the dates thereof, and all years and periods prior thereto
and for which BancGroup and its Subsidiaries 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 or any of its
Subsidiaries. BancGroup and its Subsidiaries have 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
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 statement of condition 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 on
BancGroup or Colonial Bank, N.A.
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 or its Subsidiaries have 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 statement of condition 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 and its Subsidiaries comply in all material
respects with the requirements of all applicable Laws.
12
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 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
permitted 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 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.
13
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, 2005; (ii) 2005 Annual Report to
Shareholders; (iii) Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2006, June 30, 2006, and September 30, 2006; and
(iv) any reports on Form 8-K, filed by BancGroup with the SEC since
December 31, 2005. Since December 31, 2005, 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 .
All negotiations related to this Agreement and the transaction
contemplated by this Agreement, have been carried on by BancGroup
with Acquired Corporation without the intervention of any other
person , other than Hovde Financial, Inc. (“Hovde”),
Acquired Corporation’s investment banker and advisor, in any
manner as to give rights to any valid claim against BancGroup for
finders fees, brokerage commissions, or other like or similar
payment for services rendered incident to this
undertaking.
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 material Subsidiaries is currently
subject to, or has otherwise 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
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.
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 Florida corporation, and Bank is a state
chartered bank. 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 15,000,000 shares of common
stock, $0.08 par value per share, 6,615,210 shares of which are
issued, and 6,060,435 were outstanding, and 5,000,000 shares of
preferred stock, par value $3.75 per share, none of which are
outstanding. All of such shares which are outstanding are validly
issued, fully paid and nonassessable and not subject to preemptive
rights. Acquired Corporation has 587,106 shares of its common stock
subject to issuance pursuant to the exercise of stock options under
its stock option plans of which 587,106 are exercisable (or which
shall become exercisable prior to the Effective Time). 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,
issuance or vesting of additional Acquired Corporation
Options.
15
5.3
Subsidiaries .
Acquired Corporation does not have any Subsidiaries other than the
Bank.
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, 2,000,000 shares of common
stock, par value $5.00 per share, authorized and 1,164,712
shares outstanding and no shares of preferred stock. 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, 2004, December
31, 2005, and September 30, 2006;
(ii)
Consolidated statements of income for each of the three years
ended December 31, 2005, and for the three and nine months
ended September 30, 2006;
(iii)
Consolidated statements of cash flows for each of the three
years ended December 31, 2005, and for the nine months ended
September 30, 2006; and
(iv)
Consolidated statements of changes in shareholders’
equity for the three years ended December 31, 2005, and for
the nine months ended September 30, 2006.
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 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
three and nine months ended September 30, 2006, are subject in
all cases to normal recurring year-end adjustments and the
omission of footnote disclosure.
16
(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;
(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;
17
(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 (i) continue to make
quarterly cash dividends of no more than $0.2100 per share and at
times consistent with past practices and as set forth on Schedule
5.5(d) to this Agreement and (ii) accelerate the vesting of any
existing options to purchase Acquired Corporation common
stock;
(e)
except
in the ordinary course of business or as requested by
BancGroup, 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)
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)
failed
to operate its business in the ordinary course in a manner
intended to preserve its business intact and intended to
preserve the go
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