Filed Pursuant to Rule 424(b)(3)
Registration No. 333-123174
[FIRST ALACHUA BANKING CORPORATION LOGO]
FIRST ALACHUA BANKING CORPORATION
15000 NW 140th Street
Alachua, Florida 32615
To the shareholders of April 15, 2005
First Alachua Banking Corporation
On behalf of First Alachua's board of directors, I am pleased to invite
you to attend a Special Meeting of the shareholders of First Alachua Banking
Corporation to be held at First National Bank of Alachua, located at 15000 NW
140th Street, Alachua, Florida 32615, on May 20, 2005, at 10:00 a.m.,
Eastern Time.
At the Special Meeting, you will be asked to approve the Agreement and
Plan of Merger by and among Capital City Bank Group, Inc., First Alachua
Banking Corporation and First National Bank of Alachua, whereby First Alachua
Banking Corporation will merge with and into Capital City Bank Group, Inc.
and First National Bank of Alachua will merge with and into Capital City Bank
Group's subsidiary, Capital City Bank. When the merger is completed (and
subject to certain adjustments), each share of common stock held by you will
be exchanged for the right to receive $2,847.04 in cash, plus approximately
71.176 shares of CCBG common stock. CCBG will pay First Alachua shareholders
cash instead of issuing any fractional shares in the merger.
As First Alachua's board of directors, we believe that the merger will
have many benefits. We believe that the combined company will have greater
financial strength and greater opportunity and flexibility to expand and
diversify. The merger is subject to certain conditions, including approval
of the Agreement and Plan of Merger by the affirmative vote of holders of a
majority of the outstanding common stock of First Alachua, and approval of
the merger by various regulatory agencies.
As First Alachua's board of directors, we have unanimously approved the
Agreement and Plan of Merger and recommend it to you for your approval as
well.
This Proxy Statement/Prospectus provides detailed information about the
merger. We urge you to read this entire document carefully, including the
risk factors considered by CCBG's and First Alachua's boards of directors
beginning on page 14. You can also get information about CCBG from the SEC.
CCBG's common stock is traded on the Nasdaq National Market under the symbol
"CCBG."
Whether or not you plan to attend the Special Meeting, you are urged to
complete, sign, and promptly return the enclosed proxy card. If you attend
the Special Meeting, you may vote in person if you wish, even if you have
previously returned your proxy card.
On behalf of the board of directors, I strongly urge you to vote FOR
approval of the Agreement and Plan of Merger by marking the enclosed proxy
card FOR item one.
We look forward to seeing you at the Special Meeting.
Sincerely,
/s/ Jerry M. Smith
Jerry M. Smith
President and Chairman of the Board
_____________________________________________________________________________
Neither the Securities and Exchange Commission nor any state securities
regulatory body has approved or disapproved of the securities to be issued
under this Proxy Statement/Prospectus or determined if this Proxy
Statement/Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The securities offered hereby are not savings accounts or deposit accounts or
other obligations of any bank or savings association and they are not insured
by the Federal Deposit Insurance Corporation, the Bank Insurance Fund, the
Savings Association Insurance Fund, or any other government agency.
_____________________________________________________________________________
This Proxy Statement/Prospectus is dated April 15, 2005, and was first mailed
to shareholders on April 15, 2005.
[CAPITAL CITY BANK LOGO] [FIRST ALACHUA BANKING CORPORATION LOGO]
PROPOSED MERGER OF FIRST ALACHUA BANKING CORPORATION
WITH CAPITAL CITY BANK GROUP, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 2005
A special meeting of the shareholders (the "Special Meeting") of First
Alachua Banking Corporation will be held at First National Bank of Alachua,
located at 15000 NW 140th Street, Alachua, Florida, 32615, on May 20, 2005, at
10:00 a.m., Eastern Time, for the following purposes:
* To vote on an Agreement and Plan of Merger, pursuant to which, among
other matters, (a) First Alachua Banking Corporation will merge with and
into Capital City Bank Group, Inc. with Capital City Bank Group, Inc.
being the resulting corporation, and (b) First National Bank of Alachua
will merge with and into Capital City Bank, with Capital City Bank being
the resulting bank.
* To transact any other business that properly comes before the Special
Meeting, or any adjournments or postponements of the Special Meeting.
In connection with the merger, and subject to certain potential
adjustments, each share of First Alachua common stock outstanding at the
effective time of the merger will be exchanged for $2,847.04 in cash, plus
approximately 71.176 shares of CCBG common stock. A copy of the Agreement
and Plan of Merger is attached to this Proxy Statement/Prospectus as Appendix
A.
The Board of Directors of First Alachua is not aware of any other
business to be presented to a vote at the Special Meeting.
Only shareholders of record at the close of business on April 12, 2005,
will be entitled to notice of and to vote at the Special Meeting or any
adjournments. Approval of the Agreement and Plan of Merger requires the
affirmative vote of a majority of the outstanding shares of First Alachua
common stock on that record date.
The Board of Directors of First Alachua unanimously recommends that
shareholders vote FOR approval of the Agreement and Plan of Merger.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jerry M. Smith
------------------------------------
Jerry M. Smith
President and Chairman of the Board
Alachua, Florida
April 15, 2005
_____________________________________________________________________________
Whether or not you plan to attend the Special Meeting, please complete, date,
and sign the enclosed proxy card and promptly return it in the enclosed
postage paid return envelope in order to ensure that your shares will be
represented at the Special Meeting.
Sections 607.1301 - 607.1333 of the Florida Business Corporation Act provide
that each First Alachua shareholder may dissent from the Agreement and Plan
of Merger and demand payment of the fair value of his or her shares in cash
if the merger is consummated. The right of any shareholder to receive such
payment is contingent upon strict compliance with the provisions of Sections
607.1301 - 607.1333 of the Florida Business Corporation Act. We have
included for your review the full text of Sections 607.1301 - 607.1333 of the
Florida Business Corporation Act in Appendix C attached to the accompanying
Proxy Statement/Prospectus. See "DESCRIPTION OF THE MERGER - Dissenters'
Rights of Appraisal" in the accompanying Proxy Statement/Prospectus, page 33.
_____________________________________________________________________________
TABLE OF CONTENTS
SECTION I1
WHERE YOU CAN FIND MORE INFORMATION ABOUT CCBG.................................................1
IMPORTANT INFORMATION ABOUT THE AGREEMENT AND PLAN OF MERGER...................................2
A WARNING ABOUT FORWARD-LOOKING STATEMENTS.....................................................2
SECTION II.....................................................................................3
QUESTIONS AND ANSWERS ABOUT THE MEETING........................................................3
SUMMARY........................................................................................5
The Companies...............................................................................5
Capital City Bank Group, Inc................................................................5
The Merger..................................................................................5
Background of the Merger....................................................................5
Our Reasons for the Merger and Recommendation to First Alachua Shareholders.................6
Summary of SunTrust Robinson Humphrey Opinion to the Board of Directors of First Alachua....7
First Alachua Special Shareholder Meeting...................................................7
Record Date for Special Shareholder Meeting.................................................7
Vote Required...............................................................................7
What First Alachua Shareholders will Receive................................................8
Regulatory Approvals........................................................................8
Conditions to the Merger....................................................................8
Termination of the Agreement and Plan of Merger.............................................9
Dissenters' Rights of Appraisal.............................................................9
Interests of Officers and Directors in the Merger that are Different from Yours.............9
Important Federal Income Tax Consequences of the Merger....................................10
Accounting Treatment of the Merger.........................................................10
Certain Differences in Shareholders' Rights................................................10
Comparative Market Prices of Common Stock..................................................11
Listing of CCBG Common Stock...............................................................12
Risk Factors...............................................................................12
Recent Developments in CCBG's Business.....................................................12
Selected Financial Data....................................................................12
RISK FACTORS..................................................................................14
MEETING OF FIRST ALACHUA SHAREHOLDERS.........................................................16
Date, Place, Time, and Purpose.............................................................16
Record Date, Voting Rights, Required Vote, and Revocability of Proxies.....................17
DESCRIPTION OF THE MERGER.....................................................................18
General....................................................................................18
Background of the Merger...................................................................19
Our Reasons for the Merger and Recommendation to First Alachua Shareholders................21
Summary of SunTrust Robinson Humphrey Opinion to the Board of Directors of First Alachua...22
Analysis of First Alachua..................................................................25
Analysis of CCBG...........................................................................26
Other Factors and Analyses.................................................................27
Information Regarding SunTrust Robinson Humphrey...........................................27
CCBG's Reasons for the Merger..............................................................28
Effective Time of the Merger...............................................................29
Distribution of CCBG Stock Certificates....................................................29
Conditions to Consummation of the Merger...................................................30
Regulatory Approvals.......................................................................31
Waiver, Amendment, and Termination.........................................................31
Dissenters' Rights of Appraisal............................................................33
Conduct of Business Pending the Merger.....................................................36
Management and Operations after the Merger; Interests of Certain Persons in the Merger.....39
Certain Federal Income Tax Consequences....................................................41
Accounting Treatment.......................................................................42
Expenses and Fees..........................................................................43
Resales of CCBG Common Stock...............................................................43
DESCRIPTION OF CCBG CAPITAL STOCK.............................................................43
i
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS................................................44
Anti-Takeover Provisions Generally.......................................................44
Authorized Capital Stock.................................................................45
Amendment of Articles of Incorporation and Bylaws........................................46
Classified Board of Directors and Absence of Cumulative Voting...........................47
Director Removal and Vacancies...........................................................47
Indemnification..........................................................................48
Special Meetings of Shareowners..........................................................49
Ability of Directors to Consider Interests Other Than Shareowners' Interests.............50
Actions by Shareowners Without a Meeting.................................................50
Shareowner Nominations...................................................................51
Dissenters' Rights of Appraisal..........................................................51
COMPARATIVE MARKET PRICES AND DIVIDENDS.......................................................51
Price Range of Common Stock..............................................................51
Stock Purchase Program...................................................................53
Comparative Dividends....................................................................53
SECTION III...................................................................................55
BUSINESS OF FIRST ALACHUA.....................................................................55
General..................................................................................55
Management Stock Ownership...............................................................55
Voting Securities and Principal Shareholders of First Alachua............................56
SECTION IV....................................................................................57
BUSINESS OF CCBG..............................................................................57
General..................................................................................57
Banking Services.........................................................................57
Data Processing Services.................................................................58
Trust Services and Asset Management......................................................58
Brokerage Services.......................................................................58
Expansion of Business....................................................................58
SECTION V.....................................................................................60
DIRECTORS AND EXECUTIVE OFFICERS AFTER THE MERGER............................................60
SECTION VI....................................................................................62
SHAREOWNER PROPOSALS..........................................................................62
EXPERTS.......................................................................................62
LEGAL MATTERS.................................................................................62
OTHER MATTERS.................................................................................62
PRO FORMA FINANCIAL INFORMATION...............................................................63
APPENDIX A - AGREEMENT AND PLAN OF MERGER
APPENDIX B - BANK PLAN OF MERGER
APPENDIX C - DISSENTERS' RIGHTS OF APPRAISAL
APPENDIX D - FAIRNESS OPINION OF SUNTRUST ROBINSON HUMPHREY
ii
SECTION I
WHERE YOU CAN FIND MORE INFORMATION ABOUT CCBG
CCBG files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any materials CCBG
files with the SEC at the SEC's Public Reference Room at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. You should call the
SEC at 1-800-SEC-0330 for further information on the operation of the Public
Reference Room. The SEC also maintains a Web site that contains reports,
proxy and information statements and other information about CCBG. The
address of the SEC Web site is http://www.sec.gov.
CCBG filed a Registration Statement on Form S-4 to register with the SEC
the shares that CCBG will issue to First Alachua shareholders in the merger.
This Proxy Statement/Prospectus is a part of that Registration Statement.
Because the rules and regulations of the SEC allow the omission of certain
portions of the Registration Statement from this document, this Proxy
Statement/Prospectus does not include all of the information contained in the
Registration Statement. For further information about CCBG and the
securities offered in this Proxy Statement/Prospectus, you should review the
Registration Statement at the SEC's Public Reference Room or on its Web site.
The SEC allows CCBG to "incorporate by reference" information into the
Proxy Statement/Prospectus, which means that CCBG can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered part of
this Proxy Statement/Prospectus, except when superseded by information
contained in this Proxy Statement/Prospectus or in later filed documents
incorporated by reference in this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus incorporates by reference the documents
listed below that CCBG previously filed with the SEC. These documents
contain important information about CCBG and its finances.
* Annual Report on Form 10-K for the fiscal year ended
December 31, 2004
* Current Reports on Form 8-K filed on February 9, 2005,
March 11, 2005 and March 31, 2005
CCBG also incorporates by reference additional documents that it may
file with the SEC between the date of this Proxy Statement/Prospectus and the
completion of the merger or the termination of the Agreement and Plan of
Merger. These additional documents include periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, as well as proxy statements. We have included a copy of Amendment
No. 1 to our Form 10-K for the fiscal year ended December 31, 2004 with this
Proxy Statement/Prospectus.
CCBG's internet website is www.ccbg.com. CCBG's annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, including any
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d), and reports filed pursuant to Section 16, 13(d), and 13(g) of the
Exchange Act are available free of charge through the website as soon as
reasonably practicable after they are electronically filed with, or furnished
to, the SEC. In addition, you may obtain free of charge any such documents
filed by or furnished to the SEC by CCBG by requesting them from CCBG at the
address or telephone number listed on page 5.
PLEASE NOTE
Neither CCBG nor First Alachua has authorized anyone to give any
information or make any statement about the merger or either company that
differs from, or adds to, the information in the Proxy Statement/Prospectus
or in other documents filed with the SEC. Therefore, if anyone gives you
different or additional information, you should not rely on it.
If you reside in a jurisdiction where it is unlawful to offer to
exchange or sell, or to ask for offers to exchange or buy, the securities
offered by this Proxy Statement/Prospectus or to ask for proxies, or if you
are a person to whom it is unlawful to direct such activities, then the offer
presented by this Proxy Statement/Prospectus does not extend to you.
The information contained in this Proxy Statement/Prospectus speaks only
as of its date unless the information specifically indicates that another
date applies.
1
Information in this Proxy Statement/Prospectus about CCBG has been
supplied by CCBG, and information about First Alachua has been supplied by
First Alachua.
IMPORTANT INFORMATION ABOUT THE AGREEMENT AND PLAN OF MERGER
The Agreement and Plan of Merger, which is included in this Proxy
Statement/Prospectus in Appendix A, has been included to provide you with
information regarding its terms. It is not intended to provide any other
factual information about CCBG or First Alachua.
The Agreement and Plan of Merger contains representations and warranties
CCBG and First Alachua made to each other. The assertions embodied in those
representations and warranties are qualified by information in confidential
disclosure schedules that CCBG and First Alachua have exchanged in connection
with signing the Agreement and Plan of Merger. While CCBG and First Alachua
do not believe that these disclosure schedules contain information securities
laws require us to publicly disclose other than information that has already
been so disclosed, the disclosure schedules do contain information that
modifies, qualifies and creates exceptions to the representations and
warranties set forth in the attached Agreement and Plan of Merger.
Accordingly, you should not rely on the representations and warranties as
characterizations of the actual state of facts, because they are modified in
important part by the underlying disclosure schedules. These disclosure
schedules contain information that has been included in CCBG's general prior
public disclosures, as well as potential additional non-public information.
Moreover, information concerning the subject matter of the representations
and warranties may have changed since the date of the Agreement and Plan of
Merger, which subsequent information may or may not be fully reflected in
CCBG's public disclosures.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this Proxy
Statement/Prospectus (and in other documents filed with the SEC) that are
subject to risks and uncertainties. These statements are based on the
beliefs and assumptions of CCBG's and First Alachua's managements and on
information currently available to members of management. These forward-
looking statements include information about possible or assumed future
results of operations or the performance of CCBG after the merger. Many
possible events or factors could cause results or performance to differ
materially from those expressed in our forward-looking statements.
You should consider the events or factors detailed in the "RISK FACTORS"
section of this Proxy Statement/Prospectus beginning on page 14 when you vote
on the merger.
2
SECTION II
QUESTIONS AND ANSWERS ABOUT THE MEETING
Q(1): WHAT AM I BEING ASKED TO APPROVE?
A: You are being asked to approve the Agreement and Plan of Merger
providing for, among other things, (a) the merger of First Alachua
Banking Corporation with and into Capital City Bank Group, Inc., with
Capital City Bank Group, Inc. being the resulting financial holding
company, and (b) the merger of First National Bank of Alachua with and
into Capital City Bank, with Capital City Bank being the resulting
bank.
Q(2): WHY IS FIRST ALACHUA MERGING WITH CCBG?
A: The merger will enable First Alachua shareholders to hold stock in a
larger and more diversified entity whose shares are more widely held
and more actively traded. CCBG's common stock is traded on the Nasdaq
National Market under the symbol "CCBG." We also believe the merger
will enable First Alachua to serve better its customers with more
products and services. Based upon these and other factors, we believe
that the merger is in the best interest of the First Alachua
shareholders. We provide the background and more detailed reasons for
the merger, starting on page 19.
Q(3): AS A FIRST ALACHUA SHAREHOLDER, WHAT WILL I RECEIVE IN THE MERGER?
A: For each share of First Alachua common stock you own, CCBG will pay
you a combination of $2,847.04 in cash, plus approximately 71.176
shares of CCBG common stock. There are certain potential adjustments
that may reduce the amount of cash or stock that you may receive.
Cash will be paid in lieu of issuing fractional shares based upon the
average daily closing prices of one share of CCBG common stock (as
reported by the Nasdaq National Market) for the 20 consecutive full
trading days ending on and including the fifth full trading day prior
to the closing date of the merger.
Example: If you own 10 shares of First Alachua common stock, the
average daily closing price is $40.00 per share, and there are no
adjustments, upon completion of the merger, you will receive 711
shares of CCBG common stock and a check for $28,470.40, plus an
additional $30.40 in lieu of your remaining fractional share.
Q(4): WHAT HAPPENS AS THE MARKET PRICE OF CCBG COMMON STOCK FLUCTUATES?
A: Because the market value of CCBG common stock will fluctuate before
and after the closing date of the merger, the value of the stock you
will receive as a result of the merger will fluctuate as well and
could decrease in value. However, the Agreement and Plan of Merger
provides that First Alachua may terminate the Agreement and Plan of
Merger (subject to CCBG's right to increase the number of CCBG shares
to be issued in the merger) at any time during the two-day period
commencing at the close of trading on the fifth full trading day prior
to the closing date if both (i) the average daily closing price of one
share of CCBG common stock is less than or equal to $34, and (ii) the
number obtained by dividing the average daily closing price of one
share of CCBG common stock by 40 is less than a formula-based weighted
average of an index group of 22 bank holding companies.
Q(5): WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We expect to complete the merger during the second quarter of 2005.
The merger must be approved by holders of a majority of the First
Alachua common stock and by certain regulatory agencies, including the
Board of Governors of the Federal Reserve System and the Florida
Department of Financial Services. Additional approvals by or notices
to other Florida state authorities may be necessary.
Q(6): WHAT ARE THE U.S. TAX CONSEQUENCES OF THE MERGER TO ME?
A: We expect that for U.S. federal income tax purposes, your exchange of
First Alachua common stock for CCBG common stock in the merger
generally will not cause you to recognize any gain or loss. You will,
however, have to recognize gain in connection with any cash received
in the merger. In addition, shareholders who exercise dissenters'
rights may recognize gain or loss in the exchange of their shares for
cash. We urge you to consult your own tax advisers as to the specific
tax consequences of the merger to you.
3
We provide a more detailed review of the U.S. federal income tax
consequences of the merger at page 41 of this Proxy
Statement/Prospectus.
Q(7): AS A FIRST ALACHUA SHAREHOLDER, DO I HAVE TO ACCEPT CCBG COMMON STOCK
IN EXCHANGE FOR MY SHARES IF THE MERGER IS APPROVED?
A: No. If you are a First Alachua shareholder and you follow the
procedures prescribed by Florida law, you may dissent from the merger
and receive the fair value of your stock. If you follow those
procedures, you will not receive CCBG common stock. Instead, the fair
value of your First Alachua stock, determined in the manner prescribed
by Florida law, will be paid to you in cash.
Q(8): WHAT SHOULD I DO NOW?
A: Just indicate on your proxy card how you want to vote, sign it and
mail it in the enclosed envelope as soon as possible, so that your
shares will be represented at the Special Meeting.
If you sign and send in your proxy and do not indicate how you want to
vote, your proxy will be voted in favor of the proposal to approve the
merger. If you do not sign and send in your proxy or attend and vote
in favor of the merger at the Special Meeting, your failure to vote
will count as a vote against the merger. Failure to vote against the
merger will not result in a waiver of your right to dissent. However,
the failure to vote or a vote against the merger, alone, will not
perfect your dissenters' rights under Florida law.
The meeting is scheduled for May 20, 2005. You are invited to the
meeting to vote your shares in person rather than signing and mailing
your proxy card. If you do sign your card, you can take back your
proxy up to and including the time of the vote at the meeting and
either change your vote or attend the meeting and vote in person. We
provide more detailed instructions about voting starting on page 17.
Q(9): SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, you will be sent written
instructions explaining how to exchange your First Alachua common
stock certificates for CCBG common stock certificates and the cash
portion of the merger consideration.
Q(10): WHO CAN HELP ANSWER MY QUESTIONS?
A: If you want additional copies of this document, or if you want to ask
any questions about the merger, you should contact:
Jerry M. Smith, President
First Alachua Banking Corporation
15000 NW 140th Street
Alachua, Florida 32615
(386) 462-1041
4
SUMMARY
This summary highlights selected information contained elsewhere in this
Proxy Statement/Prospectus. Because this is a summary, it does not contain
all of the information that may be important to you. You should read the
entire Proxy Statement/Prospectus carefully. We have included page
references in this summary to direct you to other places in this Proxy
Statement/Prospectus where you can find a more complete description of the
topics we have summarized.
The Companies (See Page 55 for First Alachua, Page 57 for CCBG)
First Alachua Banking Corporation
15000 NW 140th Street
Alachua, Florida 32615
(386) 462-1041
First Alachua Banking Corporation is a financial services company and
the parent company of First National Bank of Alachua which was established in
1908. First National Bank of Alachua is headquartered in Alachua, Florida
and has assets totaling $229 million in seven banking offices and one
mortgage office in north central Florida and one banking office in St. Johns
County, Florida. First National Bank of Alachua offers its clients a variety
of services including deposit services, loans, ATMs, credit card merchant
services, investment services, mortgage lending and business accounts. First
National Bank of Alachua's website is www.fnba.net.
Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 32301
(850) 671-0300
CCBG is a $2.4 billion financial holding company headquartered in
Tallahassee, Florida providing traditional deposit and credit services, asset
management, trust, mortgage banking, bankcards, data processing and
securities brokerage services. Founded in 1895, CCBG has 60 banking offices,
5 residential lending offices, 75 ATMs, and 11 Bank 'N Shop locations in
Florida, Georgia and Alabama. For more information about CCBG, go to
www.ccbg.com.
The Merger (See Page 18)
The Agreement and Plan of Merger provides for CCBG to acquire First
Alachua by merging First Alachua with and into CCBG, with CCBG being the
resulting corporation. Immediately thereafter, First National Bank of
Alachua will merge with and into Capital City Bank, with Capital City Bank
being the resulting bank. A copy of the Agreement and Plan of Merger is
attached as Appendix A to this Proxy Statement/Prospectus. We encourage you
to read the Agreement and Plan of Merger because it is the legal document
that governs the merger.
Background of the Merger (See Page 19)
In April 2004, Jerry M. Smith, Chief Executive Officer and controlling
shareholder of First Alachua, contacted representatives of SunTrust Robinson
Humphrey to discuss possible strategic alternatives, because he had concerns
about management succession. Immediately thereafter, management of First
Alachua and SunTrust Robinson Humphrey began gathering the appropriate
information and developing a confidential memorandum describing First Alachua
that could be distributed to potential interested parties.
Upon completion of the confidential memorandum, in mid-July 2004,
SunTrust Robinson Humphrey contacted 25 potential acquirers with respect to
First Alachua. Nine entities signed confidentiality agreements and requested
the confidential memorandum on First Alachua. Of these nine entities, two
entities provided bids to First Alachua on August 26, 2004. After requesting
the two bidders to enhance their bids and reviewing the revised bids with
SunTrust Robinson Humphrey, Mr. Smith concluded that it would be preferable
to pursue a transaction with CCBG.
5
After SunTrust Robinson Humphrey and First Alachua's counsel conducted
due diligence on CCBG in October and November and SunTrust Robinson Humphrey
conducted intensive due diligence with CCBG management in late November 2004,
Mr. Smith called a meeting of the board of directors of First Alachua to
apprise the directors of the potential transaction with CCBG. SunTrust
Robinson Humphrey and First Alachua's counsel reviewed the terms of the
transaction with the board of directors of First Alachua. The board of
directors of First Alachua unanimously agreed to pursue the opportunity with
CCBG.
On February 3, 2005, after extensive additional discussion and
deliberation, the boards of directors of First Alachua and First National
Bank of Alachua approved the Agreement and Plan of Merger and authorized Mr.
Smith to execute the agreement on behalf of both entities.
Our Reasons for the Merger and Recommendation to First Alachua Shareholders
(See Page 21)
The First Alachua Board of Directors believes that the merger is in the
best interests of First Alachua and its shareholders. The First Alachua
Board of Directors has unanimously approved the Agreement and Plan of Merger.
In deciding to approve the Agreement and Plan of Merger, the First Alachua
Board of Directors considered a number of factors, including:
* the value of the consideration to be received by First Alachua
shareholders relative to the book value and earnings per share of First
Alachua common stock;
* certain information concerning the financial condition, results of
operations and business prospects of CCBG;
* the financial terms of recent business combinations in the financial
services industry and a comparison of the multiples of selected
combinations with the proposed transaction with CCBG;
* the alternatives to the merger, including remaining an independent
institution;
* the previous experience of management of CCBG in completing acquisition
transactions;
* the expanded range of banking services that the merger will allow First
Alachua to provide to its customers;
* the competitive and regulatory environment for financial institutions
generally;
* the fact that the merger will enable First Alachua shareholders to
exchange their shares of First Alachua common stock, in a partially tax-
free transaction, for cash and shares of common stock of a larger
company, the stock of which is more widely held and more liquid than
that of First Alachua; and
* the opinion of SunTrust Robinson Humphrey that the consideration to be
received by First Alachua shareholders as a result of the merger is fair
to First Alachua shareholders from a financial point of view.
The CCBG Board of Directors believes that the merger is in the best
interests of CCBG and its shareowners. The CCBG Board of Directors has
unanimously approved the Agreement and Plan of Merger. In deciding to
approve the Agreement and Plan of Merger, the CCBG Board of Directors
considered a number of factors, including:
* a review, based in part on a presentation by CCBG's management, of
- the business, operations, earnings, and financial condition,
including the capital levels and asset quality, of First Alachua on
historical, prospective, and pro forma bases and in comparison to other
financial institutions in the area; and
6
- the demographic, economic, and financial characteristics of the
Alachua and St. Johns County markets, including existing competition, history
of the market area with respect to financial institutions, and average demand
for credit, on historical and prospective bases.
* the results of CCBG's due diligence review of First Alachua;
* the likelihood of regulators approving the merger without undue
conditions or delay;
* the compatibility and the community bank orientation of both CCBG and
First Alachua; and
* a variety of factors affecting and relating to the overall strategic
focus of CCBG.
The Boards of Directors of First Alachua and CCBG believe that the
merger will result in a company with expanded opportunities for profitable
growth and that the combined resources and capital of First Alachua and CCBG
will provide the combined company with greater ability to compete in the
changing and competitive financial services industry.
The First Alachua Board believes that the merger of First Alachua with
and into CCBG is in the best interests of First Alachua and First Alachua's
shareholders. The First Alachua Board unanimously recommends that you vote
FOR the merger.
Summary of SunTrust Robinson Humphrey Opinion to the Board of Directors of
First Alachua (See Page 22)
In deciding to approve the merger, we have considered an opinion from
our financial adviser, SunTrust Robinson Humphrey, that the price to be paid
to First Alachua shareholders is fair to First Alachua shareholders, from a
financial point of view. The full text of this opinion is attached to this
Proxy Statement/Prospectus as Appendix D. We encourage you to read this
opinion.
First Alachua Special Shareholder Meeting (See Page 16)
The Special Meeting will be held at First National Bank of Alachua,
located at 15000 NW 140th Street, Alachua, Florida 32615, on Friday, May 20,
2005, at 10:00 a.m., Eastern Time. The First Alachua Board of Directors is
soliciting proxies for use at the Special Meeting. At the Special Meeting,
the First Alachua Board of Directors will ask the First Alachua shareholders
to vote on a proposal to approve the Agreement and Plan of Merger.
Record Date for Special Shareholder Meeting (See Page 17)
You may vote at the Special Meeting if you owned shares of First Alachua
common stock of record as of the close of business on Tuesday, April 12,
2005. You will have one vote for each share of First Alachua common stock
you owned as of that date. You may revoke your proxy at any time prior to or
at the time of the vote at the Special Meeting.
Vote Required (See Page 17)
Shareholders holding a majority of the outstanding shares of First
Alachua common stock entitled to vote at the Special Meeting must be present
in person or by proxy at the Special Meeting in order to form a quorum.
In order to approve the merger, however, shareholders holding a majority of
the outstanding shares of First Alachua common stock must approve the
Agreement and Plan of Merger. At the record date, the directors and
executive officers of First Alachua as a group (5 persons) could vote
approximately 6,878 shares of First Alachua common stock, constituting
approximately 67.5% of the total number of shares of First Alachua common
stock outstanding at that date. The First Alachua directors, as well as the
directors of First National Bank of Alachua, have committed to vote their
shares of First Alachua common stock in favor of the merger.
7
What First Alachua Shareholders will Receive (See Page 29)
Under the Agreement and Plan of Merger and subject to certain potential
adjustments, CCBG will pay First Alachua shareholders $2,847.04 in cash, plus
approximately 71.176 shares of CCBG common stock for each share of First
Alachua common stock that they own.
First Alachua shareholders will not receive fractional shares of CCBG
common stock. Instead, they will receive a payment for any fractional shares
based on the average of the daily closing sales prices of one share of CCBG
common stock, as reported by the Nasdaq National Market, for the 20
consecutive full trading days ending on and including the fifth full trading
day prior to the closing date of the merger.
In addition, as a condition to the merger, First Alachua must have,
immediately prior to the effective date of the merger, a net worth of at
least $25.375 million, subject to certain adjustments. Based on First
Alachua's last call report filed with the FDIC, as of December 31, 2004,
First Alachua had an unaudited net worth of approximately $25.392 million.
Based on CCBG's closing market price on the Nasdaq National Market on
February 3, 2005 (the day prior to the public announcement of the Agreement
and Plan of Merger), shareholders would receive total aggregate consideration
of approximately $58.0 million, or $5,690.53 per share (assuming 10,186
shares of First Alachua common stock are outstanding).
Once the merger is complete, CCBG's transfer agent will mail you
materials and instructions for exchanging your First Alachua stock
certificates for CCBG stock certificates and the cash portion of the
consideration. You should not send in your First Alachua stock certificates
until you receive the transmittal materials and instructions from CCBG's
transfer agent.
Regulatory Approvals (See Page 31)
We cannot complete the merger until we receive the approval of the Board
of Governors of the Federal Reserve System and the Florida Department of
Financial Services. CCBG and First Alachua have filed applications with the
Federal Reserve Board and the Florida Department of Financial Services
seeking approval of the merger. The approvals of these regulators may impose
conditions or restrictions that, in the opinion of CCBG and/or First Alachua,
would have a material adverse effect on the economic or business benefits of
the merger. In that event, CCBG and First Alachua may terminate the
Agreement and Plan of Merger by mutual consent.
Conditions to the Merger (See Page 30)
The completion of the merger depends upon CCBG and First Alachua
satisfying a number of conditions, including:
* the holders of a majority of the outstanding First Alachua common stock
must approve the Agreement and Plan of Merger;
* First Alachua must have a minimum net worth of at least $25.375 million,
subject to certain adjustments;
* CCBG and First Alachua must receive all required regulatory approvals
and any waiting periods required by law must have passed; and
* CCBG and First Alachua must each receive a legal opinion confirming the
tax-free nature of the merger.
Termination of the Agreement and Plan of Merger (See Page 31)
Either CCBG or First Alachua may terminate the Agreement and Plan of
Merger without completing the merger if, among other things, any of the
following occurs:
* the merger is not completed by August 31, 2005;
8
* the holders of a majority of the outstanding shares of First Alachua
common stock do not approve the Agreement and Plan of Merger; or
* the other party breaches or materially fails to comply with any of its
representations or warranties, covenants or obligations under the
Agreement and Plan of Merger.
* First Alachua may terminate the Agreement and Plan of Merger without
completing the merger if both:
* the adjusted average daily closing price of CCBG common stock is less
than or equal to $34.00; and
* the quotient obtained by dividing the average closing price by 40 is
less than a formula based on the weighted average of the closing prices
of an index group of 22 bank holding companies.
CCBG may terminate the Agreement and Plan of Merger without completing
the merger:
* in the event that the due diligence investigation of First Alachua by
CCBG results in a finding of an event or circumstance that has had or is
reasonably likely to have a material adverse effect on First Alachua's
financial position or business;
* if the audit opinion of First Alachua's auditor is qualified and the
total capital of First Alachua as of September 30, 2004 is not readily
determinable by First Alachua's auditor, and if CCBG and First Alachua
cannot agree upon appropriate audit adjustments within 30 days of
delivery of the audit opinion from First Alachua's auditors; or
* in the event that the Board of Directors of First Alachua or First
National Bank of Alachua does not reaffirm its approval of the Agreement
and Plan of Merger.
Dissenters' Rights of Appraisal (See Page 33 and Appendix C)
Each holder of First Alachua common stock as of the record date who
perfects his or her rights is entitled to the dissenters' rights of appraisal
under the Florida Business Corporation Act, subject to compliance with the
procedures set forth in those dissenters' rights of appraisal provisions.
Pursuant to Section 607.1302 of the Florida Business Corporation Act, a First
Alachua shareholder who does not wish to accept the shares of CCBG common
stock to be received pursuant to the terms of the Agreement and Plan of
Merger may dissent from the merger and elect to receive the fair value of his
or her shares immediately prior to the completion of the merger. A copy of
the dissenters' rights of appraisal statute under the Florida Business
Corporation Act is set forth in Appendix C to this Proxy Statement/Prospectus
and a summary is included under "DESCRIPTION OF THE MERGER - Dissenters'
Rights of Appraisal."
Interests of Officers and Directors in the Merger that are Different from
Yours (See Page 39)
Certain members of First Alachua's management and Board of Directors
have interests in the merger that are in addition to their interests as
shareholders of First Alachua.
Jerry M. Smith, Chairman, President and Chief Executive Officer, will be
paid a bonus of up to $1,000,000 by either CCBG or Capital City Bank upon the
successful completion of the merger and will enter into a three-year
employment agreement with CCBG.
The Agreement and Plan of Merger contains provisions for the
indemnification of First Alachua directors, officers and employees by CCBG,
and provisions for the officers and employees of First Alachua to receive
certain employee benefits that CCBG already provides to its officers and
employees.
In addition, the Agreement and Plan of Merger contains provisions for
CCBG to provide directors' and officers' liability insurance (with certain
cost restraints) to First Alachua's officers and directors, for three years
after the effective time of the merger.
9
The CCBG and First Alachua Boards of Directors were aware of these
interests and took them into account in approving the Agreement and Plan of
Merger.
Important Federal Income Tax Consequences of the Merger (See Page 41)
It is anticipated that CCBG, First Alachua and their shareowners will
not recognize any gain or loss for U.S. federal income tax purposes from the
merger, except for the cash portion of the consideration paid to First
Alachua shareholders for their First Alachua common stock and the cash
received by First Alachua shareholders instead of fractional shares. Both
CCBG and First Alachua will receive a legal opinion to that effect. Forms of
these legal opinions are filed as exhibits to the Registration Statement of
which this Proxy Statement/Prospectus is a part. However, the opinions do
not bind the Internal Revenue Service, which could take a different view. In
addition, this tax treatment will not apply to any First Alachua shareholder
who receives cash for his or her shares due to the exercise of dissenters'
rights. Determining the actual tax consequences of the merger to you as an
individual taxpayer can be complicated, and the tax treatment also may depend
upon facts that are unique to your specific situation. Accordingly, you
should consult your own tax adviser for a full understanding of the tax
consequences of the merger.
Accounting Treatment of the Merger (See Page 42)
The merger will be accounted for as a "purchase," as that term is used
under accounting principles generally accepted in the United States, for
accounting and financial reporting purposes. Under purchase accounting, the
assets and liabilities of First Alachua as of the effective time of the
merger will be recorded at their respective fair values and added to those of
CCBG. Any excess of purchase price over the fair values is recorded as
goodwill. Financial statements of CCBG issued after the merger would reflect
such fair values and would not be restated retroactively to reflect the
historical financial position or results of operations of First Alachua.
Certain Differences in Shareholders' Rights (See Page 44)
When the merger is consummated, First Alachua shareholders, whose rights
are governed by First Alachua's Articles of Incorporation and Bylaws, as
amended, and by the Florida Business Corporation Act, will automatically
become CCBG shareowners, and their rights as CCBG shareowners will be
determined by CCBG's Articles of Incorporation and Bylaws and by the Florida
Business Corporation Act. The rights of CCBG shareowners differ from the
rights of First Alachua shareholders in certain important respects. For
example:
* CCBG's Articles of Incorporation and Bylaws contain certain provisions
designed to assist the CCBG Board of Directors with protecting the
interests of CCBG and its shareowners if any group or person attempts to
acquire control of CCBG, while First Alachua's do not.
* CCBG is authorized to issue both common and preferred stock (which has
not been designated), whereas First Alachua has only Class A common
stock and Class B common stock authorized.
* The affirmative vote of the holders of at least two-thirds of all the
issued and outstanding voting shares of capital stock is required to
amend certain provisions of CCBG's Articles of Incorporation, including
provisions relating to shareowner meetings, nomination, election and
removal of directors, acquisition offers, indemnification, and
amendments. Amendment of the First Alachua Articles of Incorporation
only requires a majority of the outstanding shares of capital stock.
* CCBG has a classified Board of Directors, divided into three classes.
Each class serves a three-year term with one class's term expiring each
year. The effect of CCBG having a classified Board of Directors is that
only approximately one-third of the members of the Board is elected each
year. First Alachua does not have a classified board, and each director
of First Alachua is subject to annual elections.
* CCBG's bylaws expand the Florida Business Corporation Act's statutory
scheme of indemnification of officers and directors by providing for the
mandatory indemnification of any of its officers and directors for costs and
expenses actually and reasonably incurred in connection with a legal
proceeding, regardless of
10
whether the officer or director is successful on the merits or
otherwise, including amounts paid in settlement of such a proceeding, to
the fullest extent permitted by the Florida Business Corporation Act,
and requires advancement of such costs and other expenses during pending
proceedings. The Board of Directors also has discretionary ability to
provide indemnification with respect to other persons, such as agents
and employees. Indemnification of First Alachua's directors, officers,
employees, and other agents is provided pursuant to the Florida Business
Corporation Act. Neither the Articles of Incorporation nor the Bylaws
of First Alachua provide for an expansion of the indemnification rights
provided under the Florida Business Corporation Act.
* CCBG's Articles of Incorporation expressly require the Board of
Directors to consider all factors it deems relevant in evaluating a
proposed share exchange, tender offer, merger, consolidation, or other
similar transaction. Under the Florida Business Corporation Act, First
Alachua's Board of Directors may rely upon such factors as the directors
deem relevant in evaluating such transactions.
* CCBG's Bylaws provide that any action required or permitted to be taken
at a meeting of shareowners may not be effected by the written consent
of the shareowners entitled to vote on the action, whereas First
Alachua's Bylaws provide that any action required or permitted to be
taken at a meeting of shareholders may be taken without a meeting if a
consent in writing, setting forth the action taken, shall be signed by
all of the shareholders entitled to vote with respect to the relevant
subject matter.
* Because CCBG's common stock is traded on the Nasdaq National Market,
shareowners of CCBG generally do not have dissenters' rights of
appraisal under the Florida Business Corporation Act, whereas First
Alachua's shareholders do.
Comparative Market Prices of Common Stock (See Page 51)
CCBG common stock is traded on the Nasdaq National Market under the
symbol "CCBG." First Alachua common stock is not traded in any established
market. On February 3, 2005, the last day prior to the public announcement
of the Agreement and Plan of Merger, the last reported sale price per share
of CCBG common stock on the Nasdaq National Market was $39.95. Based on the
combined $2,847.04 in cash and the exchange ratio of approximately 71.176
shares of CCBG stock for each share of stock, the resulting equivalent pro
forma price per share of First Alachua common stock would have been
$5,690.53.
To the knowledge of First Alachua, the most recent sale of First Alachua
common stock prior to February 3, 2005, the last day prior to the public
announcement of the Agreement and Plan of Merger, was on January 30, 2002,
which was a sale of 25 shares for a purchase price of $1,537.67 per share.
To the knowledge of First Alachua, there have been no sales since the
announcement of the merger. There can be no assurance as to what the market
price of the CCBG common stock will be if and when the merger is consummated.
Listing of CCBG Common Stock (See Page 43)
CCBG will list the shares of CCBG common stock to be issued in
connection with the merger on the Nasdaq National Market.
Risk Factors (See Page 14)
An investment in CCBG common stock involves risks. In determining
whether to approve the Agreement and Plan of Merger, you should consider the
various risks associated with an investment in CCBG common stock as more
fully described in the "Risk Factors" section beginning on page 14.
Recent Developments in CCBG's Business
On March 19, 2004, Capital City Bank completed its merger with Quincy
State Bank, a former affiliate of Synovus Financial Corp. Results of
Quincy's operations have been included in CCBG's consolidated financial
statements since March 20, 2004. Quincy had $116.6 million in assets with
one office in Quincy, Florida and one
11
office in Havana, Florida. The transaction was accounted for as a purchase
and resulted in approximately $14.9 million of intangible assets, including
approximately $12.5 million in goodwill and a core deposit intangible of $2.4
million. The core deposit intangible is being amortized over a seven-year
period.
On October 15, 2004, CCBG completed its merger with Farmers and
Merchants Bank. Results of Farmers and Merchants Bank's operations have been
included in CCBG's consolidated financial statements since October 16, 2004.
Farmers and Merchants Bank had $411 million in assets with three full-service
offices in Laurens County, Georgia. The transaction was accounted for as a
purchase and resulted in approximately $41.1 million of intangible assets,
including approximately $34.7 million in goodwill, a core deposit intangible
of $5.9 million and a non-compete agreement of approximately $0.5 million.
The core deposit intangible is being amortized over a seven-year period and
the non-compete is being amortized over a two-year period.
Selected Financial Data
The following table presents selected consolidated financial data for
CCBG for the five-year period ended December 31, 2004. The CCBG information
is based on the consolidated financial statements contained in reports CCBG
filed with the SEC, including its Annual Report on Form 10-K for the year
ended December 31, 2004. These documents are incorporated by reference in
this Proxy Statement/Prospectus. See "WHERE YOU CAN FIND MORE INFORMATION
ABOUT CCBG," on page 1. You should read the following tables in conjunction
with the consolidated financial statements of CCBG described above and the
footnotes to them.
Historical results are not necessarily indicative of results to be
expected for any future period. In the opinion of the management of CCBG, all
adjustments (which include only normal recurring adjustments) necessary to
arrive at a fair statement of interim results of operations of CCBG have been
included.
12
Capital City Bank Group, Inc. and Subsidiary
At or for the year ended December 31,
--------------------------------------------------------------
(Dollars in Thousands, Except Per Share Data)(1) 2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------
Interest Income $101,525 $94,830 $104,165 $117,156 $107,720
Net Interest Income 86,084 79,991 81,662 68,907 61,486
Provision for Loan Losses 2,141 3,436 3,297 3,983 3,120
Net Income 29,371 25,193 23,082 16,866 18,153
Per Common Share:
Basic Net Income $2.18 $1.91 $1.75 $1.27 $1.43
Diluted Net Income 2.18 1.90 1.74 1.27 1.43
Cash Dividends Declared .730 .656 .502 .476 .436
Diluted Book Value 18.13 15.27 14.08 12.86 11.61
Based on Net Income:
Return on Average Assets 1.46% 1.40% 1.34% 0.99% 1.24%
Return on Average Equity 13.31% 12.82% 12.85% 10.00% 12.99%
Net Interest Margin (FTE) 4.88% 5.01% 5.35% 4.61% 4.80%
Dividend Payout Ratio 33.42% 34.51% 28.87% 37.48% 30.49%
Equity to Assets Ratio 10.86% 10.98% 10.22% 9.43% 9.66%
Averages for the Period:
Loans, Net of Unearned Interest $1,538,744 $1,318,080 $1,256,107 $1,184,290 $1,002,122
Earning Assets 1,789,843 1,624,680 1,556,500 1,534,548 1,315,024
Assets 2,006,745 1,804,895 1,727,180 1,704,167 1,463,612
Deposits 1,599,201 1,431,808 1,424,999 1,442,916 1,207,103
Subordinated Note 5,155 -- -- -- --
Long-Term Debt 59,462 55,594 30,423 15,308 13,070
Shareowners' Equity 220,731 196,588 179,652 168,652 139,738
Period-End Balances:
Loans, Net of Unearned Interest $1,828,825 $1,341,632 $1,285,221 $1,243,351 $1,051,832
Earning Assets 2,113,571 1,648,818 1,636,472 1,626,841 1,369,294
Assets 2,364,013 1,846,502 1,824,771 1,821,423 1,527,460
Deposits 1,894,886 1,474,205 1,434,200 1,550,101 1,268,367
Subordinated Note 30,928 -- -- -- --
Long-Term Debt 68,453 46,475 71,745 13,570 11,707
Shareowners' Equity 256,800 202,809 186,531 171,783 147,607
Other Data:
Basic Average Shares Outstanding 13,443,753 13,222,487 13,225,285 13,241,957 12,732,749
Diliuted Average Shares Outstanding 13,447,937 13,251,189 13,274,355 13,292,435 12,768,553
Shareowners of Record 1,598 1,512 1,457 1,473 1,599
Banking Locations 60 57 54 56 56
Full-Time Equivalent Associates 926 795 781 787 791
- -----------------------------------------------------
(1) All shares and per share data have been adjusted to reflect the 5-for-4 stock split effective June 13, 2003.
13
RISK FACTORS
In addition to the other information contained in or incorporated by
reference into this Proxy Statement/Prospectus, in deciding whether to
approve the Agreement and Plan of Merger, you should consider the various
risks associated with an investment in CCBG common stock, including, but not
limited to the following:
CCBG may have difficulties integrating First Alachua's operations into CCBG's
operations.
The merger involves the integration of two companies that have
previously operated independently of each other. Successful integration of
First Alachua's operations will depend primarily on CCBG's ability to
consolidate its operations, systems and procedures into those of CCBG and to
eliminate redundancies and costs. We may not be able to integrate our
operations without encountering difficulties including, without limitation:
* the loss of key employees and customers;
* possible inconsistencies in standards, control procedures and policies;
and
* unexpected problems with costs, operations, personnel, technology or
credit.
In determining that the merger is in the best interests of CCBG and
First Alachua, as the case may be, the Board of Directors of each of CCBG and
First Alachua considered that enhanced earnings may result from the
consummation of the merger, including from the reduction of duplicate costs,
improved efficiency and cross-marketing opportunities. However, we cannot
assure that any enhanced earnings or cost savings will actually occur from
the merger.
There is a limited market for shares of CCBG common stock.
While CCBG common stock is listed and traded on the Nasdaq National
Market, there has been limited trading activity in CCBG common stock. The
average daily trading volume of CCBG common stock over the twelve-month
period ending December 31, 2004 was approximately 10,761 shares. CCBG does
not anticipate that the merger will cause any significant improvements in the
trading of CCBG common stock.
CCBG and Capital City Bank are subject to extensive governmental regulation.
CCBG and Capital City Bank are subject to extensive governmental
regulation. CCBG, as a financial holding company, is regulated primarily by
the Federal Reserve. Capital City Bank is a commercial bank chartered by the
State of Florida and regulated by the Federal Reserve, the Federal Deposit
Insurance Corporation and the Florida Department of Financial Services.
These federal and state bank regulators have the ability, should the
situation require, to place significant regulatory and operational
restrictions upon CCBG and Capital City Bank. Any such restrictions imposed
by federal and state bank regulators could affect the profitability of CCBG
and Capital City Bank.
The financial institution industry is very competitive.
CCBG and Capital City Bank compete directly with financial institutions
that are well established and have significantly greater resources and
lending limits than CCBG and Capital City Bank. As a result of those greater
resources, the large financial institutions may be able to provide a broader
range of services to their customers than CCBG and may be able to afford
newer and more sophisticated technology than CCBG. The long-term success of
CCBG will be dependent on the ability of Capital City Bank to compete
successfully with other financial institutions in its service areas.
14
Management of CCBG holds a large portion of CCBG common stock.
As of the record date, the directors and executive officers of CCBG
beneficially owned about 4.85 million shares of CCBG common stock, or 34.3%,
of the total outstanding shares of CCBG. As a result, CCBG's management has
significant control of CCBG.
CCBG's Articles of Incorporation and Bylaws may prevent or delay a takeover
by another company.
CCBG's Articles of Incorporation permit the Board of Directors of CCBG
to issue preferred stock without shareowner action. The ability to issue
preferred stock could discourage a company from attempting to obtain control
of CCBG by means of a tender offer, merger, proxy contest or otherwise.
Additionally, CCBG's Articles of Incorporation and Bylaws divide the Board of
Directors of CCBG into three classes, as nearly equal in size as possible,
with staggered three-year terms. One class is elected each year. The
classification of the Board of Directors could make it more difficult for a
company to acquire control of CCBG. CCBG is also subject to certain
provisions of the Florida Business Corporation Act and the CCBG Articles of
Incorporation which relate to business combinations with interested
shareowners.
The fairness opinion obtained by First Alachua will not reflect changes in
circumstances between the signing of the Agreement and Plan of Merger and the
closing date.
First Alachua has not obtained an updated opinion as of the date of this
document from its financial adviser. Changes in the operations and prospects
of First Alachua, general market and economic conditions and other factors
which may be beyond the control of First Alachua, and on which the fairness
opinion was based, may alter the value of First Alachua or the prices of
shares of First Alachua common stock and shares of CCBG common stock by the
time the merger is completed. The opinion does not speak as of the time the
merger will be completed or as of any date other than the date of such
opinion. For a description of the opinion that First Alachua received from
its financial adviser, please refer to "DESCRIPTION OF THE MERGER - Summary
of SunTrust Robinson Humphrey Opinion to the Board of Directors of First
Alachua" on page 22.
Because the market price of CCBG common stock may fluctuate, you cannot be
sure of the value of the merger consideration that you will receive.
Upon completion of the merger, and subject to certain potential
adjustments, each share of First Alachua common stock will be converted into
merger consideration consisting of $2,847.04 in cash and approximately 71.176
shares of CCBG common stock pursuant to the terms of the Agreement and Plan
of Merger. The price of CCBG common stock may increase or decrease before or
after completion of the merger and, therefore, the implied value of the stock
portion of the merger consideration may be higher or lower than the implied
value of the stock portion of the merger consideration on February 3, 2005 or
the closing time of the merger. Stock price changes may result from a variety
of factors, including general market and economic conditions, changes in our
respective businesses, operations and prospects, and regulatory
considerations. Many of these factors are beyond our control.
If, at the effective time, the CCBG stock does not constitute at least 45% of
the merger consideration, the parties will re-evaluate the transaction before
consummating the merger.
As a condition to the merger, at the effective time, each of Gunster,
Yoakley & Stewart, P.A., counsel to CCBG, and Smith, Gambrell & Russell, LLP,
counsel to First Alachua, is expected to opine that the merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and that neither CCBG nor First
Alachua will recognize gain or loss by reason of the merger (except for
amounts resulting from any required change in accounting methods and any
income and deferred gain or loss recognized pursuant to Treasury regulations
issued under Section 1502 of the Internal Revenue Code). If at the effective
time, however, the CCBG stock does not constitute at least 45% of the merger
consideration, the firms will re-evaluate the transaction to determine
whether to issue the referenced tax opinions, and the parties will re-
evaluate the transaction before consummating the merger. If the parties re-
evaluate the transaction in this event, the parties may decide not to
consummate the merger or may renegotiate the terms of the merger.
15
We may not receive required regulatory approvals, and, if received, such
approvals may be subject to adverse regulatory conditions.
Before the merger may be completed, various approvals must be obtained
from the Board of Governors of the Federal Reserve System and the Florida
Department of Financial Services. We cannot guarantee that we will receive
all required regulatory approvals in order to complete the merger. In
addition, some of the governmental authorities from whom those approvals must
be obtained may impose conditions on the completion of the merger or require
changes in the terms of the merger. These conditions or changes could have
the effect of delaying the merger or imposing additional costs or limiting
the possible revenues of the combined company.
CCBG's financial success depends in part on the successful integration of its
recent acquisitions.
CCBG's future growth and profitability depend, in part, on its ability
to complete successfully its acquisition of First Alachua and manage the
combined operations as well as the operations of Farmers and Merchants Bank,
which was acquired on October 15, 2004 and Quincy State Bank, which was
acquired on March 14, 2004. For the acquisitions to be successful, CCBG will
have to succeed in combining the personnel and operations of CCBG, First
Alachua, Farmers and Merchants Bank and Quincy State Bank and in achieving
expense savings by eliminating selected redundant operations. We cannot
assure you that our plan to integrate and operate the combined operations
will be timely or efficient, or that we will successfully retain existing
customer relationships of First National Bank of Alachua.
First Alachua Directors and Executive Officers Have Interests in the Merger
Besides Those of a Shareholder.
Some of First Alachua's executive officers participated in negotiations
of the Agreement and Plan of Merger with CCBG, and the board of directors
approved the Agreement and Plan of Merger and is recommending that First
Alachua shareholders vote for the Agreement and Plan of Merger. In
considering these facts and the other information contained in this Proxy
Statement/Prospectus, you should be aware that First Alachua's executive
officers and directors have financial interests in the merger besides being
First Alachua shareholders. Please refer to "Interests of Certain Persons in
the Merger" on page 39. These interests include:
Jerry M. Smith, Chairman, Chief Executive Officer and President, will be
paid a bonus of up to $1,000,000 by either CCBG or Capital City Bank upon the
successful completion of the merger and will enter into a three-year
employment agreement with CCBG.
The Agreement and Plan of Merger contains provisions for the
indemnification of First Alachua directors, officers and employees by CCBG,
and provisions for the officers and employees of First Alachua to receive
certain employee benefits that CCBG already provides to its officers and
employees.
In addition, the Agreement and Plan of Merger contains provisions for
providing directors' and officers' liability insurance (with certain cost
restraints), for three years after the effective time of the merger.
MEETING OF FIRST ALACHUA SHAREHOLDERS
Date, Place, Time, and Purpose
The First Alachua Board of Directors is sending you this Proxy
Statement/Prospectus in connection with the solicitation by the First Alachua
Board of Directors of proxies for use at the Special Meeting. CCBG will pay
the filing fees and one-half of the printing costs incurred in connection
with this Proxy Statement/Prospectus and the registration statement of which
this Proxy Statement/Prospectus is a part. First Alachua will pay one-half
of the printing costs. At the Special Meeting, the First Alachua Board of
Directors will ask you to vote on a proposal to approve the Agreement and
Plan of Merger. First Alachua will pay all other costs associated with the
solicitation of proxies for the Special Meeting. The Special Meeting will be
held at First National Bank of Alachua, located at 15000 NW 140th Street,
Alachua, Florida 32615, on Friday, May 20, 2005, at 10:00 a.m., Eastern
Time.
16
Record Date, Voting Rights, Required Vote, and Revocability of Proxies
First Alachua has set the close of business on Tuesday, April 12, 2005,
as the record date for determining the holders of First Alachua common stock
entitled to notice of and to vote at the Special Meeting. Only holders of
First Alachua common stock of record on the books of First Alachua at the
close of business on the record date are entitled to notice of and to vote at
the Special Meeting. As of the record date, First Alachua had 4,456 shares
of Class A common stock and 5,730 shares of Class B common stock outstanding.
First Alachua has no other classes of authorized capital stock. First
Alachua shareholders do not have the preemptive right to purchase or
subscribe to any unissued authorized shares of First Alachua common stock.
The Class B common stock was created in connection with the assumption
by First Alachua of debt of certain Class B shareholders. While the debt was
outstanding, Class A shareholders were entitled to dividend and liquidation
preferences. The principal and interest on the debt related to the Class B
common stock was repaid in full and retired as of March 26, 1990. Thus, the
Class A common stock and Class B common stock currently have identical
rights, preferences and limitations.
The directors of First Alachua and First National Bank of Alachua have
committed to vote their shares in favor of the merger. CCBG holds no shares
of First Alachua common stock.
You are entitled to one vote for each share of First Alachua common
stock (whether Class A or Class B) you own on the record date. Pursuant to
Sections 607.1103 and 607.1004 of the Florida Business Corporation Act, both
Class A common stock and Class B common stock will vote together as a single
voting group. Shareholders holding a majority of the outstanding shares of
First Alachua common stock entitled to vote at the Special Meeting must be
present, in person or by proxy, at the Special Meeting to form a quorum. In
order to approve the merger, shareholders holding at least a majority of the
outstanding shares of First Alachua common stock must approve the Agreement
and Plan of Merger. Consequently, abstentions and broker non-votes, as well
as instructions to withhold authority to vote, will have the same effect as a
vote "against" the Agreement and Plan of Merger.
_____________________________________________________________________________
Failure either to vote by proxy or in person at the Special Meeting will have
the same effect as a vote cast "against" approval of the Agreement and Plan
of Merger and the transactions contemplated therein.
_____________________________________________________________________________
Persons named as proxies will vote shares of First Alachua common stock
in accordance with the instructions on the proxies if such proxies are
properly executed, received in time, and not revoked. If the proxy does not
contain instructions on how to vote, persons named as proxies will vote for
approval of the Agreement and Plan of Merger. If any other matters properly
come before the Special Meeting, the persons named as proxies will vote upon
such matters according to their judgment. If necessary, such persons may
vote in favor of a proposal to adjourn the Special Meeting in order to permit
further solicitation of proxies in the event there are not sufficient votes
to approve the Agreement and Plan of Merger at the time of the Special
Meeting. However, no proxy that is voted against the approval of the
Agreement and Plan of Merger will be voted in favor of an adjournment of the
Special Meeting in order to permit further solicitation of proxies.
A First Alachua shareholder who has given a proxy may revoke it at any
time prior to its exercise at the Special Meeting by:
* giving written notice of revocation to the Secretary of First Alachua;
* properly submitting to First Alachua a duly executed proxy bearing a
later date; or
* attending the Special Meeting and voting in person.
All written notices of revocation and other communications with respect
to revocation of proxies should be addressed as follows: First Alachua
Banking Corporation, 15000 NW 140th Street, Alachua, Florida 32615,
Attention: Jerry M. Smith, President.
17
At the record date, the directors and executive officers of First
Alachua as a group (5 persons) were entitled to vote approximately 6,878
shares of First Alachua common stock, constituting approximately 67.5% of the
total number of shares of First Alachua common stock outstanding at that
date. The First Alachua directors, as well as the directors of First
National Bank of Alachua, have committed to vote their shares of First
Alachua common stock in favor of the Agreement and Plan of Merger. See
"BUSINESS OF FIRST ALACHUA - Management Stock Ownership," on page 55.
DESCRIPTION OF THE MERGER
The following information describes certain aspects of the merger. The
Agreement and Plan of Merger is attached as Appendix A to this Proxy
Statement/Prospectus, and you are urged to read carefully the Agreement and
Plan of Merger in its entirety.
General
The Holding Company Merger
--------------------------
Subject to the terms and conditions of the Agreement and Plan of Merger,
at the effective time, First Alachua will merge with and into CCBG in
accordance with the provisions of, and with the effect provided in, Sections
607.1101, 607.1103, 607.1105, 607.1106 and 607.1107 of the Florida Business
Corporation Act. CCBG will be the surviving corporation resulting from this
holding company merger and will continue to be governed by the laws of the
State of Florida.
The Bank Merger
---------------
Subsequent to the consummation of the holding company merger, First
National Bank of Alachua will be merged with and into Capital City Bank in
accordance with the provisions of and with the effect provided in Section
658.41 of the Florida Statutes on terms and subject to the provisions of the
Bank Plan of Merger, attached as Appendix B to this Proxy
Statement/Prospectus. First Alachua, as the sole shareholder of First
National Bank of Alachua, has already approved the bank merger.
At the effective time, and subject to any audit adjustments, each share
of First Alachua common stock outstanding immediately prior to the effective
time will be converted into and exchanged for the right to receive:
* approximately 71.176 shares of CCBG common stock, and
* $2,847.04 in cash.
Each share of First National Bank of Alachua common stock issued and
outstanding immediately prior to the effective time will cease to be
outstanding and will be extinguished.
In the event that the First Alachua audited financial statements
provided to CCBG indicate total shareholders' equity, as that term is defined
in accordance with accounting principles generally accepted in the United
States, as of September 30, 2004, to be less than $24,665,000, the difference
obtained by subtracting total shareholders' equity (as determined by the
auditor) from $24,665,000 will be deemed to be audit adjustments to the First
Alachua financial statements. The total purchase price of $58,000,000 to be
paid by CCBG for the First Alachua common stock will be reduced by the amount
of any audit adjustments.
If, pursuant to the preceding paragraph, the opinion of First Alachua's
auditor with respect to First Alachua's audited financial statements is
qualified and the total capital is not readily determinable by the auditor,
then the parties agree to negotiate appropriate audit adjustments; provided,
that, if the parties cannot agree as to the amount of such audit adjustments
within 30 days of the delivery of the auditor's audit opinion, CCBG may
terminate the Agreement and Plan of Merger. In the event that CCBG elects
not to terminate the Agreement and Plan of Merger, then there will be no
audit adjustments.
18
As a result, shareholders of First Alachua will become shareowners of
CCBG, and CCBG and Capital City Bank will conduct the business and operations
of First Alachua and First National Bank of Alachua, respectively.
Shares held by First Alachua, CCBG, or their subsidiaries, other than
shares held in a fiduciary capacity or in satisfaction of debts previously
contracted, will not be exchanged for the right to receive either CCBG common
stock or cash. Shares held by First Alachua shareholders who perfect their
dissenters' rights of appraisal will not be converted to CCBG common stock.
The Agreement and Plan of Merger provides that the exchange ratio will be
adjusted to prevent dilution in the event CCBG changes the number of shares
of CCBG common stock issued and outstanding prior to the effective time of
the merger as a result of a stock split, stock dividend, recapitalization,
reclassification, or similar transaction.
The market value of the CCBG common stock that shareholders of First
Alachua will receive may vary significantly between the date of this Proxy
Statement/Prospectus and the effective time of the merger. Further, because
CCBG and First Alachua must satisfy various conditions, including receipt of
necessary regulatory approvals, the merger may not be consummated until a
substantial period of time following the Special Meeting. During the time
between the date of the Special Meeting and the effective time of the merger,
shareholders of First Alachua who do not properly perfect their dissenters'
rights of appraisal, or who do not sell their shares of First Alachua common
stock, will be subject to the risk of a decline in the market value of CCBG
common stock.
CCBG will not issue fractional shares. Instead of issuing any
fractional share to which any First Alachua shareholder would otherwise be
entitled upon consummation of the merger, CCBG will pay such shareholder cash
equal to the fractional part of a share of CCBG common stock multiplied by
the average daily closing price of one share of CCBG common stock, as
reported by the Nasdaq National Market, for the 20 consecutive full trading
days ending on and including the fifth full trading day prior to the closing
date of the merger.
In addition, as a condition to the merger, First Alachua must have,
immediately prior to the effective date of the merger, a consolidated net
worth of at least $25.375 million, subject to certain adjustments. See "-
Conditions to Consummation of the Merger," on page 30. Based on the last
call report filed by First Alachua with the FDIC, as of December 31, 2004,
First Alachua had a net worth of approximately $25.392 million.
At the record date, First Alachua had 4,456 shares of Class A common
stock and 5,730 shares of Class B common stock outstanding, for a total of
10,186 shares of common stock. Based on the number of shares of First
Alachua common stock outstanding on the record date and the exchange ratio of
approximately 71.176 shares, CCBG anticipates that it will issue
approximately 725,000 shares of CCBG common stock to holders of First Alachua
common stock once the merger is complete. Accordingly, CCBG would then have
issued and outstanding approximately 14,887,106 shares of CCBG common stock
based on the number of shares of CCBG common stock issued and outstanding on
the record date. Following the merger, and assuming no exercise of
dissenters' rights, the current shareholders of First Alachua will
beneficially own approximately 4.9% of the outstanding CCBG common stock.
Background of the Merger
First Alachua has nearly a 100-year history of involvement in the
Alachua County community. Founded in 1908, First Alachua's bank subsidiary,
First National Bank of Alachua, is the oldest continuously operating national
bank in Florida and the largest community bank operating in Alachua County.
In 1971, a group of investors led by current Chairman of the Board and
President Jerry M. Smith purchased a controlling interest in First National
Bank of Alachua. In 1983, Mr. Smith formed First Alachua Banking
Corporation, with the bank as the sole subsidiary.
In early 2004, Mr. Smith, as the Chief Executive Officer and controlling
shareholder of First Alachua, began to consider strategic alternatives for
First Alachua, primarily due to his concerns about management succession.
In April 2004, Mr. Smith contacted representatives of SunTrust Robinson
Humphrey to discuss possible strategic alternatives. On April 26, 2004,
representatives of SunTrust Robinson Humphrey met with Mr. Smith and certain
members of his family. The representatives of SunTrust Robinson Humphrey
discussed the mergers and
19
acquisitions landscape in the State of Florida for banking institutions
similar to First Alachua, including the purchase price multiples that other
transactions had obtained. SunTrust Robinson Humphrey also discussed the
potential partners which might be interested in the markets and profile of
First Alachua, as well as the process and timing for a potential transaction.
In May 2004, SunTrust Robinson Humphrey provided First Alachua
management a list of materials which would be required in order to develop a
confidential memorandum describing the Company, including financial
information. Management of First Alachua and SunTrust Robinson Humphrey
began gathering the appropriate information and developing a confidential
memorandum describing the Company that could be distributed to potential
interested parties.
On June 25, 2004, SunTrust Robinson Humphrey and First Alachua signed an
engagement letter whereby SunTrust Robinson Humphrey would (i) assist the
board of directors of the Company in its consideration of various strategic
alternatives, including determining whether a sale of the Company was
advisable; (ii) identify opportunities for sale; (iii) advise the Company
concerning opportunities for such sale; and (iv) participate on the Company's
behalf in negotiations concerning any sale.
Upon completion of the confidential memorandum, in mid-July 2004,
SunTrust Robinson Humphrey contacted 25 potential acquirers with respect to
First Alachua. Nine entities signed confidentiality agreements and requested
the confidential memorandum on First Alachua.
Two bids were received with respect to an acquisition of First Alachua
on August 26, 2004. One bid was received from CCBG and another bid was
received from a larger bank holding company headquartered outside the State
of Florida in another southeastern state. Mr. Smith reviewed the bids with
SunTrust Robinson Humphrey. After reviewing the bids, SunTrust Robinson
Humphrey was instructed to contact both prospective purchasers to ask each to
consider enhancing their bids, which they did. On September 2, 2004, CCBG
submitted a nonbinding expression of interest to acquire First Alachua,
stating that CCBG was prepared to offer $58.0 million in a combination of 50%
cash and 50% CCBG common stock for all of the outstanding shares of First
Alachua. The other bidder offered $58.0 million to be paid 100% in its stock
as consideration for the purchase of the outstanding shares of First Alachua.
Both offers also contemplated an employment agreement with Mr. Smith and
change of control payment to Mr. Smith. After reviewing the revised bids
from CCBG and the other bidder with SunTrust Robinson Humphrey, Mr. Smith
concluded that it would be preferable to pursue a transaction with CCBG.
Due diligence was commenced by CCBG in early October and the parties
began the process of negotiating the terms of a potential Agreement and Plan
of Merger. SunTrust Robinson Humphrey and First Alachua's counsel conducted
due diligence on CCBG in October and November, with SunTrust Robinson
Humphrey conducting intensive due diligence with CCBG management in late
November 2004.
The parties continued due diligence and business and legal negotiations
on the terms of the Agreement and Plan of Merger through the month of
November and into the first few days of December 2004. As of December 3,
2004, it appeared that all business and legal issues respecting the Agreement
and Plan of Merger would be resolved to both parties' satisfaction. Mr.
Smith then called a meeting of the Board of Directors of First Alachua to
apprise the directors of the potential transaction with CCBG and its status.
At the board meeting, including the attendance of representatives of SunTrust
Robinson Humphrey and First Alachua's legal counsel, Mr. Smith distributed
drafts of the operative agreements, and reviewed in detail the history
leading up to the potential transaction. SunTrust Robinson Humphrey and
First Alachua's counsel reviewed the terms of the transaction as they had
been negotiated to date. The Board of Directors of First Alachua unanimously
agreed to pursue the opportunity with CCBG. Mr. Smith advised the directors
that upon completion of final negotiations and drafting of the definitive
agreements, another meeting of the Board of Directors would be called.
From December 7, 2004 through January 31, 2005, management of the two
companies and their respective legal and financial advisors continued final
negotiations of the terms of the proposed Agreement and Plan of Merger.
On February 3, 2005, the boards of directors of First Alachua and First
National Bank of Alachua held a joint special board meeting. Mr. Smith
updated the directors on the successful completion of the due diligence
20
review of CCBG and the negotiation of a definitive Agreement and Plan of
Merger and ancillary agreements. Representatives of First Alachua's counsel,
Smith, Gambrell & Russell, LLP, reviewed the proposed definitive Agreement
and Plan of Merger, together with all exhibits, in detail. Representatives
of SunTrust Robinson Humphrey reviewed with the Boards of Directors its
financial analysis of the merger and delivered its oral fairness opinion,
which was subsequently confirmed in writing, that, as of the date of such
opinion and based upon and subject to certain matters stated in such opinion,
the 71.176 shares of CCBG common stock and the $2,847.04 in cash to be
exchanged for each share of First Alachua common stock was fair from a
financial point of view to the holders of First Alachua common stock. Based
upon the value of the stock of CCBG on February 3, 2005, the total
consideration per share for purposes of the fairness opinion was $5,690.53
and the total aggregate consideration was $57,963,750.
After extensive discussion and deliberation, the boards of directors of
First Alachua and First National Bank of Alachua approved the Agreement and
Plan of Merger and authorized Mr. Smith to execute the agreement on behalf of
both entities. The officers of First Alachua and First National Bank of
Alachua were authorized to take such further action as necessary to
consummate the merger, subject to the required regulatory and shareholder
approvals.
Immediately following the conclusion of the joint board meeting, the
parties entered into the Agreement and Plan of Merger.
Our Reasons for the Merger and Recommendation to First Alachua Shareholders
In evaluating and determining to approve the Agreement and Plan of
Merger, the First Alachua Board of Directors, with the assistance of SunTrust
Robinson Humphrey and outside legal counsel, considered a variety of factors
and based their opinion as to the fairness of the transactions contemplated
by the Agreement and Plan of Merger primarily on the following factors:
* The financial terms of the merger, including the value of the
consideration offered, the premium to book value paid, the ratio of
CCBG's offer price to First Alachua's earnings and the prices paid in
comparable transactions in Florida and the Southeastern United States
over the last few years.
* The future prospects of First Alachua and possible alternatives to the
proposed merger, including the prospects of continuing as an independent
institution.
* The opinion of SunTrust Robinson Humphrey that the merger consideration
is fair, from a financial point of view, to First Alachua's
shareholders.
* Information with respect to the financial condition, results of
operations, business and prospects of First Alachua and the current
industry, economic and market conditions, as well as the risks
associated with achieving those prospects.
* The non-financial terms and structure of the Agreement and Plan of
Merger and the proposed merger, in particular, the fact that the merger
would qualify as a tax-free reorganization to First Alachua's
shareholders with respect to the exchange of First Alachua stock for
CCBG stock.
* The business and financial condition and earnings prospects of CCBG, the
potential appreciation of CCBG common stock and the competence and
experience of CCBG management.
* The social and economic effects of the merger on First Alachua and its
employees, depositors, loan and other customers, creditors and other
constituencies of the communities in which First Alachua is located.
Each of the above factors supports, directly or indirectly, the
determination of the First Alachua Board as to the fairness of the Agreement
and Plan of Merger and the related merger. This discussion of the
information and factors considered by the First Alachua Board of Directors in
making its decision is not intended to be exhaustive, but does include all
material factors considered by the First Alachua Board of Directors. The
First Alachua Board
21
did not quantify or attempt to assign relative weights to the specific
factors considered in reaching its determination; however, the First Alachua
Board placed special emphasis on the consideration payable in the proposed
merger and the receipt of a favorable fairness opinion from its financial
advisor. For additional information regarding the fairness opinion, see " -
Summary of SunTrust Robinson Humphrey Opinion to the Board of Directors of
First Alachua."
On February 3, 2005, CCBG, First Alachua and First National Bank of
Alachua executed the Agreement and Plan of Merger. CCBG and First Alachua
each conducted a due diligence review of the material financial, operating
and legal information relating to the other party.
First Alachua's Board of Directors unanimously recommends that
shareholders vote "FOR" approval of the Agreement and Plan of Merger.
Summary of SunTrust Robinson Humphrey Opinion to the Board of Directors of
First Alachua
First Alachua engaged SunTrust Robinson Humphrey as its financial
advisor in connection with the merger. At the February 3, 2005 joint meeting
of the Board of Directors of First Alachua and First National Bank of
Alachua, SunTrust Robinson Humphrey reviewed its financial analysis of the
merger and delivered its oral opinion, which was subsequently confirmed in
writing, that, as of the date of such opinion and based upon and subject to
certain matters stated therein, the 71.176 shares of CCBG common stock and
$2,847.04 in cash (collectively, the "Merger Consideration") to be exchanged
for each share of First Alachua common stock (other than certain shares
specified in the Agreement and Plan of Merger) was fair from a financial
point of view to the holders of First Alachua common stock.
The full text of the opinion of SunTrust Robinson Humphrey, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken, is attached as Appendix D and is incorporated by reference into
this Proxy Statement/Prospectus. The summary of the SunTrust Robinson
Humphrey opinion described below is qualified in its entirety by reference to
the full text of the SunTrust Robinson Humphrey opinion. First Alachua
shareholders are urged to read the opinion carefully and in its entirety.
SunTrust Robinson Humphrey's opinion is directed to the Board of
Directors of First Alachua and relates only to the fairness from a financial
point of view of the Merger Consideration to be received by the holders of
First Alachua common stock. SunTrust Robinson Humphrey's opinion does not
address any other aspect of the merger and does not constitute a
recommendation to any shareholder as to how such shareholder should vote at
the First Alachua shareholders meeting. It addresses the aggregate
consideration to be received by the holders of First Alachua common stock as
a whole, without regard to size of holdings by individual shareholders, and
does not address the particular situations of specific shareholders.
Material and Information Considered with Respect to the Merger
--------------------------------------------------------------
In arriving at its opinion, SunTrust Robinson Humphrey among other
things:
* reviewed the January 31, 2005 draft of the Agreement and Plan of Merger;
* reviewed certain publicly available business and historical financial
information and other data relating to the business and financial
prospects of First Alachua and CCBG, including certain publicly
available consensus financial forecasts and estimates of CCBG that were
reviewed and discussed with the management of CCBG;
* reviewed internal financial and operating information with respect to
the business, operations and prospects of First Alachua furnished to
SunTrust Robinson Humphrey by First Alachua that is not publicly
available;
* reviewed the reported prices and trading activity of CCBG's common stock
and compared those prices and activity with other publicly-traded
companies that SunTrust Robinson Humphrey deemed relevant;
22
* compared the historical financial results and present financial
condition of First Alachua and CCBG and, for CCBG only, compared stock
market data, with those of publicly traded companies that SunTrust
Robinson Humphrey deemed relevant;
* reviewed certain pro forma effects of the merger on CCBG's financial
statements and potential benefits of the merger and discussed these
items with the management of First Alachua and CCBG;
* compared the financial terms of the merger with the publicly available
financial terms of certain other recent transactions that SunTrust
Robinson Humphrey deemed relevant;
* conducted discussions with members of the management of First Alachua
and CCBG concerning their respective businesses, operations, assets,
present condition and future prospects; and
* undertook such other studies, analyses and investigations, and
considered such information, as SunTrust Robinson Humphrey deemed
appropriate.
SunTrust Robinson Humphrey assumed and relied upon, without independent
verification, the accuracy and completeness of all of the financial and other
information discussed with or reviewed by it in arriving at its opinion.
With respect to the financial forecasts, estimates, pro forma effects and
estimates of synergies and other potential benefits of the merger provided to
or discussed with it, SunTrust Robinson Humphrey assumed, at the direction of
the management of First Alachua and without independent verification or
investigation, that they have been reasonably prepared on bases reflecting
the best currently available information, estimates and judgments of the
management of First Alachua and CCBG and are otherwise reasonable. SunTrust
Robinson Humphrey also assumed with the approval of First Alachua that the
future financial results referred to in its opinion that were provided to it
by First Alachua will be achieved, and that the synergies and other potential
benefits of the merger will be realized, at the times and in the amounts
estimated by the management of First Alachua.
In arriving at its opinion, SunTrust Robinson Humphrey did not conduct a
physical inspection of the properties and facilities of First Alachua.
SunTrust Robinson Humphrey did not review individual credit files nor did it
make any independent evaluation or appraisal of any of the assets or
liabilities (including any contingent, derivative or off-balance-sheet assets
or liabilities) of First Alachua or CCBG or any of their respective
subsidiaries, and SunTrust Robinson Humphrey was not furnished with any such
evaluation or appraisal. SunTrust Robinson Humphrey is not an expert in the
evaluation of loan and lease portfolios for purposes of assessing the
adequacy of the allowances for losses with respect to such portfolios and,
accordingly, SunTrust Robinson Humphrey assumed that First Alachua's and
CCBG's allowances for losses are in the aggregate adequate to cover those
losses.
The SunTrust Robinson Humphrey opinion is necessarily based upon market,
economic and other conditions as they existed on and could be evaluated as
of, the date of its opinion. SunTrust Robinson Humphrey's opinion does not
address the relative merits of the merger as compared to other business
strategies or transactions that might be available to First Alachua or First
Alachua's underlying business decision to effect the merger. SunTrust
Robinson Humphrey was not asked to, nor did it, offer any opinion as to any
terms or conditions of the Agreement and Plan of Merger or the form of the
merger (other than the Merger Consideration). The financial markets in
general and the market for the common stock of First Alachua and CCBG, in
particular, are subject to volatility, and SunTrust Robinson Humphrey's
opinion did not address potential developments in the financial markets or
what the value of CCBG common stock will be when issued pursuant to the
Agreement and Plan of Merger or the prices at which it will trade or
otherwise be transferable at any time.
For purposes of its opinion, SunTrust Robinson Humphrey assumed that:
* the Agreement and Plan of Merger does not differ in any respect from the
draft it examined and that CCBG and First Alachua will comply in all
material respects with the terms of the Agreement and Plan of Merger and
the transaction will be consummated in accordance with its terms without
waiver, modification or amendment of any material term, condition or
agreement;
* the merger will be treated as a tax-free reorganization for federal
income tax purposes; and
23
* all material governmental, regulatory or other consents and approvals
necessary for the consummation of the merger will be obtained without
any adverse effect on First Alachua or CCBG or on the expected benefits
of the merger.
Subsequent developments may affect SunTrust Robinson Humphrey's opinion
and SunTrust Robinson Humphrey does not have any obligation to update or
revise its opinion.
In preparing its opinion, SunTrust Robinson Humphrey performed a variety
of financial and comparative analyses, a summary of which is described below.
The summary is not a complete description of the analyses underlying SunTrust
Robinson Humphrey's opinion or the presentation made to First Alachua's
Board, but summarizes the material analyses performed and presented in
connection with its opinion. The preparation of a fairness opinion is a
complex analytic process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances and, therefore, is not readily
susceptible to summary description. Accordingly, SunTrust Robinson Humphrey
believes that its analyses must be considered as an integrated whole and that
selecting portions of its analyses and factors, without considering all
analyses and factors, or focusing on information in tabular format, could
create a misleading or incomplete view of the processes underlying such
analyses and SunTrust Robinson Humphrey's opinion.
In performing its analyses, SunTrust Robinson Humphrey made numerous
assumptions with respect to First Alachua, CCBG, industry performance and
general business, economic, market and financial conditions, many of which
are beyond the control of First Alachua and CCBG. The estimates contained in
these analyses and the valuation ranges resulting from any particular
analysis are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less favorable
than those suggested by such analyses. In addition, analyses relating to the
value of businesses or securities do not purport to be appraisals or to
reflect the prices at which businesses or securities actually may be sold.
Accordingly, these analyses and estimates are inherently subject to
substantial uncertainty.
SunTrust Robinson Humphrey's opinion and analyses were only one of many
factors considered by the First Alachua Board of Directors in its evaluation
of the merger and should not be viewed as determinative of the views of the
First Alachua Board of Directors or management of First Alachua with respect
to the merger or the consideration to be received by First Alachua in the
merger. The Merger Consideration was determined on the basis of negotiations
between First Alachua and CCBG. In arriving at its opinion, SunTrust
Robinson Humphrey did not attribute any particular weight to any analyses or
factors considered by it and did not form an opinion as to whether any
individual analysis or factor (positive or negative) supported or failed to
support its opinion. Rather, SunTrust Robinson Humphrey arrived at its
ultimate opinion based on the results of all analyses undertaken by it and
assessed as a whole and believes that the totality of the factors considered
and analysis it performed in connection with its opinion operated
collectively to support its determination as to the fairness of the exchange
ratio from a financial point of view. First Alachua's decision to enter into
the merger was made solely by the First Alachua Board of Directors and not as
a result of a recommendation by SunTrust Robinson Humphrey.
The following is a summary of the material financial and comparative
analyses presented by SunTrust Robinson Humphrey in connection with its
opinion to the First Alachua Board of Directors. The summary includes
information presented in a tabular format. In order to understand fully the
financial analyses, these tables must be read together with the accompanying
text. The tables alone do not constitute a complete description of the
financial analyses.
Summary of Merger Consideration
-------------------------------
Shareholders of First Alachua in the aggregate will receive 725,000
shares of CCBG common stock and $29.0 million in cash. Based on the 10,186
shares of First Alachua common stock outstanding as of February 3, 2005, each
shareholder of First Alachua would receive approximately 71.176 shares of
CCBG common stock and $2,847.04 in cash for each share of First Alachua
common stock that it owns. Based on the last trading price of CCBG common
stock on February 3, 2005 of $39.95, the value of the shares of CCBG common
stock to be received in exchange for each share of First Alachua common stock
was $2,843.48 and the total Merger Consideration per share for purposes of
the SunTrust Robinson Humphrey opinion was $5,690.53.
24
Analysis of First Alachua
Analysis of Selected Publicly-Traded Reference Companies
--------------------------------------------------------
SunTrust Robinson Humphrey reviewed and compared publicly available
financial data, market information and trading multiples for First Alachua
with other selected publicly-traded banks and thrifts located in the State of
Florida that SunTrust Robinson Humphrey deemed relevant to First Alachua.
Atlantic BancGroup, Inc. (ATBC)
BankAtlantic Bancorp, Inc. (BBX)
BankUnited Financial Corporation (BKUNA)
Capital City Bank Group, Inc. (CCBG)
Centerstate Banks of Florida, Inc. (CSFL)
Commercial Bankshares, Inc. (CLBK)
Federal Trust Corporation (FDT)
Fidelity Bankshares, Inc. (FFFL)
First Community Bank Corporation of America (FCFL)
First National Bancshares, Inc. (FBMT)
Harbor Florida Bancshares, Inc. (HARB)
Jacksonville Bancorp, Inc. (JAXB)
Seacoast Banking Corporation of Florida, Inc. (SBCF)
TIB Financial Corp. (TIBB)
For the selected publicly-traded reference companies, SunTrust Robinson
Humphrey analyzed, among other things, stock price as a multiple of calendar
year 2004 and projected calendar year 2005 earnings per share, book value per
share, tangible book value per share and assets to market capitalization.
All multiples were based on closing stock prices as of February 1, 2005.
Projected earnings per share for the reference companies were based on First
Call consensus estimates. First Call is an information provider that
publishes a compilation of estimates of projected financial performance for
publicly-traded companies produced by equity research analysts at leading
investment banking firms. The following tables set forth the median
multiples indicated by the market analysis of selected publicly-traded
reference companies compared to multiples based upon the implied Merger
Consideration of $5,690.53 per share:
Peer Median Merger
Market Price to: ------------- ------------
Calendar 2004 EPS 21.0 x 21.8 x
Calendar 2005 EPS 18.2 18.8
Book Value Per Share 2.5 2.3
Tangible Book Value Per Share 2.6 2.4
Assets/Market Capitalization 20.8% 25.0%
SunTrust Robinson Humphrey noted that none of the companies used in the
market analysis of selected publicly-traded companies was identical to First
Alachua and that, accordingly, the analysis necessarily involves complex
considerations and judgments concerning differences in financial and
operating characteristics of the companies reviewed and other factors that
would affect the market values of the selected publicly-traded companies.
Analysis of Selected Merger and Acquisition Transactions
--------------------------------------------------------
SunTrust Robinson Humphrey reviewed and analyzed the financial terms, to
the extent publicly available and deemed relevant by SunTrust Robinson
Humphrey, for all completed and pending mergers and acquisitions involving
banks and thrifts in the State of Florida involving a transaction value of
between $10.0 million and $100.0 million that were announced between January
1, 1995 and February 1, 2005. The universe included 110 reference
transactions.
25
For the selected transactions, SunTrust Robinson Humphrey analyzed,
among other things, acquisition price as a multiple of latest twelve months
earnings per share, book value per share, tangible book value per share,
adjusted tangible book value per share and total assets. SunTrust Robinson
Humphrey calculated adjusted tangible book value per share by adjusting the
tangible equity to tangible assets ratio for each of the target banks and
thrifts in the reference transactions to equal 10.5%, the tangible equity to
tangible assets ratio of First Alachua as of December 31, 2004. All
multiples for the selected transactions were based on publicly available
information at the time of announcement of the relevant transaction. The
following tables set forth the median multiples indicated by this analysis
compared to multiples based upon the implied Merger Consideration of
$5,690.53 per share:
Reference
Transactions
Median Merger
Market Price to: -------------- ------------
LTM EPS 22.1 x 21.8 x
Book Value Per Share 2.4 2.3
Tangible Book Value Per Share 2.5 2.4
Adjusted Tangible Book Value Per Share 2.2 2.4
Total Assets 20.0% 25.0%
SunTrust Robinson Humphrey noted that no transaction considered in the
analysis of selected merger and acquisition transactions is identical to the
CCBG/First Alachua merger and that the selected merger and acquisition
transactions may differ significantly from the CCBG/First Alachua merger
based on, among other things, the size of the transactions, the structure of
the transactions and the dates that the transactions were announced and
consummated. All multiples for the selected transactions were based on
public information available at the time of announcement of such transaction,
without taking into account differing market and other conditions during the
period during which the selected transactions occurred.
Dividend Discount Analysis
--------------------------
SunTrust Robinson Humphrey performed a dividend discount analysis based
upon projections provided by First Alachua's management for the fiscal years
ending December 31, 2005 through 2009 to estimate the net present equity
value per share of First Alachua. SunTrust Robinson Humphrey discounted five
years of estimated cash flows for First Alachua, assuming a dividend rate
sufficient to maintain an equity capital ratio (defined as equity divided by
assets) of 8.00% and using a range of discount rates from 14% to 16%. In
order to derive the terminal value of First Alachua's earnings stream beyond
2009, SunTrust Robinson Humphrey assumed terminal value multiples of fiscal
year 2009 earnings per share ranging from 16.0x to 18.0x. The present value
of this terminal amount was then calculated based on the range of discount
rates mentioned above. These rates and values were chosen to reflect
different assumptions regarding the required rates of return of holders or
prospective buyers of First Alachua common stock. This analysis yielded a
range of stand-alone values for First Alachua common stock of between
$4,840.80 and $5,678.80 per share, with a median value of $5,245.20 per
share.
Analysis of CCBG
Analysis of Selected Publicly-Traded Reference Companies
--------------------------------------------------------
SunTrust Robinson Humphrey reviewed and compared publicly available
financial data, market information and trading multiples for CCBG with other
selected publicly-traded reference companies that SunTrust Robinson Humphrey
deemed relevant to CCBG. These companies are:
Alabama National BanCorporation (ALAB)
BankAtlantic Bancorp, Inc. (BBX)
BankUnited Financial Corporation (BKUNA)
Fidelity Bankshares, Inc. (FFFL)
Main Street Banks, Inc. (MSBK)
Seacoast Banking Corporation of Florida (SBCF)
United Community Banks, Inc. (UCBI)
26
For the selected publicly-traded reference companies, SunTrust Robinson
Humphrey analyzed, among other things, stock price as a multiple of calendar
year 2004 and projected calendar year 2005 earnings per share, book value per
share, tangible book value per share and assets as a percentage of total
market capitalization. All multiples were based on closing stock prices as
of February 1, 2005. Projected earnings per share for the reference
companies were based on First Call consensus estimates. The following table
sets forth the median multiples indicated by the market analysis of selected
publicly-traded reference companies:
Reference
Companies
CCBG Median
Market Price to: ----------- -----------
Calendar 2004 EPS 21.0 x 20.4 x
Calendar 2005E EPS 18.2 17.1
Book Value Per Share 2.2 2.5
Tangible Book Value Per Share 3.2 3.0
Assets/Market Capitalization 23.5% 19.4%
SunTrust Robinson Humphrey noted that none of the companies used in the
market analysis of selected publicly-traded companies was identical to CCBG
and that, accordingly, the analysis necessarily involves complex
considerations and judgments concerning differences in financial and
operating characteristics of the companies reviewed and other factors that
would affect the market values of the selected publicly-traded companies.
Dividend Discount Analysis
--------------------------
SunTrust Robinson Humphrey performed a dividend discount analysis based
upon projections provided by First Call for the fiscal years ending December
31, 2005 and 2006 and based upon net income growth and asset growth of 8% and
10%, respectively, for the fiscal years ending December 31, 2007, 2008 and
2009 to estimate the net present equity value per share of CCBG. Net income
growth for the years ending December 31, 2007, 2008 and 2009 was based upon
consensus five year projected growth estimates for CCBG provided by First
Call. SunTrust Robinson Humphrey discounted five years of estimated cash
flows for CCBG using a range of discount rates from 10% to 12%. In order to
derive the terminal value of CCBG's earnings stream beyond 2009, SunTrust
Robinson Humphrey assumed terminal value multiples of fiscal year 2009
earnings per share ranging from 16.0x to 18.0x. The present value of this
terminal amount was then calculated based on the range of discount rates
mentioned above. These rates and values were chosen to reflect different
assumptions regarding the required rates of return of holders or prospective
buyers of CCBG common stock. This analysis yielded a range of stand-alone
values for CCBG common stock of between $34.88 and $41.39 per share, with an
median value of $38.02 per share. SunTrust Robinson Humphrey noted as part
of its analysis that CCBG's closing stock price on February 3, 2005 was
$39.95 per share.
Other Factors and Analyses
SunTrust Robinson Humphrey took into consideration various other factors
and analyses, including: historical market prices and trading volumes for
CCBG's common stock; movements in the common stock of selected publicly-
traded companies; movements in the S&P Bank Index; and analyses of the costs
of equity of each of First Alachua and CCBG.
Information Regarding SunTrust Robinson Humphrey
The First Alachua Board of Directors selected SunTrust Robinson Humphrey
to act as its financial advisor and render a fairness opinion regarding the
merger because SunTrust Robinson Humphrey is a nationally recognized
investment banking firm with substantial experience in transactions similar
to the merger and because it is familiar with First Alachua, its business and
its industry. SunTrust Robinson Humphrey is continually engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings, secondary
distributions of listed and unlisted securities and private placements.
27
Pursuant to a letter agreement dated June 25, 2004, First Alachua paid
SunTrust Robinson Humphrey an opinion fee of $75,000 upon the signing of the
Agreement and Plan of Merger. In addition, First Alachua has agreed to pay
SunTrust Robinson Humphrey a financial advisory fee at closing of the merger
equal to 1.25% of the aggregate consideration to be received pursuant to the
merger, less amounts previously received. Based on the current market price
of CCBG common stock as of the record date, the additional fee payable to
SunTrust Robinson Humphrey under the preceding formula would be approximately
$650,000. In addition, First Alachua has agreed to reimburse SunTrust
Robinson Humphrey for its reasonable out of pocket expenses and to indemnify
SunTrust Robinson Humphrey and certain related persons against certain
liabilities arising out of or in conjunction with its rendering of services
under its engagement, including certain liabilities under the federal
securities laws. In the ordinary course of its business, SunTrust Robinson
Humphrey and its affiliates may actively trade in the debt and equity
securities of CCBG for its own account and the accounts of its customers and,
accordingly, may at any time hold a long or short position in such
securities. In addition, SunTrust Robinson Humphrey and its affiliates
(including SunTrust Banks, Inc.) may have other financing and business
relationships with First Alachua or CCBG in the ordinary course of business.
CCBG's Reasons for the Merger
The CCBG Board of Directors believes that the merger is in the best
interests of CCBG and its shareowners. The CCBG Board of Directors has
unanimously approved the Agreement and Plan of Merger. In deciding to
approve the Agreement and Plan of Merger, the CCBG Board of Directors
considered a number of factors, including:
* a review, based in part on a presentation by CCBG's management, of
- the business, operations, earnings, and financial condition,
including the capital levels and asset quality, of First Alachua
on historical, prospective, and pro forma bases and in comparison
to other financial institutions in the area,
- the demographic, economic, and financial characteristics of the
Alachua County and St. Johns County, Florida markets, including
existing competition, history of the market areas with respect to
financial institutions, and average demand for credit, on
historical and prospective bases, and
- the results of CCBG's due diligence review of First Alachua;
* the likelihood of regulators approving the merger without undue
conditions or delay;
* the compatibility and the community bank orientation of both CCBG and
its subsidiary and First Alachua;
* that the merger will provide CCBG with significant opportunities to
market its fee based products, such as cash management, asset management
and securities products to the existing customers of First Alachua;
* that after the merger, First Alachua will be able to draw upon the
resources and competencies of CCBG and Capital City Bank to provide a
broader range of services and product delivery channels; and
* a variety of factors affecting and relating to the overall strategic
focus of CCBG.
While CCBG's Board of Directors considered the foregoing and other
factors, the Board of Directors did not assign any specific or relative
weights to the factors considered and did not make any determination with
respect to any individual factor. CCBG's Board of Directors collectively
made its determination with respect to the merger based on the unanimous
conclusion reached by its members, in light of the factors that each of them
considered appropriate, that the merger is in the best interests of CCBG's
shareowners.
The terms of the merger, including the exchange ratio, were the result
of arm's-length negotiations between representatives of CCBG and
representatives of First Alachua. Based upon its consideration of the
foregoing
28
factors, the Board of Directors of CCBG approved the Agreement and Plan of
Merger and the merger as being in the best interests of CCBG and its
shareowners.
Effective Time of the Merger
The effective time of the merger will occur on the date and at the time
the Articles of Merger reflecting the holding company merger become effective
with the Secretary of State of the State of Florida. Unless First Alachua
and CCBG otherwise agree in writing, and subject to the conditions to the
obligations of CCBG and First Alachua to effect the merger, the parties will
use their reasonable efforts to cause the effective time of the merger to
occur at a mutually-agreed upon time within 60 days after the last to occur
of:
* the effective date (including expiration of any applicable waiting
period) of the last required consent of any regulatory authority having
authority over and approving or exempting the merger, and
* the date on which the shareholders of First Alachua approve the
Agreement and Plan of Merger.
CCBG and First Alachua cannot assure that they can obtain the necessary
regulatory approvals or that they can or will satisfy the other conditions to
the merger. CCBG and First Alachua anticipate that they will satisfy all
conditions to consummation of the merger so that the merger can be completed
during the second quarter of 2005. However, delays in the consummation of
the merger could occur.
The Board of Directors of either CCBG or First Alachua may terminate the
Agreement and Plan of Merger if the merger is not consummated by August 31,
2005, unless the failure to consummate the merger by that date is the result
of a breach of the Agreement and Plan of Merger by the party seeking
termination. See "- Conditions to Consummation of the Merger," on page 30
and "- Waiver, Amendment, and Termination," on page 31.
Distribution of CCBG Stock Certificates
Promptly after the effective time of the merger, CCBG will mail to each
holder of record of First Alachua common stock appropriate transmittal
materials and instructions for the exchange of First Alachua stock
certificates for CCBG stock certificates and the cash portion of the
consideration.
Holders of First Alachua common stock should NOT send in their First
Alachua stock certificates until they receive the transmittal materials and
instructions.
After CCBG's exchange agent receives your First Alachua stock
certificates and properly completed transmittal materials, the Exchange Agent
will issue and mail to you a certificate representing the number of shares of
CCBG common stock to which you are entitled. The Exchange Agent will also
send First Alachua shareholders a check for the amount to be paid, without
interest for the cash portion of the consideration, for any fractional shares
and for all undelivered dividends or distributions in respect of such shares.
After the effective time of the merger, to the extent permitted by law,
holders of First Alachua common stock of record as of the effective time of
the merger will be entitled to vote at any meeting of CCBG shareowners the
number of whole shares of CCBG common stock they will receive in the merger,
regardless of whether such shareholders have surrendered their First Alachua
stock certificates. Whenever CCBG declares a dividend or other distribution
on CCBG common stock, the record date for which is at or after the effective
time of the merger, the declaration will include dividends or other
distributions on all shares issuable pursuant to the Agreement and Plan of
Merger. However, CCBG will not pay any dividend or other distribution
payable after the effective time of the merger with respect to CCBG common
stock to the holder of any unsurrendered First Alachua stock certificate
until the holder duly surrenders such First Alachua stock certificate. In no
event will the holder of any surrendered First Alachua stock certificate(s)
be entitled to receive interest on any cash to be issued to such holder,
except to the extent required in connection with dissenters' rights. In no
event will CCBG or the Exchange Agent be liable to any holder of First
Alachua common stock for any amounts paid or property delivered in good faith
to a public official pursuant to any applicable abandoned property, escheat,
or similar law.
29
After the effective time of the merger, no transfers of shares of First
Alachua common stock on First Alachua's stock transfer books will be
recognized. If First Alachua stock certificates are presented for transfer
after the effective time of the merger, they will be canceled and exchanged
for shares of CCBG common stock and a check for the cash portion of the
consideration to be received in the merger and the amount due in lieu of a
fractional share, if any.
After the effective time of the merger, holders of First Alachua stock
certificates will have no rights with respect to the shares of First Alachua
common stock other than the right to surrender such First Alachua stock
certificates and receive in exchange the shares of CCBG common stock and the
cash portion to be received in the merger to which such holders are entitled.
After the effective time of the merger, holders of First Alachua stock
certificates who have complied with the provisions regarding the right to
dissent (as detailed in the Florida Business Corporation Act), may be
entitled to receive the fair value of such shareholder's shares of First
Alachua common stock in cash, determined immediately prior to the merger,
excluding any appreciation or depreciation in anticipation of the merger.
Failure to comply with the procedures prescribed by applicable law will
result in the loss of dissenters' rights of appraisal. A copy of the
dissenters' rights of appraisal statute under the Florida Business
Corporation Act is set forth in Appendix C to this Proxy
Statement/Prospectus.
Conditions to Consummation of the Merger
Consummation of the merger is subject to various conditions, including:
* the approval of the Agreement and Plan of Merger by the holders of a
majority of the outstanding First Alachua common stock;
* the receipt of all regulatory approvals required for consummation of the
merger (see "- Regulatory Approvals," on page 31);
* receipt of all consents required for consummation of the merger or for
the prevention of any default under any contract or permit which
consent, if not obtained, is reasonably likely to have, individually or
in the aggregate, a material adverse effect;
* the absence of any law or order, whether temporary, preliminary or
permanent, or any action taken by any court, governmental, or regulatory
authority of competent jurisdiction prohibiting, restricting, or making
illegal the consummation of the transactions contemplated by the
Agreement and Plan of Merger;
* the Registration Statement, of which this Proxy Statement/Prospectus
forms a part, being declared effective by the SEC and the receipt of all
necessary SEC and state approvals relating to the issuance or trading of
the shares of CCBG common stock issuable pursuant to the Agreement and
Plan of Merger;
* the approval of the CCBG common stock issuable pursuant to the Agreement
and Plan of Merger for listing on the Nasdaq National Market;
* the receipt of a written opinion from counsel for each of CCBG and First
Alachua as to the tax aspects of the merger, including that the merger
will constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code;
* the accuracy, in all material respects, as of the date of the Agreement
and Plan of Merger and as of the effective time of the merger, of the
representations and warranties of First Alachua and CCBG as set forth in
the Agreement and Plan of Merger;
* the performance of all agreements and the compliance with all covenants
of First Alachua and First National Bank of Alachua and CCBG as set
forth in the Agreement and Plan of Merger;
* the receipt by CCBG and First Alachua of certain required written
opinions of counsel;
30
* the receipt by CCBG of agreements from each person First Alachua
reasonably believes may be deemed an affiliate of First Alachua with
respect to certain matters;
* First Alachua must have, immediately prior to the effective time, a
consolidated minimum net worth of at least $25,375,000, provided that
"net worth" (a) shall not be reduced by fees, costs and expenses (i)
incurred or paid by First Alachua in connection with the execution and
performance of the Agreement and Plan of Merger up to a maximum amount
of $1,100,000 or (ii) incurred or paid at the request of CCBG, and (b)
shall be reduced for adjustments requested by CCBG for purposes of
complying with accounting principles generally accepted in the United
States and adjustments for purposes of booking any audit adjustments to
First Alachua's audited financial statements and for purposes of
establishing First Alachua's allowance for loan losses;
* the delivery to CCBG by each First Alachua and First National Bank of
Alachua director of a Director and Voting Agreement;
* the receipt by CCBG of letters from each director and executive officer
of First Alachua and First National Bank of Alachua releasing any claims
they may have against either First Alachua or First National Bank of
Alachua;
* the delivery to CCBG by First Alachua and First National Bank of Alachua
of any required clearance certificate or similar document required by
any state taxing authority in order to relieve CCBG of any obligation to
withhold any portion of the consideration under the Agreement and Plan
of Merger;
* CCBG shall have received an executed Executive Employment Agreement from
Jerry M. Smith;
* CCBG shall have received an executed letter agreement from Jerry M.
Smith; and
* First Alachua and First National shall have received from CCBG an
agreement related to the First Alachua Executive Indexed Salary
Continuation Plan.
CCBG and First Alachua cannot assure you when or if all of the
conditions to the merger can or will be satisfied. In the event the merger
is not completed by August 31, 2005, the Agreement and Plan of Merger may be
terminated and the merger abandoned by either First Alachua or CCBG, unless
the failure to consummate the merger by that date is the result of a breach
of the Agreement and Plan of Merger by the party seeking termination. See "-
Waiver, Amendment, and Termination," on page 31.
Regulatory Approvals
CCBG and First Alachua cannot complete the merger unless and until they
receive regulatory approvals from the Federal Reserve Board and the Florida
Department of Financial Services. These regulators will evaluate financial,
managerial and competitive criteria, as well as the supervisory history of
the parties and the public benefits of the merger. CCBG and First Alachua
have filed all required regulatory applications relating to the merger. CCBG
and First Alachua cannot assure when or whether they will receive the
required regulatory approvals. Additionally, the parties cannot assure that
the regulatory approvals will impose no conditions or restrictions that in
the judgment of their Boards of Directors would so adversely impact the
economic or business benefits of the merger that, had such conditions or
restrictions been known, the parties would not have entered into the
Agreement and Plan of Merger.
CCBG and First Alachua are not aware of any other material governmental
approvals or actions that are required for consummation of the merger.
Waiver, Amendment, and Termination
To the extent permitted by applicable law, First Alachua and CCBG may amend
the Agreement and Plan of Merger by written agreement at any time, whether
before or after approval of the Agreement and Plan of Merger by
31
the First Alachua shareholders. After the First Alachua shareholders approve
the Agreement and Plan of Merger, the Agreement and Plan of Merger cannot be
amended in a way that reduces or modifies the consideration to be received by
the holders of First Alachua common stock without further approval of First
Alachua shareholders. In addition, after the First Alachua shareholders
approve the Agreement and Plan of Merger, the provisions of the Agreement and
Plan of Merger relating to the manner or basis in which shares of First
Alachua common stock will be exchanged for shares of CCBG common stock cannot
be amended in a manner adverse to the holders of CCBG common stock without
any requisite approval of CCBG shareowners entitled to vote on such an
amendment. In addition, prior to or at the effective time of the merger,
either First Alachua or CCBG, or both, acting through their respective Boards
of Directors, chief executive officers or other authorized officers, may:
* waive any default in the performance of any term of the Agreement and
Plan of Merger by the other party;
* waive or extend the time for the compliance or fulfillment by the other
party of any and all of its obligations under the Agreement and Plan of
Merger; and
* waive any of the conditions precedent to the obligations of such party
under the Agreement and Plan of Merger, except any condition that, if
not satisfied, would result in the violation of any applicable law or
governmental regulation.
No such waiver will be effective unless written and unless signed by a duly
authorized officer of First Alachua or CCBG, as the case may be.
The Agreement and Plan of Merger may be terminated at any time prior to the
effective time of the merger:
* by the mutual agreement of CCBG and First Alachua;
* by CCBG or First Alachua:
- in the event of any material breach of any representation or
warranty of the other party contained in the Agreement and Plan of
Merger which cannot be or has not been cured within 30 days after
written notice to the breaching party and which breach is
reasonably likely, in the opinion of the non-breaching party, to
have, individually or in the aggregate, a material adverse effect
on the breaching party (provided that the terminating party is not
then in material breach of any representation, warranty, covenant,
or other agreement contained in the Agreement and Plan of Merger),
- in the event of any material breach of any covenant or agreement
of the other party contained in the Agreement and Plan of Merger
which cannot be or has not been cured within 30 days after written
notice to the breaching party,
- if any approval of any regulatory authority required for
consummation of the merger has been denied by final nonappealable
action, or if any action taken by such authority is not appealed
within the time limit for appeal,
- if the shareholders of First Alachua fail to approve the Agreement
and Plan of Merger at the Special Meeting,
- if the merger is not consummated by August 31, 2005, provided that
the failure to consummate is not due to a breach by the party
electing to terminate, or
- in the event that any of the conditions precedent to the
obligations of such party to consummate the merger cannot be
satisfied or fulfilled by August 31, 2005, provided that the
terminating party is not then in material breach of any
representation, warranty, covenant, or other agreement contained
in the Agreement and Plan of Merger;
32
* by CCBG, in the event that the Board of Directors of First Alachua or
First National Bank of Alachua does not reaffirm its approval of the
Agreement and Plan of Merger (excluding any other acquisition proposal
from a third party), or shall have resolved not to reaffirm the merger,
or shall have affirmed, recommended or authorized entering into any
acquisition proposal or other transaction involving a merger, share
exchange, consolidation or transfer of substantially all of the assets
of First Alachua;
* by CCBG if the audit opinion of First Alachua's auditor is qualified and
the total capital of First Alachua as of September 30, 2004 cannot be
readily determinable by First Alachua's auditor, and if CCBG and First
Alachua cannot agree upon appropriate audit adjustments within 30 days
of delivery of First Alachua's auditor's audit opinion;
* by First Alachua at any time during the two-day period commencing at the
close of trading on the fifth full trading day prior to the closing
date, if both (i) the average of the daily closing prices of one share
of CCBG common stock (as reported by the Nasdaq National Market) for the
20 consecutive full trading days ending on and including the fifth full
trading day prior to the closing date is less than or equal to $34, and
(ii) the quotient obtained by dividing the average closing price of one
share of CCBG common stock (as calculated above) by 40 is less than the
number obtained by subtracting 0.15 from the quotient obtained by
dividing (x) the weighted average of the closing prices of an index
group of 22 bank holding companies at the close of trading on the fifth
full trading day prior to the closing date by (y) the weighted average
of the closing prices of the index group on February 2, 2005 (the day
before the Agreement and Plan of Merger was executed). However, if
First Alachua elects to exercise this termination right, then it must
give prompt written notice to CCBG (and provided that this notice of
election to terminate may be withdrawn at any time within the two-day
termination period). During the three-day period beginning with its
receipt of the notice of election to terminate, CCBG has the option of
adjusting the number of shares of CCBG common stock to be issued per
share of First Alachua common stock accordingly. If CCBG makes this
election, it shall give prompt written notice to First Alachua. In that
event, the Agreement and Plan of Merger will remain in effect in
accordance with its terms (except for the share exchange ratio); and
* by CCBG in the event of a First Alachua material adverse effect, and, if
CCBG provides notice of and grants time to cure such material adverse
effect, such material adverse effect is not cured to CCBG's satisfaction
within the time frame specified in the notice.
In addition to any other payments required by the Agreement and Plan of
Merger, in the event that the Agreement and Plan of Merger is terminated as a
result of First Alachua or the holders of at least a majority of the shares
of First Alachua common stock entering into an agreement with respect to the
merger of First Alachua with a party other than CCBG or the acquisition of a
majority of the outstanding shares of First Alachua common stock by any party
other than CCBG, or is terminated in anticipation of any such agreement or
acquisition, then, in either event, First Alachua shall immediately pay CCBG,
by wire transfer, $2,320,000 in full satisfaction of CCBG's losses and
damages resulting from such termination.
If CCBG and/or First Alachua terminate the merger as described in this
section, the Agreement and Plan of Merger will become void and have no
effect, except that certain provisions of the Agreement and Plan of Merger
will survive, including those relating to the obligations to maintain the
confidentiality of certain information. In addition, termination of the
Agreement and Plan of Merger will not relieve any breaching party from
liability for any uncured willful breach of a representation, warranty,
covenant, or agreement giving rise to such termination.
Dissenters' Rights of Appraisal
Holders of First Alachua common stock as of the record date are entitled
to dissenters' rights of appraisal under the Florida Business Corporation
Act. Pursuant to Section 607.1302 of the Florida Business Corporation Act, a
First Alachua shareholder who does not wish to accept the shares of CCBG
common stock to be received pursuant to the terms of the Agreement and Plan
of Merger may dissent from the merger and elect to receive the fair value of
his or her shares immediately prior to the completion of the merger. Such
fair value is exclusive of any appreciation or depreciation in anticipation
of the merger, unless such exclusion would be inequitable to First Alachua
and its remaining shareholders.
33
In order to exercise appraisal rights, a dissenting shareholder of First
Alachua must strictly comply with the statutory procedures of Sections
607.1301 through 607.1333 of the Florida Business Corporation Act, which are
summarized below. A copy of the full text of those Sections is attached as
Appendix C to this Proxy Statement/Prospectus. Shareholders of First Alachua
are urged to read Appendix C in its entirety and to consult with their legal
advisers. Each shareholder of First Alachua who desires to assert his or her
appraisal rights is cautioned that failure on his or her part to adhere
strictly to the requirements of Florida law in any regard will cause a
forfeiture of any appraisal rights.
Procedures for Exercising Dissenters' Rights of Appraisal. The
following summary of Florida law is qualified in its entirety by reference to
the full text of the applicable provisions of the Florida Business
Corporation Act attached as Appendix C to this Proxy Statement/Prospectus.
1. A dissenting shareholder must file with First Alachua, prior to
the taking of the vote on the merger, a written notice of intent to demand
payment for his or her shares if the merger is effectuated. A vote against
the merger will not alone be deemed to be the written notice of intent to
demand payment. A dissenting shareholder need not vote against the merger,
but cannot vote, or allow any nominee who holds such shares for the
dissenting shareholder to vote, any of his First Alachua shares for the
merger. Such written notification should be delivered either in person or by
mail (certified mail, return receipt requested, being the recommended form of
transmittal) to:
First Alachua Banking Corporation
15000 N.W. 140th Street
Alachua, Florida 32615
Attention: Jerry M. Smith, President
All such notices must be signed in the same manner as the shares are
registered on the books of First Alachua. If a shareholder has not provided
written notice of intent to demand fair value before the vote is taken at the
special meeting, the shareholder will be deemed to have waived his or her
appraisal rights.
2. Within 10 days after the completion of the merger, CCBG must
supply to each First Alachua shareholder who filed a notice of intent to
demand payment for his or her shares a written appraisal notice and an
appraisal election form that specifies, among other things,
* the date of the completion of the merger,
* CCBG's estimate of the fair value of the First Alachua shares,
* where to return the completed appraisal election form and the
shareholder's stock certificates and the date by which they must be
received by CCBG or its agent, which date may not be fewer than 40 nor
more than 60 days after the date CCBG sent the appraisal notice and
appraisal election form to the shareholder, and
* the date by which a notice from the shareholder of his or her desire to
withdraw his or her appraisal election must be received by CCBG, which
date must be within 20 days after the date set for receipt by CCBG of
the appraisal election form from the shareholder.
The form must also contain CCBG's offer to pay to the shareholder the
amount that it has estimated as the fair value of the First Alachua shares,
and request certain information from the shareholder, including:
* the shareholder's name and address,
* the number of shares as to which the shareholder is asserting appraisal
rights,
* whether the shareholder voted for the merger,
34
* whether the shareholder accepts the offer of CCBG to pay its estimate of
the fair value of the First Alachua shares to the shareholder, and
* if the shareholder does not accept the offer of CCBG, the shareholder's
estimated fair value of the First Alachua shares and a demand for
payment of the shareholder's estimated value plus interest.
A dissenting shareholder must send the certificate(s) representing his
or her shares with the appraisal election form. Any dissenting shareholder
failing to return a properly completed appraisal election form and his or her
stock certificates within the period stated in the form will lose his or her
appraisal rights and be bound by the terms of the Agreement and Plan of
Merger.
3. Upon returning the appraisal election form, a dissenting
shareholder shall thereafter be entitled only to payment pursuant to the
procedure set forth in the applicable sections of the Florida Business
Corporation Act and shall not be entitled to vote or to exercise any other
rights of a shareholder, unless the dissenting shareholder withdraws his or
her demand for appraisal within the time period specified in the appraisal
election form.
4. A dissenting shareholder who has delivered the appraisal election
form and his or her stock certificates may decline to exercise appraisal
rights and withdraw from the appraisal process by giving written notice to
CCBG within the time period specified in the appraisal election form.
Thereafter, a dissenting shareholder may not withdraw from the appraisal
process without the written consent of CCBG. Upon such withdrawal, the right
of the dissenting shareholder to be paid the fair value of his or her shares
will cease, and he or she will be reinstated as a shareholder.
5. If the dissenting shareholder accepts the offer of CCBG in the
appraisal election form to pay CCBG's estimate of the fair value of the First
Alachua shares, payment for the shares of the dissenting shareholder is to be
made within 90 days after the receipt of the appraisal election form by CCBG
or its agent. Upon payment of the agreed value, the dissenting shareholder
will cease to have any interest in such shares.
6. A shareholder must demand appraisal rights with respect to all of
the shares registered in his or her name, except that a record shareholder
may assert appraisal rights as to fewer than all of the shares registered in
the record shareholder's name but which are owned by a beneficial
shareholder, if the record shareholder objects with respect to all shares
owned by the beneficial shareholder. A record shareholder must notify First
Alachua in writing of the name and address of each beneficial shareholder on
whose behalf appraisal rights are being asserted. A beneficial shareholder
may assert appraisal rights as to any shares held on behalf of the
shareholder only if the shareholder submits to First Alachua the record
shareholder's written consent to the assertion of such rights before the date
specified in the appraisal notice, and does so with respect to all shares
that are beneficially owned by the beneficial shareholder.
The current Florida Statute, Section 607.1330, addresses what should
occur if a dissenting shareholder fails to accept the offer of CCBG to pay
the value of the shares as estimated by CCBG, and CCBG fails to comply with
the demand of the dissenting shareholder to pay the value of the shares as
estimated by the dissenting shareholder, plus interest. The following
paragraphs summarize these provisions of Florida law:
1. If a dissenting shareholder refuses to accept the offer of CCBG
to pay the value of the shares as estimated by CCBG, and CCBG fails to comply
with the demand of the dissenting shareholder to pay the value of the shares
as estimated by the dissenting shareholder, plus interest, then within 60
days after receipt of a written demand from any dissenting shareholder given
within 60 days after the date on which the merger was effected, CCBG shall,
or at its election at any time within such period of 60 days may, file an
action in any court of competent jurisdiction in the county in Florida where
the registered office of CCBG, maintained pursuant to Florida law, is located
requesting that the fair value of such shares be determined by the court.
2. If CCBG fails to institute such a proceeding within the above-
prescribed period, any dissenting shareholder may do so in the name of CCBG.
A copy of the initial pleading will be served on each dissenting shareholder.
CCBG is required to pay each dissenting shareholder the amount found to be
due within 10 days after final determination of the proceedings, which amount
may, in the discretion of the court, include a fair rate of
35
interest, which will also be determined by the court. Upon payment of the
judgment, the dissenting shareholder ceases to have any interest in such
shares.
The current Florida Statute, Section 607.1331, provides that the costs
of a court appraisal proceeding, including reasonable compensation for, and
expenses of, appraisers appointed by the court, shall be determined by the
court and assessed against CCBG, except that the court may assess costs
against all or some of the dissenting shareholders, in amounts the court
finds equitable, to the extent that the court finds such shareholders acted
arbitrarily, vexatiously or not in good faith with respect to their appraisal
rights. The court also may assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable,
against (i) CCBG and in favor of any or all dissenting shareholders if the
court finds CCBG did not substantially comply with the notification
provisions set forth in Sections 607.1320 and 607.1322, or (ii) either CCBG
or a dissenting shareholder, in favor of any other party, if the court finds
that the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to the appraisal
rights. If the court in an appraisal proceeding finds that the services of
counsel for any dissenting shareholder were of substantial benefit to other
dissenting shareholders, and that the fees for those services should not be
assessed against CCBG, the court may award to such counsel reasonable fees to
be paid out of the amounts awarded the dissenting shareholders who were
benefited. To the extent that CCBG fails to make a required payment when a
dissenting shareholder accepts CCBG's offer to pay the value of the shares as
estimated by CCBG, the dissenting shareholder may sue directly for the amount
owed and, to the extent successful, shall be entitled to recover from CCBG
all costs and expenses of the suit, including counsel fees.
Any dissenting shareholder who perfects his or her right to be paid the
value of his or her shares will recognize gain or loss, if any, for federal
income tax purposes upon the receipt of cash for such shares. The amount of
gain or loss and its character as ordinary or capital gain or loss will be
determined in accordance with applicable provisions of the Code. See "-
Certain Federal Income Tax Consequences."
BECAUSE OF THE COMPLEXITY OF THE PROVISIONS OF THE FLORIDA LAW RELATING
TO DISSENTERS' APPRAISAL RIGHTS, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING
FROM THE MERGER ARE URGED TO CONSULT THEIR OWN LEGAL ADVISERS.
Conduct of Business Pending the Merger
First Alachua has agreed in the Agreement and Plan of Merger that,
unless CCBG gives prior written consent, and except as otherwise expressly
contemplated in the Agreement and Plan of Merger, First Alachua will, and
will cause First National Bank of Alachua to:
* operate its business only in the usual, regular, and ordinary course;
* preserve intact its business organization and assets and maintain its
rights and franchises; and
* take no action which would:
- adversely affect the ability of any party to obtain any consents
required for the transactions contemplated by the Agreement and
Plan of Merger without the imposition of certain conditions or
restrictions referred to in the Agreement and Plan of Merger, or
- adversely affect the ability of any party to perform its covenants
and agreements under the Agreement and Plan of Merger.
In addition, First Alachua has agreed that, from the date of the
Agreement and Plan of Merger until the earlier of the effective time of the
merger or the termination of the Agreement and Plan of Merger, unless CCBG
has given prior written consent, and except as otherwise expressly
contemplated by the Agreement and Plan of Merger, First Alachua will not do
or agree or commit to do, or permit any of its subsidiaries to do or agree or
commit to do, any of the following:
36
* amend its Articles of Incorporation, Bylaws or other governing
instruments (except as specified in the Agreement and Plan of Merger);
* incur any additional debt obligation or other obligation for borrowed
money (except indebtedness by First Alachua or one of its subsidiaries
to First Alachua or one of its subsidiaries) in excess of an aggregate
of $25,000 (on a consolidated basis) except in the ordinary course of
the business of First Alachua and its subsidiaries consistent with past
practices (which shall include creation of deposit liabilities,
purchases of federal funds, and entry into repurchase agreements fully
secured by U.S. government or agency securities), or impose, or suffer
the imposition, on any asset of First Alachua or any of its subsidiaries
of any lien or permit any such lien to exist (other than in connection
with deposits, repurchase agreements, bankers acceptances, "treasury tax
and loan" accounts established in the ordinary course of business, the
satisfaction of legal requirements in the exercise of trust powers, and
liens in effect as of the date of the Agreement and Plan of Merger that
were previously disclosed to CCBG by First Alachua);
* repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly
or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of First Alachua or any of its subsidiaries
or, except as consistent with past practice, declare or pay any dividend
or make any other distribution in respect of First Alachua's capital
stock or First National Bank of Alachua's capital stock;
* except for the Agreement and Plan of Merger, or as previously disclosed
to CCBG by First Alachua, issue, sell, pledge, encumber, authorize the
issuance of, enter into any contract to issue, sell, pledge, encumber,
or authorize the issuance of, or otherwise permit to become outstanding,
any additional shares of First Alachua common stock or any other capital
stock of First Alachua or any of its subsidiaries, or any stock
appreciation rights, or any option, warrant, or other equity right;
* adjust, split, combine or reclassify any capital stock of First Alachua
or any of its subsidiaries or issue or authorize the issuance of any
other securities in respect of or in substitution for shares of First
Alachua common stock, or sell, lease, mortgage or otherwise dispose of
or otherwise encumber any asset having a book value in excess of $25,000
(other than in the ordinary course of business for reasonable and
adequate consideration);
* except for purchases of U.S. Treasury securities or U.S. Government
agency securities, which in either case have maturities of one year or
less, purchase any securities or make any material investment, either by
purchase of stock or securities, contributions to capital, asset
transfer, or purchase of any assets, in any entity, or otherwise acquire
direct or indirect control over any entity, other than in connection
with:
- foreclosures in the ordinary course of business, or
- acquisitions of control by a depository institution subsidiary in
its fiduciary capacity;
* make any new loans or extensions of credit or renew, extend or
renegotiate any existing loans or extensions of credit:
- with respect to properties or businesses outside of First National
Bank of Alachua's current market area, or to borrowers whose
principal residence is outside of First National Bank of Alachua's
current market area,
- that are unsecured in excess of $100,000, or
- that are secured in excess of $300,000;
* purchase or sell (except for sales of single-family residential first
mortgage loans in the ordinary course of First Alachua's or First
National Bank of Alachua's business for fair market value) any whole
loans, leases, mortgages or any loan participations or agented credits
or other interest therein;
37
* renew or renegotiate any loans or credits that are on any watch list
and/or are classified or special mentioned or take any similar actions
with respect to collateral held with respect to debts previously
contracted or other real estate owned, except pursuant to safe and sound
banking practices and with prior disclosure to CCBG;
* First Alachua or First National Bank of Alachua may, however, without
the prior notice to or written consent of CCBG, renew or extend existing
credits on substantially similar terms and conditions as present at the
time such credit was made or last extended, renewed or modified, for a
period not to exceed one year and at rates not less than market rates
for comparable credits and transactions and without any release of any
collateral except as First Alachua or any of its subsidiaries is
presently obligated under existing written agreements kept as part of
First Alachua's or any of its subsidiaries' official records;
* grant any increase in compensation or benefits to the employees or
officers of First Alachua or any of its subsidiaries, except in
accordance with past practice previously disclosed to CCBG by First
Alachua or as required by law, pay any severance or termination pay or
any bonus other than pursuant to written policies or written contracts
in effect on the date of the Agreement and Plan of Merger and previously
disclosed to CCBG by First Alachua; enter into or amend any severance
agreements with officers of First Alachua; grant any increase in fees or
other increases in compensation or other benefits to directors of First
Alachua, except in accordance with past practice previously disclosed to
CCBG by First Alachua; or voluntarily accelerate the vesting of any
stock options or other stock-based compensation or employee benefits or
other equity rights;
* enter into or amend any employment contract between First Alachua or any
of its subsidiaries and any person (unless such amendment is required by
law) that First Alachua or any of its subsidiaries does not have the
unconditional right to terminate without liability (other than liability
for services already rendered) at any time on or after the effective
time of the merger;
* adopt any new employee benefit plan of First Alachua or terminate or
withdraw from, or make any material change in or to, any existing
employee benefit plans of First Alachua other than any such change that
is required by law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan, or make
any distributions from such employee benefit plans, except as required
by law, the terms of such plans or consistent with past practice;
* make any significant change in any tax or accounting methods or systems
of internal accounting controls, except as may be appropriate to conform
to changes in tax laws or regulatory accounting requirements or
accounting principles generally accepted in the United States;
* commence any litigation other than in accordance with past practice, or
settle any litigation involving any liability of First Alachua or any of
its subsidiaries for material money damages or restrictions upon the
operations of First Alachua or any of its subsidiaries; or
* except in the ordinary course of business, enter into, modify, amend or
terminate any material contract calling for payments exceeding $25,000
or waive, release, compromise or assign any material rights or claims.
CCBG has agreed in the Agreement and Plan of Merger that from the date
of the Agreement and Plan of Merger until the earlier of the effective time
of the merger or the termination of the Agreement and Plan of Merger, unless
First Alachua has given prior written consent, and except as otherwise
expressly contemplated in the Agreement and Plan of Merger, CCBG will:
* continue to conduct its business and the business of its subsidiaries in
a manner designed in its reasonable judgment, to enhance the long-term
value of the CCBG capital stock and the business prospects of CCBG and
its subsidiaries and (to the extent consistent) use all reasonable
efforts to preserve intact CCBG's and its subsidiaries' core businesses
and goodwill with their respective employees and the communities they
serve, and
38
* take no action which would:
- materially adversely affect the ability of any party to obtain any
consents required for the transactions contemplated by the
Agreement and Plan of Merger without the imposition of certain
conditions or restrictions referred to in the Agreement and Plan
of Merger, or
- materially adversely affect the ability of any party to perform
its covenants and agreements under the Agreement and Plan of
Merger; provided, that this will not prevent CCBG or any of its
subsidiaries from acquiring any assets or other businesses or from
discontinuing or disposing of any of its assets or businesses if
such action is, in the judgment of CCBG, desirable in the conduct
of the business of CCBG and its subsidiaries, and
* not amend or agree or commit to amend or permit any of its subsidiaries
to amend or agree or commit to amend, without the prior written consent
of First Alachua, which consent shall not be unreasonably withheld, the
Articles of Incorporation or Bylaws of CCBG, in any manner adverse to
the holders of First Alachua common stock as compared to the rights of
holders of CCBG common stock generally as of the date of the Agreement
and Plan of Merger.
Management and Operations after the Merger; Interests of Certain Persons in
the Merger
Following the merger, First Alachua will be merged with and into CCBG
and First National Bank of Alachua will be merged with and into Capital City
Bank. Certain members of First Alachua's management and the First Alachua
Board of Directors have interests in the merger in addition to their
interests as shareholders of First Alachua generally. These include, among
other things, provisions in the Agreement and Plan of Merger relating to
indemnification of directors and officers and eligibility for certain CCBG
employee benefits.
Indemnification and Advancement of Expenses.
------------------------------------------- With respect to all claims
brought during the period of three years after the effective time of the
merger, the Agreement and Plan of Merger provides that CCBG will indemnify,
defend and hold harmless the present and former directors, officers and
employees of First Alachua and First National Bank of Alachua against all
liabilities arising out of actions or omissions arising out of the
indemnified party's service as a director, officer or employee of First
Alachua and First National Bank of Alachua or, at First Alachua's request, of
another corporation, partnership, joint venture, trust or other enterprise
occurring at or prior to the effective time of the merger (including the
transactions contemplated by the Agreement and Plan of Merger) to the fullest
extent permitted under Florida law. Notwithstanding the foregoing, with
respect to all losses, liabilities, damage, costs, claims, and expenses
related to the First National Bank of Alachua 401(k) Plan liabilities, if
any, neither CCBG nor any of its subsidiaries will indemnify, defend or hold
harmless the present and former trustees of the First National Bank of
Alachua 401(k) Plan, including Jerry M. Smith and Frank Bevis. Without
limiting the foregoing, in any case in which approval by CCBG is required to
effectuate any indemnification, CCBG will direct, at the election of the
indemnified party, that the determination of any such approval will be made
by independent counsel mutually agreed upon between CCBG and the indemnified
party.
CCBG will, to the extent available (and First Alachua and First National
Bank of Alachua shall cooperate prior to the effective time of the merger in
these efforts), maintain in effect for a period of three years after the
effective time of the merger directors' and officers' liability insurance
with respect to claims arising from facts or events which occurred up to 12
months prior to the effective time of the merger and covering the indemnified
parties; provided, that CCBG will not be obligated to make aggregate premium
payments for such three-year period in respect of such an insurance policy
(or coverage replacing such a policy) which exceed $45,000 for the portion
related to First Alachua's and First National Bank of Alachua's directors and
officers.
Other Matters Relating to Employee Benefit Plans.
------------------------------------------------ The Agreement and Plan
of Merger also provides that, following the effective time of the merger,
CCBG will provide generally to officers and employees of First Alachua and
its subsidiaries employee benefits under employee benefit and welfare plans
(other than stock option or other plans involving the potential issuance of
CCBG common stock), on terms and conditions which when taken as a whole are
substantially similar to those currently provided by CCBG and its
subsidiaries to their similarly situated officers and employees. CCBG will
waive any pre-existing condition exclusion under any employee health plan for
39
which any employees and/or officers and dependents covered by First Alachua
plans as of the effective time of the merger will become eligible by virtue
of the preceding sentence, to the extent:
* the pre-existing condition was covered under the corresponding plan
maintained by First Alachua or any of its subsidiaries, and
* the individual affected by the pre-existing condition was covered by
First Alachua's or any of its subsidiaries' corresponding plan on the
date which immediately precedes the effective time; provided further,
however, that any portion of a pre-existing condition exclusion period
imposed by a CCBG employee health plan will not be enforced to the
extent it exceeds in duration any corresponding provision in effect
under a First Alachua benefit plan immediately prior to closing. In
addition, CCBG will credit employees of First Alachua or any of its
subsidiaries for amounts paid under First Alachua benefit plans for the
applicable plan year that contains the closing date for purposes of
applying deductibles, co-payments and out-of-pocket limitations under
CCBG health plans.
For purposes of participation and vesting (but not benefit accrual)
under CCBG's employee benefit plans, the service of the employees of First
Alachua prior to the effective time of the merger will be treated as service
with CCBG or its subsidiaries participating in such employee benefits plans.
Subject to compliance with applicable laws and the absence of any
material adverse effect upon CCBG or any First Alachua benefit plans or CCBG
benefit plans, First Alachua will, prior to closing, take such actions as are
necessary to terminate each First Alachua benefit plan (other than the
Executive Indexed Salary Continuation Plan, by and between Jerry M. Smith and
First National Bank of Alachua, dated June 1, 1995, the Endorsement Method
Split Dollar Plan Agreement, dated June 1, 1995, and the First National Bank
of Alachua 401(k) Profit Sharing Plan) and to distribute all benefits
attributable to such benefit plans as soon as administratively feasible.
In addition, Jerry M. Smith will enter into a three year employment
agreement with CCBG.
First National Bank of Alachua 401(k) Plan Qualification.
-------------------------------------------------------- First National
Bank of Alachua, as the sponsor of the First National Bank of Alachua 401(k)
Plan, and Jerry M. Smith, as co-trustee of the First National Bank of Alachua
401(k) Plan, will take all actions reasonably necessary prior to the closing
time to submit a proper application to the Internal Revenue Service pursuant to
the Employee Plans Compliance Resolution System ("EPCRS Application") as set
forth in Revenue Procedure 2003-44 (or successor guidance) that will contain a
reasonable proposal to address certain matters previously disclosed to CCBG so
as to obtain IRS approval of certain corrections, if needed. It is understood
and agreed that these corrections may, if necessary, be made after the closing
time and that IRS approval may be obtained after the closing time. Jerry M.
Smith, as co-trustee of the First National Bank of Alachua 401(k) Plan, will
consult with CCBG and CCBG's legal counsel prior to taking any actions, will
obtain CCBG and CCBG's legal counsel's prior approval in connection with any
IRS or Pension Benefit Guaranty Corporation submissions, communications,
filings, or applications, and will provide CCBG at closing with documentation
of the actions ultimately implemented.
In the Agreement and Plan of Merger, CCBG, First Alachua, First National
Bank of Alachua, and Jerry M. Smith, as co-trustee of the First National Bank
of Alachua 401(k) Plan, expressly agreed that, at all times subsequent to
closing, all participants in the First National Bank of Alachua 401(k) Plan
will make all elective deferrals exclusively to the Capital City Bank Group,
Inc. 401(k) Plan. Upon approval by the IRS of the EPCRS Application, CCBG,
in its sole discretion, may elect to (1) freeze the First National Bank of
Alachua 401(k) Plan; (2) terminate the First National Bank of Alachua 401(k)
Plan; or (3) merge the First National Bank of Alachua 401(k) Plan with the
Capital City Bank Group, Inc. 401(k) Plan as a successor plan. Prior to the
closing, First National Bank of Alachua may continue to pay in the ordinary
course the reasonable fees and expenses relating to the administration of the
First National Bank of Alachua 401(k) Plan, subject, however, to the
provisions of the Agreement and Plan of Merger relating to certain potential
401(k) Plan liabilities and any corrections required pursuant to the EPCRS
Application. After the closing, CCBG will pay in the ordinary course all
reasonable fees and expenses relating to the administration of the First
National Bank of Alachua 401(k) Plan, subject, however, to the provisions of
the Agreement and Plan of Merger relating to certain Alachua potential 401(k)
Plan liabilities and any corrections required pursuant to the EPCRS
Application. First Alachua and First National Bank of Alachua have
previously
40
disclosed to CCBG the fees and expenses that First National Bank of Alachua
has paid to service providers relating to the First National Bank of Alachua
401(k) Plan.
In the Agreement and Plan of Merger, CCBG, First Alachua, First National
Bank of Alachua, and Jerry M. Smith, as co-trustee of the First National Bank
of Alachua 401(k) Plan, also expressly agreed that, at all times subsequent
to the execution of the Agreement and Plan of Merger, no stock or other
security issued by First Alachua or any of its subsidiaries held in the First
National Bank of Alachua 401(k) Plan may be withdrawn or transferred by any
participant until CCBG, in its sole discretion, determines that the terms of
the IRS compliance statement, if any, pursuant to the EPCRS Application have
been met.
With respect to the EPCRS Application, First National Bank of Alachua,
and subsequent to closing, CCBG, will pay all fees and expenses, including
all legal fees of counsel to First National Bank of Alachua, accounting fees,
filing fees, and application fees, subject to the indemnification provisions
in a letter agreement between Jerry M. Smith and CCBG; provided, however,
that to the extent the IRS or any other governmental agency or applicable law
(i) prohibits First Alachua, CCBG, or any of their respective subsidiaries
from paying such fees and expenses; or (ii) deems such amount to be
penalties, Jerry M. Smith, individually, will pay all fees and expenses,
including all legal fees, accounting fees, filing fees, and application fees.
Jerry M. Smith, to the extent Mr. Smith has direct control over the
implementation of corrections, if any, set forth in the IRS compliance
statement, and the then-sponsor of the First National Bank of Alachua 401(k)
Plan will be responsible for timely and properly implementing the corrections
set forth in the IRS compliance statement pursuant to the EPCRS Application,
subject to the indemnification provisions in the letter agreement mentioned
in the preceding paragraph.
Certain Federal Income Tax Consequences
This section summarizes the material anticipated federal income tax
consequences of the merger for First Alachua shareholders. This summary is
based on the federal income tax laws now in effect. It does not take into
account possible changes in these laws or interpretations, including
amendments to applicable statutes or regulations or changes in judicial
decisions or administrative rulings, some of which may have retroactive
effect. This summary does not purport to address all aspects of the possible
federal income tax consequences of the merger and is not intended as tax
advice to any person. This summary does not address the federal income tax
consequences of the merger to shareholders in light of their particular
circumstances or status (for example, as foreign persons, tax-exempt
entities, dealers in securities, and insurance companies, among others), nor
does this summary address any consequences of the merger under any state,
local, estate, or foreign tax laws. You are urged to consult your own tax
advisers as to the specific tax consequences of the merger to you, including
tax return reporting requirements, the application and effect of federal,
foreign, state, local, and other tax laws, and the implications of any
proposed changes in the tax laws.
The parties to the merger have not required, and will not request, a
federal income tax ruling from the IRS as to the tax consequences of the
merger. Instead, at the effective time, Gunster, Yoakley & Stewart, P.A.,
counsel to CCBG, will render an opinion to CCBG, and Smith, Gambrell &
Russell, LLP, counsel to First Alachua, will render its opinion to First
Alachua, concerning the material federal income tax consequences of the
proposed merger under federal income tax law. Both firms are expected to
opine, based upon (a) the assumption that the merger is consummated in
accordance with the Agreement and Plan of Merger, (b) the accuracy of
representations made by the management of CCBG and First Alachua, and (c)
specifically assuming that CCBG stock will constitute at least 45% of the
total merger consideration as of the effective time, that the merger will
constitute a reorganization within the meaning of Section 368(a) of the Code,
and that neither CCBG nor First Alachua will recognize gain or loss by reason
of the merger (except for amounts resulting from any required change in
accounting methods and any income and deferred gain or loss recognized
pursuant to Treasury regulations issued under Section 1502 of the Code).
If, at the effective time, the CCBG stock does not constitute at least
45% of the merger consideration and the referenced tax opinions are not
rendered, the parties will re-evaluate the transaction before consummating
the merger.
41
Assuming the merger qualifies as a reorganization pursuant to Section
368(a) of the Code, the shareholders of First Alachua will have the following
federal income tax consequences:
* First Alachua shareholders will recognize gain (but not loss) from the
exchange, but not in excess of the cash received; the computation of
gain is made on a share by share basis; it is not anticipated that any
portion of such gain will be characterized as a dividend;
* the basis of the CCBG common stock received by the First Alachua
shareholders in the merger (including fractional shares deemed received
and redeemed) will, in each instance, be the same as the basis of the
First Alachua common stock surrendered in exchange therefor, (i)
decreased by the cash received (other than cash received in lieu of a
fractional share of CCBG common stock) and (ii) increased by the gain
recognized in the exchange;
* the holding period of the CCBG common stock received by the First
Alachua shareholders will, in each instance, include the period during
which the First Alachua common stock surrendered in exchange therefor
was held, provided that the First Alachua common stock was held as a
capital asset on the date of the exchange;
* the payment of cash to First Alachua shareholders in lieu of fractional
shares of CCBG common stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by CCBG; it is anticipated that any gain
or loss recognized upon such exchange will be capital gain or loss
(rather than a dividend), provided the fractional share constitutes a
capital asset in the hands of the exchanging shareholder;
* subject to the conditions and limitations of Code Section 302, a holder
of First Alachua common stock who exercises statutory dissenters' rights
in connection with the merger generally will recognize gain or loss
equal to the difference, if any, between such holder's tax basis in the
First Alachua common stock exchanged and the amount of cash received in
exchange therefor; and
* unless the exchange is deemed to have the effect of the distribution of
a dividend, any gain or loss recognized by a holder of First Alachua
common stock as a result of the merger will be capital gain or loss and
will be long-term capital gain or loss if such holder's stock has been
held for more than one year at the effective time of the merger.
Assuming the merger qualifies as a tax-free reorganization, each First
Alachua shareholder who receives CCBG common stock in the merger will be
required to attach to his or her federal income tax return for the year of
the merger a complete statement of all facts pertinent to the non-recognition
of gain, including the shareholder's basis in the First Alachua common stock
exchanged, and the number of shares of CCBG common stock and cash received in
exchange for First Alachua common stock. Each shareholder should also keep
as part of such shareholder's permanent records information necessary to
establish such shareholder's basis in, and holding period for, the CCBG
common stock received in the merger.
Accounting Treatment
The merger will be accounted for as a "purchase," as that term is used
under accounting principles generally accepted in the United States, for
accounting and financial reporting purposes. Under purchase accounting, the
assets and liabilities, including intangibles, of First Alachua as of the
effective time of the merger will be recorded at their respective fair values
and added to those of CCBG. Any excess of purchase price over the fair
values is recorded as goodwill. Financial statements of CCBG issued after
the merger would reflect such fair values and would not be restated
retroactively to reflect the historical financial position or results of
operations of First Alachua.
There are certain conditions on the exchange of First Alachua common
stock for CCBG common stock by affiliates of First Alachua, and there are
certain restrictions on the transferability of the CCBG common stock received
by those affiliates. See "- Resales of CCBG Common Stock," on page 43.
42
Expenses and Fees
The Agreement and Plan of Merger provides that each of the parties will
bear and pay all direct costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated by the Agreement and Plan of
Merger, including filing, registration and application fees, printing fees,
and fees and expenses of financial or other consultants, investment bankers,
accountants, and counsel, except that CCBG shall bear and pay the filing fees
payable, and one-half of the printing costs incurred, in connection with the
registration statement of which this Proxy Statement/Prospectus is a part.
First Alachua will pay one-half of the printing costs.
In the event that First Alachua terminates the Agreement and Plan of
Merger by entering into a definitive agreement with respect to the sale of
First Alachua to any person or entity who or which has made a proposal to
acquire First Alachua, First Alachua will pay CCBG $2,320,000 for losses and
damages of CCBG incurred in connection with the merger.
Resales of CCBG Common Stock
The CCBG common stock issued to shareholders of First Alachua in
connection with the merger will be registered under the Securities Act of
1933, as amended, and will be freely transferable by those shareholders of
First Alachua and CCBG not considered to be "Affiliates" of First Alachua or
CCBG. "Affiliates" generally are defined as persons or entities who control,
are controlled by, or are under common control with First Alachua or CCBG
(generally, directors, executive officers and 10% shareholders).
Rules 144 and 145 under the Securities Act restrict the sale of CCBG
common stock received in the merger by Affiliates and certain of their family
members and related interests. Generally speaking, during the one-year
period following the effective time of the merger, Affiliates of First
Alachua may resell publicly the CCBG common stock received by them in the
merger within certain limitations as to the amount of CCBG common stock sold
in any three-month period and as to the manner of sale. After this one-year
period, Affiliates of First Alachua who are not Affiliates of CCBG may resell
their shares without restriction. The ability of Affiliates to resell shares
of CCBG common stock received in the merger under Rule 144 or 145 as
summarized in this Proxy Statement/Prospectus generally will be subject to
CCBG's having satisfied its reporting requirements under the Securities
Exchange Act of 1934, as amended, for specified periods prior to the time of
sale. Affiliates also would be permitted to resell CCBG common stock
received in the merger pursuant to an effective registration statement under
the Securities Act or an available exemption from the Securities Act
registration requirements. This Proxy Statement/Prospectus does not cover
any resales of CCBG common stock received by persons who may be deemed to be
Affiliates of First Alachua or CCBG.
First Alachua has caused each person First Alachua reasonably believes
to be an Affiliate of First Alachua to sign and deliver to CCBG an agreement
providing that such Affiliate will not sell, pledge, transfer, or otherwise
dispose of any CCBG common stock obtained as a result of the merger except in
compliance with the Securities Act and the rules and regulations of the SEC.
The certificates representing CCBG common stock issued to Affiliates in the
merger may bear a legend summarizing these restrictions. See "- Conditions
to Consummation of the Merger," on page 30.
The receipt of the First Alachua Affiliate Agreements by CCBG is a
condition to CCBG's obligations to consummate the merger.
DESCRIPTION OF CCBG CAPITAL STOCK
General. The authorized capital stock of CCBG currently consists of
90,000,000 shares of common stock, $.01 par value per share, of which
14,162,106 shares of common stock were issued and outstanding as of the
record date. CCBG is also authorized to issue 3,000,000 shares of preferred
stock, par value $0.01 per share, none of which is issued and outstanding.
Additionally, as of the record date, there were exercisable options to
acquire 6,170 shares of CCBG common stock.
43
Common Stock. Owners of CCBG common stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. The ability of CCBG to pay dividends is affected by the
ability of its subsidiary depository institution to pay dividends. The
approval of the Florida Department of Financial Services is required if the
total of all dividends declared by Capital City Bank, in any calendar year
exceeds Capital City Bank's net profits (as defined in the Florida Statutes)
for that year combined with its retained net profits for the preceding two
calendar years. In 2005, Capital City Bank may declare dividends without
regulatory approval of $35.2 million plus an additional amount equal to the
net profits of Capital City Bank for 2005 up to the date of any such dividend
declaration. See "BUSINESS - Supervision and Regulation - The Bank -
Dividends" and "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Note 15 -
Dividend Restrictions" in CCBG's 2004 Form 10-K.
For a further description of CCBG Capital Stock, see "EFFECT OF THE
MERGER ON THE RIGHTS OF SHAREHOLDERS - Authorized Capital Stock," on page 45.
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
In the merger, shareholders of First Alachua will receive shares of CCBG
as part of the consideration for their shares of First Alachua. First
Alachua, a financial services company, is a Florida corporation headquartered
in Alachua, Florida and is governed by Florida law and the Articles of
Incorporation and Bylaws, as amended, adopted by First Alachua. CCBG, a
financial holding company, is a Florida corporation headquartered in
Tallahassee, Florida and is governed by Florida law and CCBG's Articles of
Incorporation and Bylaws, as amended. There are some significant differences
between the rights of First Alachua's shareholders and the rights of CCBG's
shareowners. The following is a summary of the principal differences between
the current rights of First Alachua's shareholders and those of CCBG's
shareowners.
The following summary is not intended to be complete and is qualified in
its entirety by reference to the Florida Business Corporation Act, as well as
the Articles of Incorporation and Bylaws, as amended, of First Alachua and
CCBG.
Anti-Takeover Provisions Generally
CCBG.
---- CCBG's Articles of Incorporation and Bylaws contain certain
provisions designed to assist the CCBG Board of Directors in protecting the
interests of CCBG and its shareowners if any group or person attempts to
acquire control of CCBG. These provisions may help the CCBG Board of
Directors determine whether a sale of control is in the best interests of
CCBG's shareowners, or enhance their ability to maximize the value to be
received by the shareowners upon a sale of control of CCBG. In addition, as
of the record date, William G. Smith, Jr., Chairman, President, and Chief
Executive Officer of CCBG, and his brother, Robert Hill Smith, Vice President
of CCBG, together beneficially owned approximately 30.0% of CCBG's
outstanding common stock. Such concentrated ownership could also have the
effect of deterring takeover proposals.
Although CCBG's management believes that these provisions and
concentrated ownership are beneficial to CCBG's shareowners, these two
factors may tend to discourage some takeover bids. As a result, CCBG's
shareowners may be deprived of opportunities to sell some or all of their
shares at prices that represent a premium over prevailing market prices. On
the other hand, defeating undesirable acquisition offers can be a very
expensive and time-consuming process. To the extent that these factors
discourage undesirable proposals, CCBG may be able to avoid those
expenditures of time and money.
CCBG's anti-takeover provisions and concentrated ownership also may
discourage open market purchases by a company that may desire to acquire
CCBG. Those purchases may increase the market price of CCBG common stock
temporarily, and enable shareowners to sell their shares at a price higher
than they might otherwise obtain. In addition, CCBG's anti-takeover
provisions and concentrated ownership may decrease the market price of CCBG
common stock by making the stock less attractive to persons who invest in
securities in anticipation of price increases from potential acquisition
attempts. The anti-takeover provisions and concentrated ownership also may
make it more difficult and time consuming for a potential acquiror to obtain
control of CCBG by replacing the Board of Directors and management.
Furthermore, the anti-takeover provisions and concentrated ownership may make
it more difficult for CCBG's shareowners to replace the Board of Directors or
management, even if a majority
44
of the shareowners believes that replacing the Board of Directors or
management is in the best interests of CCBG. Because of these factors, these
anti-takeover provisions and concentrated ownership may tend to perpetuate
the incumbent Board of Directors and management. For more information about
these provisions, see "- Authorized Capital Stock," on page 45, "- Amendment
of Articles of Incorporation and Bylaws," on page 46, "- Classified Board
of Directors and Absence of Cumulative Voting," on page 47, "- Director
Removal and Vacancies," on page 47, "- Indemnification," on page 48, "-
Ability of Directors to Consider Interests Other than Shareowner Interests"
on page 50, "- Actions by Shareowners Without a Meeting," on page 50, "-
Shareowner Nominations," on page 51.
First Alachua.
------------- First Alachua's Articles of Incorporation and Bylaws do
not contain anti-takeover provisions. However, First Alachua's five
directors and executive officers collectively beneficially own 6,878 shares,
or 67.5% of First Alachua's common stock. Such concentrated ownership could
have the effect of deterring takeover proposals.
Authorized Capital Stock
CCBG.
---- CCBG's Articles of Incorporation authorize the issuance of up to
(1) 90,000,000 shares of CCBG $.01 par value common stock, of which
14,162,106 shares were issued and outstanding as of the record date, and (2)
3,000,000 shares of $.01 par value preferred stock, of which no shares are
issued. CCBG's Board of Directors may authorize the issuance of additional
shares of CCBG common stock without further action by CCBG's shareowners,
unless such action is required in a particular case by applicable laws or
regulations or by any stock exchange upon which CCBG's capital stock may be
listed. CCBG's shareowners do not have the preemptive right to purchase or
subscribe to any unissued authorized shares of CCBG common stock or any
option or warrant for the purchase thereof.
CCBG's Board of Directors may issue, without any further action by the
shareowners, shares of CCBG preferred stock, in one or more classes or
series, with such voting, conversion, dividend, redemption and liquidation
rights as the Board may specify. In establishing and issuing shares of CCBG
preferred stock, CCBG's Board of Directors may designate that CCBG preferred
stock will vote as a separate class on any or all matters, thus diluting the
voting power of the CCBG common stock. The existence of this ability could
render more difficult or discourage an attempt to gain control of CCBG by
means of a tender offer, merger, proxy contest or otherwise. The Board also
may designate that CCBG preferred stock will have dividend rights that are
cumulative and that receive preferential treatment compared to CCBG common
stock, and that CCBG preferred stock will have liquidation rights with
priority over CCBG common stock in the event of CCBG's liquidation. The
Board of Directors also may designate whether or not CCBG preferred stock
shall be subject to the operation of retirement or sinking funds to be
applied to the purchase or redemption of such preferred shares, and the terms
and provisions relative to the operation thereof.
Subject to certain potential adjustments, the payment of cash in lieu of
fractional shares and payments made to dissenting shareholders, CCBG will
issue 725,000 shares of CCBG common stock in the merger. Based on the number
of shares of CCBG common stock outstanding on the record date, it is
anticipated that, following the consummation of the merger, approximately
14,887,106 shares of CCBG common stock will be outstanding.
The authority to issue additional shares of CCBG common stock provides
CCBG with the flexibility necessary to meet its future needs without the
delay resulting from seeking shareowner approval. The authorized but
unissued shares of CCBG common stock will be issuable from time to time for
any corporate purpose, including, without limitation, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public
or private sales for cash as a means of raising capital. Such shares could
be used to dilute the stock ownership of persons seeking to obtain control of
CCBG. In addition, the sale of a substantial number of shares of CCBG common
stock to persons who have an understanding with CCBG concerning the voting of
such shares, or the distribution or declaration of a dividend of shares of
CCBG common stock (or the right to receive CCBG common stock) to CCBG
shareowners, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of CCBG.
First Alachua.
------------- First Alachua is authorized to issue 500,000 shares,
consisting of 250,000 shares of $0.10 par value Class A common stock and
250,000 shares of $0.10 par value Class B common stock, of which 4,456 shares
of Class A common stock and 5,730 shares of Class B common stock are
outstanding as of the record date.
45
First Alachua has no other classes of authorized capital stock. First
Alachua shareholders do not have the preemptive right to purchase or
subscribe to any unissued authorized shares of First Alachua common stock.
The Class B common stock was created in connection with the assumption
by First Alachua of debt of certain Class B shareholders. While the debt was
outstanding, Class A shareholders were entitled to dividend and liquidation
preferences. The principal and interest on the debt related to the Class B
common stock was repaid in full and retired as of March 26, 1990. Thus, the
Class A common stock and Class B common stock currently have identical
rights, preferences and limitations.
Amendment of Articles of Incorporation and Bylaws
CCBG.
---- CCBG's Articles of Incorporation provide that the affirmative vote
of the holders of at least two-thirds of all the issued and outstanding
voting shares of capital stock is required to amend certain provisions,
including provisions relating to shareowner meetings, nomination, election
and removal of directors, acquisition offers, indemnification, and
amendments. However, if such amendment has received the prior approval by an
affirmative vote of a majority of "Disinterested Directors," as defined in
Section 607.0901(1)(h), Florida Statutes, then the affirmative vote of the
holders of a majority of all the shares of capital stock of CCBG issued and
outstanding and entitled to vote, or such greater percentage approval as is
required by Florida law, is sufficient to amend the Articles. A
"Disinterested Director" is defined in Section 607.0901(1)(h), Florida
Statutes, as:
* any member of the Board of Directors who was a member of the Board of
Directors before the later of January 1, 1987, or the date on which an
interested shareowner became an interested shareowner; and
* any member of the Board of Directors who was recommended for election
by, or was elected to fill a vacancy and received the affirmative vote
of, a majority of the Disinterested Directors then on the Board.
The remaining provisions of CCBG's Articles of Incorporation may be amended
by the holders of at least a majority of the issued and outstanding voting
shares of capital stock.
Subject to certain restrictions set forth below, either the Board of
Directors or the shareowners of CCBG may amend CCBG's Bylaws by majority
vote. The Board of Directors may amend the Bylaws and adopt new Bylaws
provided that:
* the Board of Directors may not alter, amend, or repeal any bylaw adopted
by shareowners if the shareowners specifically provide that such bylaw
is not subject to amendment or repeal by the Board; and
* in the case of any shareowner action, the approval of two-thirds of the
shareowners, acting only by voting at a special meeting, is required to
amend any bylaw provision pertaining to:
- meetings of shareowners,
- directors,
- indemnification of directors, officers, employees and agents, and
- amendments.
First Alachua.
------------- First Alachua's Articles of Incorporation are silent as
to any vote requirement to amend such Articles. Accordingly, amendments to
the First Alachua Articles of Incorporation are subject to the Florida
Business Corporation Act as it relates to amendments made to articles of
incorporation. The Florida Business Corporation Act provides that, other
than in the case of certain routine amendments which may be made by the
corporation's Board of Directors without shareholder action (such as changing
the corporate name), an amendment to a corporation's articles requires the
affirmative vote of a majority of the outstanding shares of each voting
group.
46
The First Alachua Bylaws may be amended by the affirmative vote of a
majority of the directors at any regular meeting or special meeting. In
addition, under the Florida Business Corporation Act, the Bylaws can be
amended or repealed by an affirmative vote of a majority of the First Alachua
shareholders.
Classified Board of Directors and Absence of Cumulative Voting
CCBG.
---- CCBG's Articles of Incorporation provide that CCBG's Board of
Directors is divided into three classes, with each class to be as nearly
equal in number as possible. The term of the Class I directors terminates on
the date of the 2007 annual meeting of shareowners, the term of the Class II
directors terminates on the date of the 2005 annual meeting of shareowners
and the term of the Class III directors terminates on the date of the 2006
annual meeting of shareowners. At each annual meeting of shareowners,
successors to the class of directors whose term expires at that annual
meeting are to be elected for a three-year term. The effect of CCBG having a
classified Board of Directors is that only approximately one-third of the
members of the Board is elected each year, which effectively requires two
annual meetings for CCBG's shareowners to change a majority of the members of
the Board of Directors. The purpose of dividing CCBG's Board of Directors
into classes is to facilitate continuity and stability of leadership of CCBG
by ensuring that experienced personnel familiar with CCBG will be represented
on CCBG's Board of Directors at all times, and to permit CCBG's management to
plan for the future for a reasonable period of time. However, by potentially
delaying the time within which an acquiror could obtain working control of
the Board of Directors, this provision may discourage some potential mergers,
tender offers, or takeover attempts.
Pursuant to the CCBG Bylaws, each shareowner is entitled to one vote for
each share of CCBG common stock held and is not entitled to cumulative voting
rights in the election of directors. With cumulative voting, a shareowner
has the right to cast a number of votes equal to the total number of such
holder's shares multiplied by the number of directors to be elected. The
shareowner has the right to distribute all of his or her votes in any manner
among any number of candidates or to accumulate such shares in favor of one
candidate. Directors are elected by a plurality of the total votes cast by
the shares entitled to vote in the election. With cumulative voting, it may
be possible for minority shareowners to obtain representation on the Board of
Directors. Without cumulative voting, the holders of more than 50% of the
shares of CCBG common stock generally have the ability to elect 100% of the
directors. As a result, the holders of the remaining CCBG common stock
effectively may not be able to elect any person to the Board of Directors.
The absence of cumulative voting thus could make it more difficult for a
shareowner who acquires less than a majority of the shares of CCBG common
stock to obtain representation on CCBG's Board of Directors.
First Alachua.
------------- Pursuant to the Bylaws of First Alachua, each director of
First Alachua is subject to annual elections. First Alachua shareholders do
not have cumulative voting rights.
Director Removal and Vacancies
CCBG.
---- CCBG's Articles of Incorporation provide that:
* a director or the entire Board of Directors may be removed, but only for
cause, by the shareowners upon the affirmative vote of the holders of
two-thirds of the voting power of all shares of capital stock entitled
to vote generally in the election of directors; and
* subject to the rights of the holders of any series of preferred stock,
then outstanding vacancies on the Board of Directors may be filled by
the affirmative vote of a majority of the remaining directors.
The purpose of this provision is to prevent a majority shareowner from
circumventing the classified board system by removing directors and filling
the vacancies with new individuals selected by that shareowner. Accordingly,
the provision may have the effect of impeding efforts to gain control of the
Board of Directors by anyone who obtains a controlling interest in CCBG
common stock. The term of a director appointed to fill a vacancy shall
coincide with the term of the class of which such director shall have been
elected.
First Alachua.
------------- First Alachua's Bylaws do not provide for the removal of
a director by the shareholders or directors of First Alachua. Pursuant to
the Florida Business Corporation Act, the shareholders may remove, with or
47
without cause, the entire board of directors or an individual director.
First Alachua's Bylaws provide that if any vacancy shall occur among the
directors for any reason, the vacancy may be filled by a majority vote of the
remaining directors.
Indemnification
CCBG.
---- The Florida Business Corporation Act provides that a director,
officer, employee, or other agent of a Florida corporation:
* shall be indemnified by the corporation for all expenses of such
litigation actually and reasonably incurred when he or she is successful
on the merits on any legal proceeding;
* may be indemnified by the corporation for liability incurred in
connection with such legal proceedings (other than a derivative suit),
even if he or she is not successful on the merits, if he or she acted in
good faith and in a manner reasonably believed to be in, or not opposed
to, the best interests of the corporation (and in the case of a criminal
proceeding, he or she had no reasonable cause to believe that such
conduct was unlawful); and
* may be indemnified by the corporation for expenses of a derivative suit
(a suit by a shareowner alleging a breach by a director or officer of a
duty owed to the corporation) and amounts paid in settlement not to
exceed, in the judgment of the Board of Directors, the estimated costs
and expenses of litigating the proceeding to conclusion, even if he or
she is not successful on the merits, if he or she acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed
to, the best interests of the corporation and the shareowners. If he or
she is adjudged liable in the performance of his or her duties to the
corporation, indemnification may be made in accordance with this
paragraph, if and only to the extent that, a court determines that in
view of all of the circumstances, he or she is fairly and reasonably
entitled to indemnification for expenses.
The indemnification described in the second and third bullet-points
immediately above will be made only upon a determination by:
* a majority of a quorum of disinterested directors;
* if a quorum of disinterested directors is not obtainable, or even if
obtainable, by majority vote of a committee duly designated by the Board
of Directors (in which directors who are parties may participate)
consisting solely of two or more directors who are not at the time
parties to the proceeding;
* independent legal counsel in a written opinion;
* the shareowners (excluding the shares owned by the person seeking
indemnification); or
* the court in which the proceeding is or was pending, if indemnification
is proper under the circumstances because the applicable standard of
conduct has been met.
The Board of Directors may authorize the advancement of litigation
expenses to a director or officer upon receipt of an undertaking by the
director or officer to repay such expenses if it is ultimately determined
that he or she is not entitled to be indemnified for them.
The Florida Business Corporation Act's statutory scheme of
indemnification is not exclusive and allows expanded indemnification by
bylaw, agreement, vote of shareowners or disinterested directors, or
otherwise. Notwithstanding the permissible expansion of indemnification
rights, the Florida Business Corporation Act does not permit indemnification
for:
48
* acts or omissions that involve a violation of the criminal law, unless
the director, officer, employee or agent had reasonable cause to believe
his or her conduct was lawful or had no reasonable cause to believe his
or her conduct was unlawful;
* any transaction from which a director, officer or agent derived an
improper personal benefit;
* willful misconduct or a conscious disregard for the best interests of
the corporation in a proceeding by or in the right of the corporation to
procure a judgment in its favor or in a proceeding by or in the right of
a shareowner; or
* approving an improper distribution to shareowners.
CCBG's Bylaws expand the Florida Business Corporation Act's statutory
scheme of indemnification by providing for the mandatory indemnification of
any of its officers and directors for costs and expenses actually and
reasonably incurred in connection with a legal proceeding, regardless of
whether the officer or director is successful on the merits or otherwise,
including amounts paid in settlement of such a proceeding, to the fullest
extent permitted by the Florida Business Corporation Act, and requires
advancement of such costs and other expenses during pending proceedings. The
Board of Directors has discretionary ability to provide indemnification with
respect to other persons, such as agents and employees.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling CCBG
pursuant to the foregoing provisions, CCBG has been informed that, in the
opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
First Alachua.
------------- Indemnification of First Alachua's directors, officers,
employees, and other agents is provided pursuant to the Florida Business
Corporation Act. Neither the Articles of Incorporation nor the Bylaws of
First Alachua provide for an expansion of the indemnification rights provided
under the Florida Business Corporation Act.
Special Meetings of Shareowners
CCBG.
---- CCBG's Bylaws provide that special meetings of the shareowners
shall be held:
* when directed by the Board of Directors through a resolution adopted by
a majority of the total number of directors (whether or not any
vacancies of previously authorized directorships exist at the time the
Board is presented with such resolution); or
* when requested in writing and upon appropriate notice by the holders of
not less than 50% of all the shares entitled to vote on any issue at the
meeting.
As a result, this provision, taken together with the restriction on the
removal of directors, would prevent a substantial shareowner who held less
than 50% of CCBG's common stock from compelling shareowner consideration of
any proposal (such as a proposal for a merger) over the opposition of CCBG's
Board of Directors by calling a special meeting of shareowners at which such
shareowner could replace the entire Board of Directors with nominees who were
in favor of such proposal.
First Alachua.
------------- First Alachua's Bylaws provide that special meetings of
the shareholders may be called at any time by the President or a majority of
the members of the Board of Directors and shall be called by the President at
the request of the holders of not less than one-tenth of all the outstanding
shares of First Alachua entitled to vote at the meeting.
49
Ability of Directors to Consider Interests Other Than Shareowners' Interests
CCBG.
---- CCBG's Articles of Incorporation expressly require the Board of
Directors to consider all factors it deems relevant in evaluating a proposed
share exchange, tender offer, merger, consolidation, or other similar
transaction, including:
* the best interests of the shareowners;
* the social, legal, and economic effects on employees, customers,
depositors, and communities served by CCBG and any subsidiary;
* the consideration offered in relation to the then current market value
of CCBG or any subsidiary in a freely negotiated transaction;
* estimations of future value of the stock of CCBG or any subsidiary as an
independent entity; and
* any other factor deemed relevant by the Board of Directors.
This gives the Board the ability to consider factors other than
shareowner value in considering acquisition overtures and places such
considerations within the duty of the Board of Directors. This requires the
Board to evaluate all factors in considering a potential future acquisition
offer, including the long-term value of CCBG as a going concern versus the
short-term benefit to shareowners, in order to maximize shareowner value.
This provision might have the effect of discouraging some tender offers
which are above market price or which might otherwise be favorable to
shareowners in the short run. A decrease in the likelihood of tender or
acquisition offers could lower shareowner value by minimizing or eliminating
acquisition market premiums associated with CCBG's capital stock.
This constituency provision of CCBG's Articles of Incorporation may
discourage or make more difficult certain acquisition proposals or business
combinations and, therefore, may adversely affect the ability of shareowners
to benefit from certain transactions opposed by the CCBG Board of Directors.
The constituency provision would allow the CCBG Board of Directors to take
into account the effects of an acquisition proposal on a broad number of
constituencies and to consider any potential adverse effects in determining
whether to accept or reject such proposal.
First Alachua.
------------- First Alachua's Articles of Incorporation and Bylaws do
not contain provisions allowing the directors to consider the effect of
potential transactions on any constituency other than the First Alachua
shareholders; however, under the Florida Business Corporation Act, directors
may rely upon such factors as the director deems relevant, including the
long-term prospects and interests of the corporation and its shareholders,
and the social, economic, legal, or other effects of any action on the
employees, suppliers, customers of the corporation or its subsidiaries, the
communities and society in which the corporation or its subsidiaries operate,
and the economy of the state and the nation.
Actions by Shareowners Without a Meeting
CCBG.
---- CCBG's Bylaws provide that any action required or permitted to be
taken at a meeting of shareowners may not be effected by the written consent
of the shareowners entitled to vote on the action.
First Alachua.
------------- First Alachua's Bylaws provide that any action required
or permitted to be taken at a meeting of shareholders may be taken without a
meeting if a consent in writing, setting forth the action taken, shall be
signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
50
Shareowner Nominations
CCBG.
---- CCBG's Articles of Incorporation and Bylaws provide that
nominations of persons for election to the Board of Directors at an annual or
special meeting of shareowners may be made:
* by or at the direction of the Board of Directors by any nominating
committee of or person appointed by the Board of Directors; or
* by any shareowner of CCBG entitled to vote for the election of directors
at the meeting who complies with the applicable notice procedures set
forth in the Articles of Incorporation and the Bylaws.
Despite these provisions, nominations for Board of Director positions at
special meetings may be made only if the election of directors is one of the
purposes described in the special meeting notice.
Nominations of individuals for election at annual meetings, other than
nominations made by or at the direction of the Board of Directors, including
by any nominating committee, shall be made according to the notice procedures
set forth in the Articles of Incorporation and Bylaws.
First Alachua.
------------- First Alachua's Articles of Incorporation and Bylaws do
not contain specific provisions addressing nominations of persons for
election to the Board of Directors. In addition, the Florida Business
Corporation Act does not address director nominations.
Dissenters' Rights of Appraisal
CCBG.
---- The Florida Business Corporation Act generally gives shareowners
of a Florida corporation appraisal rights and the right to obtain payment of
the fair value of their shares in the event of a merger, share exchange, sale
or exchange of property and certain other corporate transactions. The rights
contained in the Florida Business Corporation Act generally do not apply,
however, with respect to a plan of merger or share exchange or a proposed
sale or exchange of property, to the holders of securities registered on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 holders as of
the record date for determining shareowners entitled to vote on the proposed
action and the market value of such securities is at least $10 million,
excluding the value of shares held by certain company insiders. First
Alachua's shareholders are to receive shares of CCBG common stock in the
merger, and CCBG common stock is traded on the Nasdaq National Market.
Therefore, subsequent to this merger, shareholders of First Alachua that
receive CCBG common stock in the merger will not have statutory appraisal
rights with respect to the CCBG common stock.
First Alachua.
------------- The Florida Business Corporation Act generally gives
shareholders of a Florida corporation appraisal rights, and the right to
obtain payment of the fair value of their shares in the event of a merger,
share exchange, sale or exchange of property and certain other corporate
transactions. To do this, shareholders must follow certain procedures,
including filing certain notices and refraining from voting their shares in
favor of the transaction. The applicable provisions of the Florida Business
Corporation Act are attached in their entirety as Appendix C to this Proxy
Statement/Prospectus.
For a more detailed discussion of Appraisal Rights, see "DESCRIPTION OF
THE MERGER - Dissenters' Rights of Appraisal," on page 33.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Price Range of Common Stock
CCBG common stock is traded on the Nasdaq National Market under the symbol
"CCBG." First Alachua common stock is not publicly traded. The following
table sets forth, for the indicated periods, the high and low closing sale
prices for CCBG common stock as reported by the Nasdaq National Market. The
stock prices do not include retail mark-ups, mark-downs or commissions.
Effective June 13, 2003, CCBG declared a 5-for-4 stock split.
51
The amounts below have been adjusted to reflect this stock split. As of the
record date, CCBG had a total of 1,602 shareowners of record.
CCBG
-----------------------------
Price Range
High Low
------------ ------------
2005
First Quarter $41.51 $36.92
2004
Fourth Quarter 45.41 37.90
Third Quarter 40.07 35.08
Second Quarter 43.15 35.50
First Quarter 45.55 39.05
2003
Fourth Quarter 46.83 36.62
Third Quarter 40.93 35.00
Second Quarter 36.43 29.74
First Quarter 32.32 26.81
2002
Fourth Quarter 32.04 22.26
Third Quarter 29.55 22.32
Second Quarter 27.84 20.60
First Quarter 22.00 18.12
2001
Fourth Quarter 19.74 17.52
Third Quarter 20.20 16.70
Second Quarter 20.00 15.90
First Quarter 20.90 18.50
2000
Fourth Quarter 21.40 15.10
Third Quarter 16.40 15.00
Second Quarter 16.40 14.40
First Quarter 18.40 12.00
On February 3, 2005, the last day prior to the public announcement of
CCBG's proposed acquisition of First Alachua, the last reported sale price
per share of CCBG common stock on the Nasdaq National Market was $39.95. On
April 12, 2005, the last reported sale price per share of CCBG common stock
on the Nasdaq National Market was $40.03, and the resulting equivalent pro
forma price per share of First Alachua common stock was $5,696.21. The
equivalent per share price of a share of First Alachua common stock at each
specified date represents the last reported sale price of a share of CCBG
common stock on such date multiplied by the exchange ratio of approximately
71.176 shares of CCBG common stock plus $2,847.04 in cash (exclusive of any
withholdings). The market price of CCBG common stock at the effective time
of the merger may be higher or lower than the market price at the time the
merger proposal was announced, at the time the Agreement and Plan of Merger
was executed, at the time of mailing of this Proxy Statement/Prospectus, or
at the time of the Special Meeting. Holders of First Alachua common stock
are not assured of receiving any specific market value of CCBG common stock
at the effective time of the merger, and such value may be substantially more
or less than the current value of CCBG common stock.
There is no established public trading market for the First Alachua
common stock. To the knowledge of First Alachua, the most recent trade of
First Alachua common stock prior to February 3, 2005, the last day prior to
the public announcement of the proposed merger between CCBG and First
Alachua, was the sale of 25 shares on January 30, 2002, at $1,537.67 per
share. To the knowledge of First Alachua, there have been no trades of First
Alachua common stock since the announcement of the merger.
52
The holders of First Alachua common stock are entitled to receive such
dividends or distributions as the board of directors may declare out of funds
legally available for such payments. The payment of distributions by First
Alachua is subject to the restrictions of Florida law applicable to the
declaration of distributions by a business corporation. A corporation
generally may not authorize and make distributions if, after giving effect
thereto, it would be unable to meet its debts as they become due in the usual
course of business or if the corporation's total assets would be less than
the sum of its total liabilities plus the amount that would be needed, if it
were to be dissolved at the time of distribution, to satisfy claims upon
dissolution of shareholders who have preferential rights superior to the
rights of the holders of its common stock.
The ability of First Alachua to pay distributions is affected by the
ability of its bank subsidiary to pay dividends. The ability of First
Alachua's bank subsidiary, as well as of First Alachua, to pay dividends in
the future is influenced by bank regulatory requirements and capital
guidelines.
The information regarding First Alachua common stock is provided for
informational purposes only and, due to the absence of an active market for
First Alachua's shares, you should not view it as indicative of the actual or
market value of First Alachua common stock.
Stock Purchase Program
CCBG has been engaged in an ongoing program to purchase shares of its
common stock on the open market from time to time, depending upon market
conditions and other factors; however, CCBG did not make any purchases of its
common stock during 2003 or 2004.
Comparative Dividends
The holders of CCBG common stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Although CCBG currently intends to continue to pay quarterly cash
dividends on the CCBG common stock, there can be no assurance that CCBG's
dividend policy will remain unchanged after completion of the merger. The
declaration and payment of dividends thereafter will depend upon business
conditions, operating results, capital and reserve requirements, and the CCBG
Board of Directors' consideration of other relevant factors.
CCBG is a legal entity separate and distinct from its subsidiary and its
revenues depend in significant part on the payment of dividends from its
subsidiary institutions. CCBG's subsidiary depository institution is subject
to certain legal restrictions on the amount of dividends it is permitted to
pay. See "BUSINESS - Capital City Bank - Dividends," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and
Note 15 in the Notes to Consolidated Financial Statements in CCBG's 2004 Form
10-K. These restrictions may limit CCBG's ability to pay dividends to its
shareowners. As of April 15, 2005, CCBG does not believe these restrictions
will impair CCBG's ability to declare and pay its routine and customary
dividends.
The following table sets forth cash dividends declared per share of CCBG
common stock, as adjusted for CCBG's stock split on June 13, 2003, and First
Alachua common stock for the periods indicated.
53
First Alachua
CCBG Quarterly Semi-Annual
Cash Dividends Dividends Declared
Declared Per Share Per Share
-------------------- --------------------
YEAR ENDING DECEMBER 31, 2005
First Quarter $0.190
YEAR ENDED DECEMBER 31, 2004
Fourth Quarter $0.190 $1.75
Third Quarter 0.180
Second Quarter 0.180 1.75
First Quarter 0.180
-------------------- --------------------
Total $0.730 $3.50
==================== ====================
YEAR ENDED DECEMBER 31, 2003
Fourth Quarter $0.180 $1.50
Third Quarter 0.170
Second Quarter 0.170 1.50
First Quarter 0.136
-------------------- --------------------
Total $0.656 $3.00
==================== ====================
YEAR ENDED DECEMBER 31, 2002
Fourth Quarter $0.136
Third Quarter 0.122
Second Quarter 0.122
First Quarter 0.122
--------------------
Total $0.502
====================
YEAR ENDED DECEMBER 31, 2001:
Fourth Quarter $0.122
Third Quarter 0.118
Second Quarter 0.118
First Quarter 0.118
--------------------
Total $0.476
====================
YEAR ENDED DECEMBER 31, 2000:
Fourth Quarter $0.118
Third Quarter 0.106
Second Quarter 0.106
First Quarter 0.106
--------------------
Total $0.436
====================
First Alachua is restricted under the Agreement and Plan of Merger from
paying dividends or making any distributions in respect of First Alachua's
common stock, except as consistent with past practice and that would not
cause First Alachua's net worth to fall below $25.375 million.
54
SECTION III
BUSINESS OF FIRST ALACHUA
General
First Alachua Banking Corporation is a financial services company and
the parent company of First National Bank of Alachua, which was established
in 1908. First National Bank of Alachua is headquartered in Alachua, Florida
and has assets totaling $229 million in seven banking offices and a mortgage
office in north central Florida and a banking office in St. Johns County,
Florida. The Bank offers its clients a variety of services including deposit
services, loans, ATMs, credit card merchant services, investment services,
mortgage lending and business accounts. First National Bank of Alachua's
website is www.fnba.net.
Management Stock Ownership
The following table presents information about the amount of First
Alachua common stock beneficially owned by each of the directors and
executive officers of First Alachua and all executive officers and directors
as a group as of the record date. Unless otherwise indicated, each person
has sole voting and investment power over the indicated shares. Information
relating to beneficial ownership of the First Alachua common stock is based
upon "beneficial ownership" concepts set forth in rules promulgated under the
Exchange Act. Under those rules, a person is considered to be a beneficial
owner of a security if that person has or shares "voting power," which
includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose or to direct the
disposition of such security. Under the rules, more than one person may be
deemed to be a beneficial owner of the same securities.
Name of Director or Number of
Executive Officer Position with First Alachua Shares Percentage
- --------------------------- ------------------------------- ------------ --------------
Jerry M. Smith (1) Chairman, President and 6,142 60.3%
Chief Executive Officer
A. Gerald Cayson (2) Director 393 3.9%
Robert A. Hitchcock Director 260 2.6%
Marjorie S. Drummond (3) Secretary 130 1.3%
Frank Bevis (4) Assistant Secretary 53 *
All Directors and Executive Officers 6,878 67.5%
as a Group (5 persons)
- ------------------------
* less than one percent.
(1) Includes 202 shares held in a 401(k) plan, 200 shares held in trust for
his daughters, 4,757 shares held jointly with his wife, Laura Smith, and
710 shares held directly or indirectly by Laura Smith.
(2) Includes 175 shares held by his wife, Betty E. Cayson.
(3) Includes 100 shares held in trust for her and 10 shares held jointly
with her husband, Graham L. Drummond.
(4) Includes 43 shares held in a 401(k) plan and 10 shares held jointly with
his wife, Shirley G. Bevis.
The First Alachua directors , as well as the directors of First National
Bank of Alachua, have committed to vote their shares of First Alachua common
stock in favor of the Agreement and Plan of Merger.
55
Voting Securities and Principal Shareholders of First Alachua
The following lists each person that directly or indirectly owned,
controlled, or held with power to vote 5% or more of the 10,186 outstanding
shares of First Alachua common stock as of the record date who is not a
director or executive officer of First Alachua. Unless otherwise indicated,
each person has sole voting and investment powers over the indicated shares.
Information relating to beneficial ownership of the First Alachua common
stock is based upon "beneficial ownership" concepts set forth in rules under
the Exchange Act (discussed above).
Number of Shares
Beneficially Owned at
Name and Address Record Date Percent of Class (%)
- -------------------------- ------------------------- ------------------------
Ben and Faye Eubanks (1)
P.O. Box 218
Blounstown, FL 32424 2,175 21.4%
Laura Smith (2)
15000 NW 140th Street
Alachua, FL 32615 6,142 60.3%
- --------------------------
(1) Includes 1,955 shares held jointly by Ben and Faye Eubanks and 220
shares held separately by Ben Eubanks.
(2) Includes 10 shares held in a 401(k) plan, 4,757 shares held jointly with
her husband, Jerry M. Smith, and 675 shares held directly or indirectly
by Jerry M. Smith.
56
SECTION IV
BUSINESS OF CCBG
General
CCBG is a financial holding company registered under the Gramm-Leach-
Bliley Act of 1999, and is subject to the Bank Holding Company Act of 1956,
as amended. As of December 31, 2004, CCBG had consolidated total assets of
approximately $2.4 billion and shareowners' equity of approximately $256.8
million. Its principal asset is the capital stock of Capital City Bank.
Capital City Bank accounted for approximately 100% of the consolidated assets
at December 31, 2004 and approximately 100% of consolidated net income of
CCBG for the year ended December 31, 2004. In addition to its banking
subsidiary, CCBG has one other direct subsidiary, CCBG Capital Trust I, and
seven other indirect subsidiaries, all of which are wholly-owned subsidiaries
of Capital City Bank:
* Capital City Trust Company
* Capital City Mortgage Company (inactive)
* Capital City Securities, Inc.
* Capital City Services Company
* First Insurance Agency of Grady County, Inc.
* Southern Oaks, Inc.
* FNB Financial Services, Inc.
On March 19, 2004, Capital City Bank completed its merger with Quincy
State Bank, a former affiliate of Synovus Financial Corp. Results of
Quincy's operations have been included in CCBG's consolidated financial
statements since March 20, 2004. Quincy had $116.6 million in assets with
one office in Quincy, Florida and one office in Havana, Florida. The
transaction was accounted for as a purchase and resulted in approximately
$14.9 million of intangible assets, including approximately $12.5 million in
goodwill and a core deposit intangible of $2.4 million. The core deposit
intangible is being amortized over a seven-year period.
On October 15, 2004, CCBG completed its merger with Farmers and
Merchants Bank. Results of Farmers and Merchants Bank's operations have been
included in CCBG's consolidated financial statements since October 16, 2004.
Farmers and Merchants Bank had $411 million in assets with three full-service
offices in Laurens County, Georgia. The transaction was accounted for as a
purchase and resulted in approximately $41.1 million of intangible assets,
including approximately $34.7 million in goodwill, a core deposit intangible
of $5.9 million and a non-compete agreement. The core deposit intangible is
being amortized over a seven-year period and the non-compete agreement is
being amortized over a two-year period.
Banking Services
Capital City Bank is a Florida chartered full-service bank engaged in
the commercial and retail banking business. Significant services offered by
the Bank include:
* Business Banking
---------------- - Capital City Bank provides banking services to
corporations and other business clients. Loans are made for a wide
variety of general business purposes, including financing for commercial
business properties, equipment, inventories and accounts receivable, as
well as commercial leasing, letters of credit, treasury management
services, and merchant credit card transaction processing.
* Commercial Real Estate Lending
------------------------------ - Capital City Bank provides a wide range
of products to meet the financing needs of commercial developers and
investors, residential builders and developers, and community
development.
* Residential Real Estate Lending
------------------------------- - Capital City Bank provides products to
help meet the home financing needs of consumers, including conventional
permanent and construction/permanent (fixed or adjustable rate)
financing arrangements, and FHA/VA loan products.
57
Capital City Bank offers these products through its existing network of
offices. Geographical expansion of the delivery of this product line has
occurred over the past three years through the opening of five mortgage
lending offices in Florida - in Gainesville (Alachua County), Lakeland
(Polk County), Ocala (Marion County), Panacea (Wakulla County) and
Steinhatchee (Taylor County), and one in Thomasville, Georgia (Thomas
County).
* Retail Credit
------------- - Capital City Bank provides a full range of loan products
to meet the needs of consumers, including personal loans, automobile
loans, boat/RV loans, home equity loans, and credit card programs.
* Institutional Banking
--------------------- - Capital City Bank provides banking services to
meet the needs of state and local governments, public schools and
colleges, charities, membership and not-for-profit associations,
including customized checking and savings accounts, cash management
systems, tax- exempt loans, lines of credit, and term loans.
* Retail Banking
-------------- - Capital City Bank provides a full range of consumer
banking services, including checking accounts, savings programs,
automated teller machines, overdraft facilities, debit/credit cards,
night deposit services, safe deposit facilities, and PC/Internet
banking. Customers can use the "Star-Line" system to gain 24-hour access
to their deposit and loan account information, and transfer funds
between linked accounts. The Bank is a member of the "Star" ATM Network
that permits banking customers to access cash at automatic teller
machines ("ATMs") or point of sale merchants at locations throughout the
United States.
Data Processing Services
Capital City Services Company provides data processing services to
financial institutions (including Capital City Bank), government agencies and
commercial customers located throughout North Florida and South Georgia. As
of February 28, 2005, the Services Company was providing computer services to
six correspondent banks, which have relationships with Capital City Bank.
Trust Services and Asset Management
Capital City Trust Company is the investment management arm of Capital
City Bank. The Trust Company provides asset management for individuals
through agency, personal trust, IRAs and personal investment management
accounts. Administration of pension, profit sharing and 401(k) plans is a
significant product line. Associations, endowments and other non-profit
entities hire the Trust Company to manage their investment portfolios.
Individuals requiring the services of a trustee, personal representative or a
guardian are served by a staff of well trained professionals. The market
value of trust assets under discretionary management exceeded $652 million as
of December 31, 2004, with total assets under administration exceeding $728
million.
Brokerage Services
CCBG offers access to retail investment products through Capital City
Securities, Inc., a wholly-owned subsidiary of Capital City Bank. These
products are offered through INVEST Financial Corporation, a member of the
NASD and SIPC. Non-deposit investment and insurance products are: (1) not
FDIC insured; (2) not deposits, obligations, or guaranteed by any bank; and
(3) subject to investment risk, including the possible loss of the principal
amount invested. Capital City Securities, Inc.'s brokers are licensed through
INVEST Financial Corporation, and offer a full line of retail securities
products, including U.S. Government bonds, tax-free municipal bonds, stocks,
mutual funds, unit investment trusts, annuities, life insurance and long-term
health care. CCBG and its subsidiary are not affiliated with INVEST
Financial Corporation.
Expansion of Business
Since 1984, CCBG has completed 14 acquisitions totaling $1.6 billion in
deposits within existing and new markets. In addition, in 2003, CCBG opened
four new offices - two in Tallahassee and one each in Springhill and Starke
(replacement office) - to improve service and product delivery within these
Florida markets, and plans to
58
open one new office in Crawfordville in 2005. Plans are currently being
developed for new office sites in Macon, Georgia, Keystone Heights, Florida,
and Springhill, Florida.
CCBG plans to continue its expansion, emphasizing a combination of
growth in existing markets and acquisitions. Acquisitions will be focused on
a three state area including Florida, Georgia and Alabama with a particular
focus on acquiring banks and offices.
59
SECTION V
DIRECTORS AND EXECUTIVE OFFICERS AFTER THE MERGER
The directors of CCBG after the merger will be:
CLASS I DIRECTORS CLASS II DIRECTORS CLASS III DIRECTORS
----------------- ------------------ -------------------
Cader B. Cox, III Thomas A. Barron DuBose Ausley
McGrath Keen, Jr. J. Everitt Drew Frederick Carroll, III
Ruth A. Knox Lina S. Knox John K. Humphress
William G. Smith, Jr. John R. Lewis Henry Lewis III
The executive officers of CCBG after the merger will be:
William G. Smith, Jr. Chairman, President and Chief Executive Officer
J. Kimbrough Davis Executive Vice President and Chief Financial Officer
Thomas A. Barron President of Capital City Bank
The following section sets forth certain information regarding each of
the persons who, after the consummation of the merger, will be a director or
executive officer of CCBG. Except as otherwise indicated, each of the named
persons has been engaged in his or her present principal occupation for more
than five years.
CLASS I DIRECTORS:
- ------------------
(Term Expiring in 2007)
CADER B. COX, III
Mr. Cox, 55, has been a director since 1994. Since 1976, he has served as
President of Riverview Plantation, Inc., a resort and agricultural company.
L. MCGRATH KEEN, JR.
Mr. Keen, 51, has been a director since October 2004. He served as President
(since 2000) and director (1980-2004) of Farmers and Merchants Bank, prior to
its merger with CCBG. He was a principal shareowner of Farmers and Merchants
Bank at the time of the merger.
RUTH A. KNOX
Ms. Knox, 51, has been a director since 2003. Since 2003, she has served as
President of Wesleyan College, Macon, Georgia. Prior to this appointment,
she practiced law in Atlanta and Macon, Georgia for 25 years.
WILLIAM G. SMITH, JR.
Mr. Smith, 51, is the Chairman of the Board of CCBG and has been a director
since 1982. In 1995, he was appointed President and Chief Executive Officer
of CCBG and Chairman of Capital City Bank. In 2003, Mr. Smith was elected
Chairman of the Board of Directors. Mr. Smith is the first cousin of Lina S.
Knox.
CLASS II DIRECTORS:
- -------------------
(Term Expiring in 2005)
THOMAS A. BARRON
Mr. Barron, 52, has been a director since 1982. He is Treasurer of CCBG and
was appointed President of Capital City Bank in 1995.
J. EVERITT DREW
Mr. Drew, 49, has been a director since 2003. Since 2000, he has been the
President of St. Joe Land Company where his duties include overseeing the
sale and development efforts of several hundred thousand acres of St. Joe
property in northwest Florida and southwest Georgia.
60
LINA S. KNOX
Ms. Knox, 60, has been a director since 1998. She is a dedicated community
volunteer. Ms. Knox is the first cousin of William G. Smith, Jr.
JOHN R. LEWIS
Mr. Lewis, 62, has been a director since 1999. He is President and Chief
Executive Officer of Super-Lube, Inc., Tallahassee, Florida, which he founded
in 1979.
CLASS III DIRECTORS:
- --------------------
(Term Expiring in 2006)
DUBOSE AUSLEY
Mr. Ausley, 67, has been a director since 1982. He is employed by the law
firm of Ausley & McMullen and was Chairman of this firm and its predecessor
for more than 20 years. Since 1992, he has served as a director of TECO
Energy, Inc. Since 1993, Mr. Ausley has served as a director of Sprint
Corporation. In addition, Mr. Ausley has been nominated, and has consented
to serve, as a director of Huron Consulting Group, Inc.
FREDERICK CARROLL, III
Mr. Carroll, 54, has been a director since 2003. Since 1990, he has been the
Managing Partner of Carroll and Company, an accounting firm specializing in
tax and audit based in Tallahassee, Florida.
JOHN K. HUMPHRESS
Mr. Humphress, 56, has been a director since 1994. Since 1973, he has been a
shareowner of Krause Humphress Pace & Wadsworth, Chartered CPA's.
HENRY LEWIS III
Dr. Lewis, 55, has been a director since 2003. He is a Professor and
Director of the College of Pharmacy and Pharmaceutical Studies at Florida A&M
University.
NON-DIRECTOR EXECUTIVE OFFICER:
- -------------------------------
J. KIMBROUGH DAVIS
Mr. Davis, 51, was appointed Executive Vice President and Chief Financial
Officer of CCBG in 1997. He served as Senior Vice President and Chief
Financial Officer from 1991 to 1997. In 1998, he was appointed Executive
Vice President and Chief Financial Officer of Capital City Bank.
61
SECTION VI
SHAREOWNER PROPOSALS
Shareowner proposals that are to be included in the CCBG proxy statement
for the 2005 annual meeting of shareowners must have been received by
December 3, 2004. Shareowner proposals for the 2005 annual meeting that are
not intended to be included in the proxy statement for that meeting must have
been received by February 18, 2005 or the Board of Directors can vote the
proxies in its discretion on the proposal. Shareowner proposals that are to
be included in the CCBG proxy statement for the 2006 annual meeting of
shareowners must be received by December 2, 2005. Shareowner proposals that
are not intended to be included in the CCBG proxy statement for the 2006
annual meeting of shareowners must be received by February 18, 2006, or the
Board of Directors can vote the proxies in its discretion on the proposal.
Proposals must comply with the proxy rules and be submitted in writing to: J.
Kimbrough Davis, Corporate Secretary, Capital City Bank Group, Inc., 217
North Monroe Street, Tallahassee, Florida 32301.
EXPERTS
The consolidated financial statements of Capital City Bank Group, Inc. and
subsidiary (the "Company") as of December 31, 2004 and 2003, and for each of
the years in the three-year period ended December 31, 2004, and management's
assessment of the effectiveness of internal control over financial reporting
as of December 31, 2004 have been incorporated by reference herein in
reliance upon the reports of KPMG LLP, independent registered public
accounting firm, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
The audit report covering the December 31, 2004 consolidated financial
statements refers to a change in method of computing stock-based compensation
in 2003 and a change in method of accounting for goodwill and other
intangible assets in 2002.
The audit report on management's assessment of the effectiveness of internal
control over financial reporting and the effectiveness of internal control
over financial reporting as of December 31, 2004 contains an explanatory
paragraph that states that Capital City Bank Group, Inc. acquired Farmers and
Merchants Bank during 2004. Management excluded from its assessment of the
effectiveness of the Company's internal control over financial reporting as
of December 31, 2004, Farmers and Merchants Bank's internal control over
financial reporting. The audit of internal control over financial reporting
of Capital City Bank Group, Inc. and subsidiary performed by KPMG LLP also
excluded an evaluation of the internal control over financial reporting of
Farmers and Merchants Bank.
LEGAL MATTERS
The legality of the shares of CCBG common stock to be issued in the
merger and certain tax consequences of the merger will be passed upon by
Gunster, Yoakley & Stewart P.A., Ft. Lauderdale, Florida.
Certain tax consequences of the merger will be passed upon by Smith,
Gambrell & Russell, LLP, Atlanta, Georgia.
OTHER MATTERS
Management of First Alachua does not know of any matters to be brought
before the Special Meeting other than those described above. If any other
matters properly come before the Special Meeting, the persons designated as
Proxies will vote on such matters in accordance with their best judgment.
62
PRO FORMA FINANCIAL INFORMATION
Pro Forma financial information reflecting the acquisition of First
Alachua by CCBG is not presented in this document since the pro forma effect
is not significant.
63
APPENDIX A
AGREEMENT AND PLAN OF MERGER BY AND AMONG CAPITAL CITY BANK GROUP, INC.,
FIRST ALACHUA BANKING CORPORATION AND FIRST NATIONAL BANK OF ALACHUA,
DATED AS OF FEBRUARY 3, 2005
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGERS...............................1
1.1 HOLDING COMPANY MERGER..........................................1
1.2 BANK MERGER.....................................................1
1.3 TIME AND PLACE OF CLOSING.......................................1
1.4 EFFECTIVE TIME..................................................1
1.5 ARTICLES OF INCORPORATION.......................................2
1.6 BYLAWS..........................................................2
1.7 DIRECTORS AND OFFICERS..........................................2
ARTICLE 2 MANNER OF CONVERTING SHARES.....................................2
2.1 CONVERSION OF SHARES............................................2
2.2 ANTI-DILUTION PROVISIONS........................................3
2.3 SHARES HELD BY FABC SHAREHOLDERS OR CCBG........................3
2.4 DISSENTING SHAREHOLDERS.........................................3
2.5 FRACTIONAL SHARES...............................................3
ARTICLE 3 EXCHANGE OF SHARES..............................................3
3.1 EXCHANGE PROCEDURES.............................................4
3.2 RIGHTS OF FORMER FABC SHAREHOLDERS..............................4
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF FABC..........................4
4.1 ORGANIZATION, STANDING, AND POWER...............................4
4.2 AUTHORITY OF FABC AND FIRST NATIONAL; NO BREACH BY AGREEMENT....5
4.3 CAPITAL STOCK...................................................5
4.4 INVESTMENTS; SUBSIDIARIES.......................................6
4.5 FINANCIAL STATEMENTS............................................6
4.6 ABSENCE OF UNDISCLOSED LIABILITIES..............................6
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS............................6
4.8 TAX MATTERS.....................................................7
4.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES..............................9
4.10 ASSETS..........................................................9
4.11 INTELLECTUAL PROPERTY..........................................10
4.12 ENVIRONMENTAL MATTERS..........................................10
4.13 COMPLIANCE WITH LAWS...........................................11
4.14 LABOR RELATIONS................................................11
4.15 EMPLOYEE BENEFIT PLANS.........................................12
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4.16 MATERIAL CONTRACTS.............................................14
4.17 LEGAL PROCEEDINGS..............................................15
4.18 REPORTS........................................................15
4.19 STATEMENTS TRUE AND CORRECT....................................15
4.20 ACCOUNTING, TAX, AND REGULATORY MATTERS........................15
4.21 STATE TAKEOVER LAWS............................................15
4.22 CHARTER PROVISIONS.............................................15
4.23 OPINION OF FINANCIAL ADVISOR...................................16
4.24 BOARD RECOMMENDATION...........................................16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CCBG.........................16
5.1 ORGANIZATION, STANDING, AND POWER..............................16
5.2 AUTHORITY OF CCBG; NO BREACH BY AGREEMENT......................16
5.3 CAPITAL STOCK..................................................17
5.4 CCBG SUBSIDIARIES..............................................17
5.5 SEC FILINGS; FINANCIAL STATEMENTS..............................17
5.6 ABSENCE OF UNDISCLOSED LIABILITIES.............................17
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS...........................17
5.8 ALLOWANCE FOR POSSIBLE LOAN LOSSES.............................18
5.9 INTELLECTUAL PROPERTY..........................................18
5.10 COMPLIANCE WITH LAWS...........................................18
5.11 LEGAL PROCEEDINGS..............................................18
5.12 REPORTS........................................................19
5.13 STATEMENTS TRUE AND CORRECT....................................19
5.14 ACCOUNTING, TAX AND REGULATORY MATTERS.........................19
ARTICLE 6 CONDUCT OF BUSINESS PENDING CONSUMMATION.......................19
6.1 AFFIRMATIVE COVENANTS OF FABC AND FIRST NATIONAL...............19
6.2 NEGATIVE COVENANTS OF FABC AND FIRST NATIONAL..................20
6.3 COVENANTS OF CCBG..............................................21
6.4 ADVERSE CHANGES IN CONDITION...................................21
6.5 REPORTS........................................................22
6.6 TAXES..........................................................22
ARTICLE 7 ADDITIONAL AGREEMENTS..........................................23
7.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL..23
7.2 NASDAQ LISTING.................................................23
7.3 APPLICATIONS...................................................23
7.4 FILINGS WITH STATE OFFICES.....................................23
7.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE..........................23
-ii-
7.6 INVESTIGATION AND CONFIDENTIALITY..............................24
7.7 PRESS RELEASES.................................................25
7.8 CERTAIN ACTIONS................................................25
7.9 ACCOUNTING AND TAX TREATMENT...................................25
7.10 STATE TAKEOVER LAWS............................................25
7.11 CHARTER PROVISIONS.............................................25
7.12 FABC AND FIRST NATIONAL MEETINGS...............................25
7.13 AGREEMENT OF AFFILIATES........................................25
7.14 EMPLOYEE BENEFITS AND CONTRACTS................................26
7.15 ALACHUA 401(K) PLAN QUALIFICATION..............................26
7.16 INDEMNIFICATION................................................27
7.17 CERTAIN POLICIES OF FABC.......................................28
7.18 DIRECTOR AND VOTING AGREEMENTS.................................28
7.19 PAYMENT OF BONUS...............................................28
7.20 REAL PROPERTY MATTERS..........................................28
7.21 FAIRNESS OPINION...............................................29
7.22 NON-COMPETITION AGREEMENTS.....................................29
7.23 FABC AUDITED FINANCIAL STATEMENTS..............................29
7.24 ALLOWANCE FOR POSSIBLE LOAN LOSSES.............................30
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE..............30
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY........................30
8.2 CONDITIONS TO OBLIGATIONS OF CCBG..............................31
8.3 CONDITIONS TO OBLIGATIONS OF FABC AND FIRST NATIONAL...........32
ARTICLE 9 TERMINATION....................................................32
9.1 TERMINATION....................................................32
9.2 EFFECT OF TERMINATION..........................................34
9.3 ALTERNATE TRANSACTION..........................................34
9.4 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS..................34
ARTICLE 10 MISCELLANEOUS..................................................34
10.1 DEFINITIONS....................................................34
10.2 EXPENSES.......................................................42
10.3 BROKERS AND FINDERS............................................42
10.4 ENTIRE AGREEMENT...............................................43
10.5 AMENDMENTS.....................................................43
10.6 WAIVERS........................................................43
10.7 ASSIGNMENT.....................................................43
10.8 NOTICES........................................................43
-iii-
10.9 GOVERNING LAW..................................................44
10.10 COUNTERPARTS...................................................44
10.11 CAPTIONS; ARTICLES AND SECTIONS................................44
10.12 INTERPRETATIONS................................................44
10.13 ENFORCEMENT OF AGREEMENT.......................................45
10.14 ENFORCEMENT COSTS..............................................45
10.15 SEVERABILITY...................................................45
-iv-
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of February 3, 2005, by and among CAPITAL CITY BANK GROUP, INC., a
Florida corporation ("CCBG"), FIRST ALACHUA BANKING CORPORATION, a Florida
corporation ("FABC"), and FIRST NATIONAL BANK OF ALACHUA, a national bank
("First National").
PREAMBLE
The respective Boards of Directors of CCBG, FABC, and First National are
of the opinion that the transactions described herein are in the best
interests of the parties to this Agreement and their respective shareowners.
This Agreement provides for the acquisition of FABC by CCBG pursuant to the
merger of (i) FABC with and into CCBG (the "Holding Company Merger") and
(ii) First National with and into a Florida chartered bank subsidiary of
CCBG, Capital City Bank ("CCB") (the "Bank Merger") (collectively, the
"Mergers"). At the effective time of the Holding Company Merger, the
outstanding shares of the capital stock of FABC shall be converted into the
right to receive a combination of shares of the common stock of CCBG and cash
as described in this Agreement. As a result, shareholders of FABC shall
become shareowners of CCBG and CCBG shall conduct the business and operations
of First National. The transactions described in this Agreement are subject
to the approvals of the shareholders of FABC, the Board of Governors of the
Federal Reserve System, the Florida Department of Financial Services, and the
satisfaction of certain other conditions described in this Agreement. It is
the intention of the parties to this Agreement that the Mergers, for federal
income tax purposes, shall qualify as a "reorganization" within the meaning
of Section 368(a)(1)(A) of the Code.
Certain terms used in this Agreement are defined in Section 10.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties,
intending to be legally bound, agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGERS
1.1 HOLDING COMPANY MERGER.
---------------------- Subject to the terms and conditions of
this Agreement, at the Effective Time, FABC shall be merged with and into
CCBG in accordance with the provisions of, and with the effect provided in,
Sections 607.1101, 607.1103, 607.1105, 607.1106 and 607.1107 of the FBCA.
CCBG shall be the Surviving Corporation resulting from the Holding Company
Merger and shall continue to be governed by the Laws of the State of Florida.
The Holding Company Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of FABC and CCBG.
1.2 BANK MERGER.
----------- Subsequent to the consummation of the Holding
Company Merger, First National shall be merged with and into CCB in
accordance with the provisions of and with the effect provided in Section
658.41 of the Florida Statutes on terms and subject to the provisions of the
Bank Plan of Merger ("Bank Plan"), attached hereto as Exhibit 1. FABC shall
vote the shares of First National Capital Stock in favor of the Bank Plan and
the Bank Merger provided therein.
1.3 TIME AND PLACE OF CLOSING.
------------------------- The closing of the transactions
contemplated hereby (the "Closing") will take place at the close of business
on the date that the Effective Time occurs (or the immediately preceding day
if the Effective Time is earlier than 9:00 A.M.), or at such other time as
the Parties, acting through their authorized officers, may mutually agree.
The Closing shall be held at such location as may be mutually agreed upon by
the Parties or may be conducted by mail or facsimile as may be mutually
agreed upon by the Parties.
1.4 EFFECTIVE TIME.
-------------- The Holding Company Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Articles of Merger reflecting the Holding Company Merger shall
become effective with the Secretary of State of the State of Florida (the
"Effective Time"). Subject to the terms and conditions hereof, unless
otherwise mutually agreed upon in writing by the authorized officers of each
Party, the Parties shall use their reasonable efforts to cause the Effective
Time to occur within 60 days after the last to occur of (i) the effective
date
1
(including expiration of any applicable waiting period) of the last
required Consent of any Regulatory Authority having authority over and
approving or exempting the Mergers, and (ii) the date on which the
shareholders of FABC and CCBG approve this Agreement to the extent such
approval is required by applicable Law. The actual Effective Time within the
60-day period shall be mutually agreed upon by CCBG and FABC.
1.5 ARTICLES OF INCORPORATION.
------------------------- The Articles of Incorporation of CCBG
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until duly amended or repealed.
1.6 BYLAWS.
------ The Bylaws of CCBG in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until duly
amended or repealed.
1.7 DIRECTORS AND OFFICERS.
---------------------- The directors of CCBG in office
immediately prior to the Effective Time, together with such persons as may
thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws
of the Surviving Corporation. The officers of CCBG in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the officers of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws
of the Surviving Corporation.
ARTICLE 2
MANNER OF CONVERTING SHARES
2.1 CONVERSION OF SHARES.
-------------------- Subject to the provisions of this Article
2, at the Effective Time, by virtue of the Mergers and without any action on
the part of CCBG, CCB, FABC, or First National or the shareholders of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of capital stock of CCBG issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Subject to adjustment as set forth in this Section 2.1, the
aggregate purchase price (the "Purchase Price") to be paid by CCBG for the
FABC Common Stock shall be Fifty-Eight Million U.S. Dollars ($58,000,000).
(c) Each share of FABC Common Stock issued and outstanding
immediately prior to the Effective Time, excluding shares held by any FABC
Entity or any CCBG Entity, in each case other than in a fiduciary capacity or
as a result of debts previously contracted, and excluding shares held by
shareholders who perfect their statutory dissenters' rights as provided in
Section 2.4, shall cease to be outstanding and, subject to any adjustments as
set forth in this Section 2.1, shall be converted into and exchanged for the
right to receive:
(1) that multiple of a share of CCBG Common Stock equal
to the quotient obtained by dividing (i) one-half of the Adjusted Purchase
Price Per Share by (ii) $40 (the "Share Exchange Ratio"); and
(2) cash equal to one-half of the Adjusted Purchase Price
Per Share.
(d) In the event that the FABC Audited Financial Statements,
pursuant to Section 7.23, indicate total shareholders' equity, as that term
is defined in accordance with GAAP, as of September 30, 2004 to be less than
$24,665,000, the difference obtained by subtracting (a) total shareholders'
equity as determined by the Auditor pursuant to Section 7.23 from (b)
$24,665,000 shall be deemed to be audit adjustments to the FABC Financial
Statements (the "Audit Adjustments").
(e) If, pursuant to Section 2.1(d), the opinion of the Auditor
with respect to the FABC Audited Financial Statements shall be qualified and
the total capital is not readily determinable by the Auditor, then the
parties agree to negotiate appropriate Audit Adjustments; provided, that, if
the parties cannot agree as to the amount of such Audit Adjustments within 30
days of the delivery of the Auditor's audit opinion, CCBG may terminate this
Agreement. In the event that CCBG elects not to terminate this Agreement,
then there shall be no Audit Adjustments.
(f) Each share of capital stock of CCB issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
2
(g) Each share of capital stock of First National issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be extinguished from and after the consummation of the
Bank Merger.
2.2 ANTI-DILUTION PROVISIONS.
------------------------ In the event CCBG changes the number of
shares of CCBG Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in
the case of a stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Share Exchange Ratio
shall be proportionately adjusted.
2.3 SHARES HELD BY FABC SHAREHOLDERS OR CCBG.
---------------------------------------- Each of the shares of
FABC Common Stock held by any FABC Entity or any CCBG Entity, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
2.4 DISSENTING SHAREHOLDERS.
----------------------- Any holder of shares of FABC Common
Stock who perfects his or her dissenters' rights in accordance with and as
contemplated by Sections 607.1301-1333 of the FBCA shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, that no such payment shall be made to any
dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the FBCA and surrendered to FABC
the certificate or certificates representing the shares for which payment is
being made. In the event that after the Effective Time a dissenting
shareholder of FABC fails to perfect, or effectively withdraws or loses, his
or her right to appraisal and of payment for his or her shares subject to
CCBG's consent in its sole discretion, CCBG shall issue and deliver the
consideration to which such holder of shares of FABC Common Stock is entitled
under this Article 2 (without interest) upon surrender by such holder of the
certificate or certificates representing shares of FABC Common Stock held by
him or her.
2.5 FRACTIONAL SHARES.
----------------- Notwithstanding any other provision of this
Agreement, each holder of shares of FABC Common Stock exchanged pursuant to
the Mergers who would otherwise have been entitled to receive a fraction of a
share of CCBG Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of CCBG
Common Stock multiplied by the Average Closing Price. No such holder will be
entitled to dividends, voting rights, or any other rights as a shareholder in
respect of any fractional shares.
ARTICLE 3
EXCHANGE OF SHARES
3.1 EXCHANGE PROCEDURES.
------------------- Promptly after the Effective Time, CCBG and
FABC shall cause the exchange agent selected by CCBG (the "Exchange Agent")
to mail to each holder of record of a certificate or certificates which
represented shares of FABC Common Stock immediately prior to the Effective
Time (the "Certificates") appropriate transmittal materials and instructions
(which shall specify that delivery shall be effected, and risk of loss and
title to such Certificates shall pass, only upon proper delivery of such
Certificates to the Exchange Agent). The Certificate or Certificates of FABC
Common Stock so delivered shall be duly endorsed as the Exchange Agent may
require. In the event of a transfer of ownership of shares of FABC Common
Stock represented by Certificates that are not registered in the transfer
records of FABC, the consideration provided in Section 2.1 may be issued to a
transferee if the Certificates representing such shares are delivered to the
Exchange Agent, accompanied by all documents required to evidence such
transfer and by evidence satisfactory to the Exchange Agent that any
applicable stock transfer taxes have been paid. If any Certificate shall
have been lost, stolen, mislaid or destroyed, upon receipt of (i) an
affidavit of that fact from the holder claiming such Certificate to be lost,
mislaid, stolen or destroyed, (ii) such bond, security or indemnity as CCBG
and the Exchange Agent may reasonably require and (iii) any other documents
necessary to evidence and effect the bona fide exchange thereof, the Exchange
Agent shall issue to such holder the consideration into which the shares
represented by such lost, stolen, mislaid or destroyed Certificate shall have
been converted. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it may deem
appropriate. After the Effective Time, each holder of shares of FABC Common
Stock (other than shares to be canceled pursuant to Section 2.3 or as to
which statutory dissenters' rights have been perfected as provided in Section
2.4) issued and outstanding at the Effective Time shall surrender the
Certificate or Certificates representing such shares to the Exchange Agent
and shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 2.1, together with all undelivered
dividends or distributions in respect of such shares (without interest
thereon) pursuant to Section 3.2. To the extent required by Section 2.5,
each holder of shares of FABC Common Stock issued
3
and outstanding at the Effective Time also shall receive, upon surrender of
the Certificate or Certificates, cash in lieu of any fractional share of CCBG
Common Stock to which such holder may be otherwise entitled (without
interest). CCBG shall not be obligated to deliver the consideration to which
any former holder of FABC Common Stock is entitled as a result of the Mergers
until such holder surrenders such holder's Certificate or Certificates for
exchange as provided in this Section 3.1. Any other provision of this
Agreement notwithstanding, neither CCBG nor the Exchange Agent shall be
liable to a holder of FABC Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar Law. Adoption of this Agreement by
the shareholders of FABC shall constitute ratification of the appointment of
the Exchange Agent.
3.2 RIGHTS OF FORMER FABC SHAREHOLDERS.
---------------------------------- At the Effective Time, the
stock transfer books of FABC shall be closed as to holders of FABC Common
Stock immediately prior to the Effective Time and no transfer of FABC Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 3.1,
each Certificate therefor representing shares of FABC Common Stock (other
than shares to be canceled pursuant to Sections 2.3 and 2.4) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 2.1 and 2.5 in exchange therefor,
subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by FABC in respect of such
shares of FABC Common Stock in accordance with the terms of this Agreement
and which remain unpaid at the Effective Time. Whenever a dividend or other
distribution is declared by CCBG on the CCBG Common Stock, the record date
for which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares of CCBG Common Stock issuable
pursuant to this Agreement. No dividend or other distribution payable to the
holders of record of CCBG Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any Certificate until such
holder surrenders such Certificate for exchange as provided in Section 3.1.
However, upon surrender of such Certificate, both the CCBG Common Stock
certificate (together with all such undelivered dividends or other
distributions, without interest) and any undelivered dividends and cash
payments payable hereunder (without interest) shall be delivered and paid
with respect to each share represented by such Certificate.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FABC
FABC and First National hereby jointly and severally represent and
warrant to CCBG as follows:
4.1 ORGANIZATION, STANDING, AND POWER.
---------------------------------
(a) FABC is a corporation duly organized, validly existing, and
its status is active under the Laws of the State of Florida, and has the
corporate power and authority to carry on its business as now conducted and
to own, lease and operate its Assets. FABC is duly qualified or licensed to
transact business and in good standing in the jurisdictions where the
character of its Assets or the nature or conduct of its business requires it
to be so qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed is not reasonably likely to have,
individually or in the aggregate, an FABC Material Adverse Effect. The
minute books and other organizational documents and corporate records for
FABC have been made available to CCBG for its review and, except as disclosed
in Section 4.1 of the FABC Disclosure Memorandum, are true and complete in
all Material respects as in effect as of the date of this Agreement and
accurately reflect in all Material respects all amendments thereto and all
proceedings of the Board of Directors and shareholders
thereof.
(b) First National is a national bank duly organized, validly
existing, and in good standing under the Laws of the United States of
America, and has the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its Assets. First National is
duly qualified or licensed to transact business and in good standing in the
jurisdictions where the character of its Assets or the nature or conduct of
its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, an FABC Material
Adverse Effect. The minute books and other organizational documents and
corporate records for First National have been made available to CCBG for its
review and, except as disclosed in Section 4.1 of the FABC Disclosure
Memorandum, are true and complete in all Material respects as in effect as of
the date of this Agreement and accurately reflect in all Material respects
all amendments thereto and all proceedings of the Board of Directors and
shareholders thereof.
4
4.2 AUTHORITY OF FABC AND FIRST NATIONAL; NO BREACH BY AGREEMENT.
------------------------------------------------------------
(a) Each of FABC and First National has the corporate power and
authority necessary to execute, deliver, and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated herein, including the Mergers, have been
duly and validly authorized by all necessary corporate action in respect
thereof on the part of FABC and First National, subject to receipt of the
requisite Consents referred to in Section 8.1(b) and the approval of this
Agreement by the holders of a majority of the outstanding shares of FABC
Common Stock and a majority of the outstanding shares of First National
Common Stock, which are the only shareholder votes required for approval of
this Agreement and consummation of the Mergers by FABC and First National.
Subject to such requisite shareholder approval and due authorization,
execution and delivery by CCBG, this Agreement represents a legal, valid, and
binding obligation of FABC and First National, enforceable against FABC and
First National in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any such
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
FABC and First National, nor the consummation by FABC and First National of
the transactions contemplated hereby, nor compliance by FABC and First
National with any of the provisions hereof, will (i) conflict with or result
in a breach of any provision of FABC's Articles of Incorporation or Bylaws or
the certificate or articles of incorporation of any FABC Subsidiary or any
resolution adopted by the board of directors or the shareholders of any FABC
Entity, or (ii) subject to receipt of the requisite Consents referred to in
Section 8.1(b), and except as disclosed in Section 4.2 of the FABC Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any FABC
Entity under, any Contract or Permit of any FABC Entity, where such Default
or Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, an FABC Material Adverse Effect, or where
such event would cause a breach hereof or a Default hereunder, or (iii)
subject to receipt of the requisite Consents referred to in Section 8.1(b),
constitute or result in a Default under, or require any Consent pursuant to,
any Law or Order applicable to any FABC Entity or their respective Material
Assets (including any CCBG Entity or any FABC Entity becoming subject to or
liable for the payment of any Tax on any of the Assets owned by any CCBG
Entity or any FABC Entity being reassessed or revalued by any taxing
authority).
(c) Except for the Consents referred to in Section 8.1(b), no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by FABC or First National of the Mergers and
the other transactions contemplated in this Agreement.
4.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of FABC consists of
(i) 250,000 shares of FABC Class A Common Stock, of which 4,456 shares are
issued and outstanding as of the date of this Agreement and not more than
4,456 shares will be issued and outstanding at the Effective Time, (ii)
250,000 shares of FABC Class B Common Stock, of which 5,730 shares are issued
and outstanding as of the date of this Agreement and not more than 5,730
shares will be issued and outstanding at the Effective Time, and (iii) no
shares of preferred stock are authorized, issued or outstanding. All of the
issued and outstanding shares of FABC Capital Stock are duly and validly
issued and outstanding and are fully paid and nonassessable under the FBCA.
None of the outstanding shares of FABC Capital Stock has been issued in
violation of any preemptive rights of the current or past shareholders of
FABC.
(b) The authorized capital stock of First National consists of
(i) 80,000 shares of First National Common Stock, of which 80,000 shares are
issued and outstanding as of the date of this Agreement and not more than
80,000 shares will be issued and outstanding at the Effective Time, and (ii)
no shares of preferred stock are authorized, issued or outstanding. All of
the issued and outstanding shares of First National Capital Stock are duly
and validly issued and outstanding and are fully paid and nonassessable
(except for assessment pursuant to 12 U.S.C. Section 55). None of the
outstanding shares of First National Capital Stock has been issued in
violation of any preemptive rights of the current or past shareholders of
First National.
(c) Except as set forth in Sections 4.3(a) and 4.3(b), or as
disclosed in Section 4.3 of the FABC Disclosure Memorandum, there are no
shares of FABC Capital Stock, First National Capital Stock or other equity
securities of
5
FABC or First National outstanding and no outstanding Equity Rights relating
to FABC Capital Stock or First National Capital Stock.
4.4 INVESTMENTS; SUBSIDIARIES.
------------------------- FABC and First National have disclosed
in Section 4.4 of the FABC Disclosure Memorandum all of the FABC Subsidiaries
that are corporations (identifying its jurisdiction of incorporation, each
jurisdiction in which it is qualified and/or licensed to transact business,
and the number of shares owned and percentage ownership interest represented
by such share ownership) and all of the FABC Subsidiaries that are general or
limited partnerships, limited liability companies, trusts or other
non-corporate entities (identifying the Law under which such entity is
organized, each jurisdiction in which it is qualified and/or licensed to
transact business, the type of entity and the amount and nature of the
ownership interest therein). FABC owns all of the issued and outstanding
shares of capital stock (or other equity interests) of each FABC Subsidiary.
No capital stock (or other equity interest) of any FABC Subsidiary is or may
become required to be issued (other than to another FABC Entity) by reason of
any Equity Rights, and there are no Contracts by which any FABC Subsidiary is
bound to issue (other than to another FABC Entity) additional shares of its
capital stock (or other equity interests) or Equity Rights or by which any
FABC Entity is or may be bound to transfer any shares of the capital stock
(or other equity interests) of any FABC Subsidiary (other than to another
FABC Entity). There are no Contracts relating to the rights of any FABC
Entity to vote or to dispose of any shares of the capital stock (or other
equity interests) of any FABC Subsidiary. All of the shares of capital stock
(or other equity interests) of each FABC Subsidiary held by a FABC Entity are
fully paid and (except pursuant to 12 U.S.C. Section 55 in the case of
national banks and comparable, applicable state Law, if any, in the case of
state depository institutions) nonassessable under the applicable corporation
Law of the jurisdiction in which such Subsidiary is incorporated or organized
and are owned by the FABC Entity free and clear of any Lien. Except as
disclosed in Section 4.4 of the FABC Disclosure Memorandum, each FABC
Subsidiary is either a bank, a savings association, or a corporation, and
each such Subsidiary is duly organized, validly existing, and (as to
corporations) in good standing or its status is active, as applicable, under
the Laws of the jurisdiction in which it is incorporated or organized, and
has the corporate power and authority necessary for it to own, lease, and
operate its Assets and to carry on its business as now conducted. Each FABC
Subsidiary is duly qualified or licensed to transact business and in good
standing or its status is active, as applicable, in the jurisdictions where
the character of its Assets or the nature or conduct of its business requires
it to be so qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed is not reasonably likely to have,
individually or in the aggregate, an FABC Material Adverse Effect. Each FABC
Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits are insured by the Bank Insurance Fund. The
minute books and other organizational and corporate documents for each FABC
Subsidiary have been made available to CCBG for its review, and, except as
disclosed in Section 4.4 of the FABC Disclosure Memorandum, are true and
complete in all Material respects as in effect as of the date of this
Agreement and accurately reflect in all Material respects all amendments
thereto and all proceedings of the Board of Directors, all committees of the
Board of Directors and shareholders thereof.
4.5 FINANCIAL STATEMENTS.
-------------------- To the Knowledge of FABC and to the
Knowledge of First National, each of the FABC Financial Statements was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or as disclosed in Section 4.5 of the FABC Disclosure Memorandum),
and fairly presents in all Material respects the financial position of FABC
and First National as of the respective dates and the results of operations
for the periods indicated, except that the interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be Material in amount or effect.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES.
---------------------------------- No FABC Entity has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, an FABC Material Adverse Effect, except Liabilities which are
accrued or reserved against in the balance sheets of FABC and First National
as of December 31, 2003, included in the FABC Financial Statements delivered
prior to the date of this Agreement or reflected in the notes thereto.
Except as set forth in Section 4.6 of the FABC Disclosure Memorandum, no FABC
Entity has incurred or paid any Liability since December 31, 2003, except for
such Liabilities incurred or paid (i) in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, an FABC Material Adverse Effect or
(ii) in connection with the transactions contemplated by this Agreement.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
------------------------------------ Since December 31, 2003,
except as disclosed in the FABC Financial Statements delivered prior to the
date of this Agreement or as disclosed in Section 4.7 of the FABC Disclosure
Memorandum, there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, an
FABC Material Adverse Effect.
6
4.8 TAX MATTERS.
-----------
(a) Filing of Tax Returns. Each FABC Entity has timely filed
with the appropriate taxing authorities all Returns (including, without
limitation, information returns and other Material information) in respect of
Taxes that it is required to file under applicable Law through the date
hereof. All such Returns were, and the information contained therein was,
complete and accurate in all Material respects. Except as specified in
Section 4.8(a) of the FABC Disclosure Memorandum, no FABC Entity has
requested any extension of time within which to file Returns (including,
without limitation, information returns) in respect of any Taxes. FABC and
First National have made available to CCBG copies of such portions of the
federal, state, foreign and local income tax returns of each FABC Entity for
the last four years that relate to such FABC Entity. Except as set forth in
Section 4.8(a) of the FABC Disclosure Memorandum, no FABC Entity has derived
income from or operated a trade or business in any foreign country, state or
locality.
(b) Payment of Taxes. All Taxes in respect of periods
beginning before the date hereof (i) if due and payable, have been timely
paid, (ii) if not yet due and payable, have an adequate reserve established
therefor in accordance with FABC management's estimate of the taxes owed and
in accordance with GAAP as of the Closing Date or (iii) are being contested
in good faith by an FABC Entity pursuant to appropriate proceedings which are
being diligently pursued and an adequate reserve therefor has been
established in accordance with GAAP, as set forth in Section 4.8(b) of the
FABC Disclosure Memorandum. No FABC Entity has any Material Liability for
Taxes in excess of the amounts so paid or reserves so established in
accordance with (b)(i) or (b)(ii) above. Each FABC Entity has, within the
time and manner prescribed by applicable Law, rules and regulations, withheld
and paid over to the proper taxing or other governmental authorities all
Taxes required to be withheld and paid over. Except (i) acts, events or
omissions that are ordinary business activities, (ii) to the extent relating
to income an FABC Entity receives after the Closing, or (iii) as set forth in
Section 4.8(b) of the FABC Disclosure Memorandum, to the Knowledge of FABC,
no acts, events or omissions have occurred on or before the Closing Date that
would result in Material Taxes for which any FABC Entity is or may become
liable that will apply in a period or a portion thereof beginning on or after
the Closing Date.
(c) Audit History. Except as set forth in Section 4.8(c) of
the FABC Disclosure Memorandum, there are no deficiencies for Taxes claimed,
proposed or assessed that have not yet been fully and finally resolved and,
if such resolution required payment of any Taxes, such payment has been made.
Except as set forth in Section 4.8(c) of the FABC Disclosure Memorandum,
there are no pending or, to FABC's Knowledge or to First National's
Knowledge, threatened audits, investigations or claims for or relating to
Taxes, and there are no matters under discussion with any taxing or other
governmental authority with respect to Taxes, in each case, that, in the
reasonable judgment of FABC and First National or their respective tax
advisers, are likely to result in a Material additional amount of Taxes.
Audits of federal, state, foreign and local returns for Taxes of any FABC
Entity by the relevant taxing authorities within the past 5 years have been
completed for each period set forth in Section 4.8(c) of the FABC Disclosure
Memorandum. Except as set forth in Section 4.8(c) of the FABC Disclosure
Memorandum, no extension of a statute of limitations relating to Taxes is in
effect with respect to any FABC Entity.
(d) Tax Elections.
-------------
(1) All Material elections with respect to Taxes
affecting any FABC Entity that are effective as of the date hereof are set
forth in Section 4.8(d) of the FABC Disclosure Memorandum.
(2) No FABC Entity: (i) has agreed, or is required, to
make any adjustment under Section 481(a) of the Code that would be applicable
to any taxable period ending after the Closing Date by reason of a change in
accounting method or otherwise; (ii) has made an election or is required, to
treat any Asset of any FABC Entity as owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately before enactment of the Tax Reform Act of
1986, (iii) owns tax-exempt bond financed property within the meaning of
Section 168(g) of the Code, or (iv) owns tax-exempt use property within the
meaning of Section 168(h)(1) of the Code.
(e) Asset Liens.
----------- There are no Liens for Taxes (other than for
current Taxes not yet due and payable) on any Assets of any FABC Entity.
(f) Tax Rulings/Binding Agreement.
----------------------------- No FABC Entity has requested
or received any ruling from any taxing authority, or signed any binding
agreement with any taxing authority (including, without limitation, any
advance pricing agreement), that would materially adversely affect the amount
of Taxes after the Closing Date.
7
(g) Power of Attorney.
----------------- Except as set forth in Section 4.8(g) of
the FABC Disclosure Memorandum, there is no power of attorney currently in
force granted by any FABC Entity relating to Taxes.
(h) Prior Affiliated Groups.
----------------------- Section 4.8(h) of the FABC
Disclosure Memorandum lists all combined consolidated or unitary groups
(other than the consolidated or unitary group of which FABC is the parent) of
which each FABC Entity has been a member and which has filed a combined,
consolidated or unitary return for federal, state, local or foreign tax
purposes.
(i) Tax-Sharing Agreements.
---------------------- Except as set forth in Section
4.8(i) of the FABC Disclosure Memorandum, no FABC Entity is a party to a tax-
sharing agreement or any similar arrangement.
(j) Existing Partnerships and Single Member LLCs.
-------------------------------------------- Except as set
forth in Section 4.8(j) of the FABC Disclosure Memorandum, no FABC Entity (i)
is subject to any joint venture, partnership or other agreement or
arrangement which is treated as a partnership for federal income tax
purposes, or (ii) owns a single member limited liability company which is
treated as a disregarded entity.
(k) Parachute Payments.
------------------ Except as set forth in Section 4.8(k)
of the FABC Disclosure Memorandum, no FABC Entity has made or become
obligated to make, or will, as a result of any event connected with the
merger of FABC with CCBG or any other transaction contemplated herein, make
or become obligated to make, any "excess parachute payment" as defined in
Section 280G of the Code.
(l) Balance of Intercompany Items.
----------------------------- Except as set forth in
Section 4.8(l) of the FABC Disclosure Memorandum, all items of income, gain,
deduction or loss from an intercompany transaction will be taken into account
as of the Closing Date under the matching and acceleration rules of Treas.
Reg. Section 1.1502-13.
(m) Debt or Stock of Acquiring Group.
-------------------------------- No FABC Entity owns any
debt obligation of a CCBG Entity or any CCBG Capital Stock.
(n) Compliance with Section 6038A.
----------------------------- Each FABC Entity has
complied with all applicable reporting and record-keeping requirements under
Section 6038A of the Code with respect to certain foreign-owned companies and
transactions with certain related parties.
(o) FIRPTA.
------ No FABC Entity is a "foreign person" as defined in
Section 1445(f)(3) of the Code.
(p) Permanent Establishment.
----------------------- No FABC Entity has, or has had, a
permanent establishment in any foreign country, as defined in any applicable
tax treaty or convention between the United States of America and any such
foreign country.
(q) Security for Tax-Exempt Obligations.
----------------------------------- None of the Assets of
any FABC Entity directly or indirectly secures any debt, the interest on
which is tax-exempt under Section 103(a) of the Code.
(r) U.S. Real Property Holding Corporation.
-------------------------------------- No FABC Entity is,
or has been, a United States real property holding corporation (as defined in
Section 897(c)(2) of the Code) during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(s) Unpaid Tax.
---------- The unpaid Taxes of each FABC Entity do not
exceed the reserve for Taxes based upon FABC management's estimates of the
Taxes owed (excluding any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth or included in the
most recent FABC Financial Statements as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
FABC.
(t) Tax Ownership.
------------- Each Asset with respect to which an FABC
Entity claims depreciation, amortization or similar expense for Tax purposes
is owned for Tax purposes by such FABC Entity.
(u) Timing Differences.
------------------ No item of income or gain reported by
any FABC Entity for financial accounting purposes in any pre-Closing period is
required to be included in taxable income for a post-Closing period except to
8
the extent that a reserve has been established on the books and financial
statements of FABC to reflect timing differences between book and Tax income.
4.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES.
---------------------------------- In the opinion of FABC
management and First National management, the allowances for possible loan
and lease credit losses (collectively, the "Allowance") shown on the FABC
Financial Statements immediately prior to the Effective Time will be, as of
the date thereof, adequate (within the meaning of GAAP and applicable
regulatory requirements or guidelines) to provide for all known or reasonably
anticipated losses relating to or inherent in the loan and lease portfolio of
the FABC Entities and other extensions of credit (including letters of
credit) by the FABC Entities as of the dates thereof.
4.10 ASSETS.
------
(a) Except as disclosed in Section 4.10 of the FABC Disclosure
Memorandum or as disclosed or reserved against in the FABC Financial
Statements delivered prior to the date of this Agreement, each FABC Entity
has good, marketable, and insurable title, free and clear of all Liens, to
all of its Assets. All Material tangible properties used in the businesses
of each FABC Entity are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with such FABC
Entity's past practices.
(b) All Assets which are Material to the business of either
FABC or First National, held under leases or subleases by any FABC Entity,
are held under valid Contracts enforceable by an FABC Entity and to the
Knowledge of FABC or to the Knowledge of First National, as to the
counterparty to such Contracts in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any such proceeding may
be brought), there are no Material Defaults under such Contracts and no
event(s) has occurred, which with the giving of notice or passage of time
would cause such a Material Default to occur, and each such Contract is in
full force and effect. Furthermore, none of the FABC Entities has received
any notice that any FABC Entity is in, or will be in, Material Default under
such Contracts.
(c) Each FABC Entity currently maintains insurance in amounts,
scope, and coverage reasonably adequate to operate its business as presently
conducted. None of the FABC Entities has received notice from any insurance
carrier that (i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect
to such policies of insurance will be substantially increased. There are
presently no claims for amounts exceeding in any individual case $10,000, or
in the aggregate $50,000, pending under such policies of insurance and no
notices of claims in excess of such amounts have been given by FABC under
such policies.
(d) The Assets of each FABC Entity include all Assets required
to operate the business of the FABC Entities as presently conducted.
(e) Except as disclosed in Section 4.10(e) of the FABC
Disclosure Memorandum, neither FABC nor any FABC Subsidiary holds any
deposits or has made any loans to any individuals or related group of
individuals which (i) in the case of deposits, individually or in the
aggregate exceed $8 million, or (ii) in the case of loans, individually or in
the aggregate exceed $3.5 million.
(f) There are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties the right
of use or occupancy of any real property owned or leased by any FABC Entity,
including FABC's and First National's banking facilities and all other real
estate or foreclosed properties and any improvements thereon (collectively,
the "Real Property"), except as set forth in Section 4.10(f) of the FABC
Disclosure Memorandum.
(g) Except as set forth in Section 4.10(g) of the FABC
Disclosure Memorandum, there are no outstanding contracts for sale, options
or rights of first refusal to purchase any Real Property or any portion
thereof or interest therein.
(h) There are no parties (other than any FABC Entities) in
possession of any Real Property, other than tenants under any leases
disclosed in Section 4.10(h) of the FABC Disclosure Memorandum who are in
possession of space to which they are entitled.
9
(i) Each real property owned or leased by any FABC Entities and
which is used in the ordinary course of FABC's or First National's banking
business is supplied with utilities and other services necessary for the
operation of such facilities, including gas, electricity, water, telephone,
sanitary sewer, and storm sewer, all of which services are adequate and are
provided via public roads or via permanent, irrevocable, appurtenant
easements benefiting such property.
(j) Except as set forth in the FABC Disclosure Memorandum, each
real property owned or leased by FABC or First National and which is used in
the ordinary course of FABC's or First National's banking business has direct
vehicular access to a public road, or has access to a public road via
permanent, irrevocable, appurtenant easements benefiting the parcel of real
property.
4.11 INTELLECTUAL PROPERTY.
--------------------- Except as set forth in Section 4.11 of the
FABC Disclosure Memorandum, each FABC Entity owns or has a license to use all
of the Intellectual Property used by such FABC Entity in the course of its
business. Each FABC Entity is the owner of or has a license to any
Intellectual Property sold or licensed to a third party by such FABC Entity
in connection with such FABC Entity's business operations, and such FABC
Entity has the right to convey by sale or license any Intellectual Property
so conveyed. Except as set forth in Section 4.11 of the FABC Disclosure
Memorandum, no FABC Entity is in Default under any of its Intellectual
Property licenses. No proceedings have been instituted, or are pending or to
the Knowledge of FABC threatened, which challenge the rights of any FABC
Entity with respect to Intellectual Property used, sold or licensed by such
FABC Entity in the course of its business, nor has any person claimed or
alleged any rights to such Intellectual Property. To the Knowledge of FABC,
the conduct of the business of any FABC Entity does not infringe any
Intellectual Property of any other person. Except as disclosed in Section
4.11 of the FABC Disclosure Memorandum, no FABC Entity is obligated to pay
any recurring royalties to any Person with respect to any such Intellectual
Property. Except as disclosed in Section 4.11 of the FABC Disclosure
Memorandum, every officer, director, or employee of any FABC Entity is a
party to a Contract which requires such officer, director or employee to
assign any interest in any Intellectual Property to an FABC Entity and to
keep confidential any trade secrets, proprietary data, customer information,
or other business information of any FABC Entity, and to the Knowledge of
FABC or to the Knowledge of First National, no such officer, director or
employee is party to any Contract with any Person other than any FABC Entity
which requires such officer, director or employee to assign any interest in
any Intellectual Property to any Person other than FABC or to keep
confidential any trade secrets, proprietary data, customer information, or
other business information of any Person other than any FABC Entity. Except
as disclosed in Section 4.11 of the FABC Disclosure Memorandum, no officer,
director or, to the Knowledge of FABC or to the Knowledge of First National,
any employee of any FABC Entity is party to any Contract which restricts or
prohibits such officer, director or employee from engaging in activities
competitive with any Person, including any FABC Entity.
4.12 ENVIRONMENTAL MATTERS.
---------------------
(a) Except as disclosed in Section 4.12(a) of the FABC
Disclosure Memorandum, each FABC Entity, its Operating Properties and its
Participation Facilities are and have been in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, an FABC Material Adverse Effect.
(b) Except as disclosed in Section 4.12(b) of the FABC
Disclosure Memorandum, there has not occurred, nor is there presently
occurring, nor is there any basis for the occurrence of, any emission,
release, discharge, spill, or disposal, or any threatened emission, release,
discharge, spill, or disposal, of any Hazardous Material at, in, on, upon,
about, into, beneath, adjacent to, or affecting (or potentially affecting)
any respective current or former properties of any FABC Entity, or that of
any of its Operating Properties or its Participation Facilities, that was
caused by, contributed to, exacerbated by, or otherwise affected or adversely
affected by (or potentially affected or adversely affected by), the acts or
omissions of an FABC Entity or any of its Operating Properties or, to the
Knowledge of FABC, its Participation Facilities, including, but not limited
to, (i) in an amount requiring, or reasonably requiring, a notice,
notification, or report to be made to a governmental agency or authority
pursuant to Environmental Laws or (ii) in violation or noncompliance, or
alleged violation or noncompliance, of Environmental Laws.
(c) Except as disclosed in Section 4.12(c) of the FABC
Disclosure Memorandum, each FABC Entity, its Operating Properties and its
Participation Facilities have not, at any time, generated, manufactured,
processed, distributed, treated, stored, transported, used or handled or
disposed of or arranged for the disposal of Hazardous Material at or upon:
(i) any location other than a site lawfully permitted to receive such
Hazardous Material or (ii) any site which, pursuant to any Environmental
Laws, (x) has been placed on the National Priorities List or on its state
equivalent or analog or on any other list of hazardous waste sites maintained
by a governmental agency or authority, or (y) the United States Environmental
Protection
10
Agency or the relevant state agency or other governmental agency or
authority has notified any FABC Entity or any of its Participation Facilities
or Operating Properties that such governmental agency or authority has
proposed or is proposing to place such site on the National Priorities Listor
on its state equivalent or analog or on any other list of hazardous waste
sites maintained by a governmental agency or authority, nor is there any
basis for the above.
(d) Except as disclosed in Section 4.12(d) of the FABC
Disclosure Memorandum, there is no Litigation pending, or to the Knowledge of
FABC and First National, threatened to occur, before any court, governmental
agency or authority, or any other forum, in which any FABC Entity or any of
its Operating Properties or, to the Knowledge of FABC, its Participation
Facilities, has been or, with respect to threatened Litigation, may be named
as a defendant or respondent (i) for violation or noncompliance, or alleged
violation or noncompliance, with any Environmental Laws or (ii) relating to
the emission, release, discharge, spill, or disposal or threatened emission,
release, discharge, spill, or disposal of any Hazardous Material at, in, on,
upon, about, into, beneath, adjacent to, or affecting (or potentially
affecting) the environment, whether or not occurring at, in, on, into, upon,
beneath, about, adjacent to, or affecting (or potentially affecting) a site
owned, leased, or operated by any FABC Entity or any of its Operating
Properties or Participation Facilities.
(e) Except as disclosed in Section 4.12(e) of the FABC
Disclosure Memorandum, there are no non-compliance orders, warning letters,
or notices of violation (collectively, "Notices") pending, nor to the
Knowledge of FABC and First National is there a basis for any Notices, before
any court, governmental agency or authority, or any other forum, in which any
FABC Entity or any of its Operating Properties or, to the Knowledge of FABC,
its Participation Facilities, has been or, with respect to threatened
Notices, may be named as a defendant or respondent (i) for violation or
noncompliance, or alleged violation or noncompliance, with any Environmental
Laws, or (ii) relating to the emission, release, discharge, spill, or
disposal or threatened emission, release, discharge, spill, or disposal of
any Hazardous Material at, in, on, upon, about, into, beneath, adjacent to,
or affecting (or potentially affecting) a site owned, leased, or operated by
any FABC Entity or any of its Operating Properties or Participation
Facilities.
4.13 COMPLIANCE WITH LAWS.
-------------------- FABC is duly registered as a bank holding
company under the BHC Act. Each FABC Entity has in effect all Permits
necessary for it to own, lease, or operate its Material Assets and to carry
on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, an
FABC Material Adverse Effect, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, an FABC Material Adverse Effect. Except as
disclosed in Section 4.13 of the FABC Disclosure Memorandum, none of the FABC
Entities:
(a) is in Default under or violation of any of the provisions
of its Articles of Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for Defaults
which are not reasonably likely to have, individually or in the aggregate, an
FABC Material Adverse Effect; or
(c) since January 1, 2001, has received any notification or
communication from any agency or department of federal, state, or local
government or any RegulatoryAuthority or the staff thereof (i) asserting that
any FABC Entity is not in compliance with any of the Laws or Orders which
such governmental authority or Regulatory Authority enforces, (ii)
threatening to revoke any Permits, or (iii) requiring any FABC Entity to
enter into or Consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or to adopt
any Board resolution or similar undertaking, which restricts the conduct of
its business or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
Copies of all Material reports, correspondence, notices and other
documents relating to any inspection, audit, monitoring or other form of
review or enforcement action by a Regulatory Authority have been made
available to CCBG.
4.14 LABOR RELATIONS.
--------------- No FABC Entity is the subject of any Litigation
asserting that it or any other FABC Entity has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other FABC Entity to bargain with any
labor organization as to wages or conditions of employment, nor is any FABC
Entity party to any collective bargaining agreement, nor is there any strike or
other labor dispute involving any FABC Entity, pending or threatened, or to the
Knowledge of FABC or to the Knowledge of First National
is
11
there any activity involving any FABC Entity's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
4.15 EMPLOYEE BENEFIT PLANS.
----------------------
(a) FABC and First National have listed in Section 4.15 of the
FABC Disclosure Memorandum, and, in addition thereto, have delivered or made
available to CCBG prior to the execution of this Agreement copies (and will
continue to make same available to CCBG after execution and prior to Closing,
where necessary) of any and all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay,
vacation, bonus, or other incentive plan, all other written employee
programs, arrangements, or agreements, including any employment agreement
which may itself contain such provisions, all payroll practices, all medical,
vision, dental, or other health plans, all life insurance plans, and all
other employee benefit plans or fringe benefit plans, including "employee
benefit plans" as that term is defined in Section 3(3) of ERISA (generally
referred to as "Benefit Plans"), currently adopted, maintained by,
participated in, sponsored in whole or in part by, or contributed to by FABC
or ERISA Affiliate (as defined below) thereof for the benefit of FABC's or
any ERISA Affiliate's employees, retirees, dependents, spouses, directors,
independent contractors, or any other beneficiaries (collectively
"Participants") under which such Participants are eligible to participate or
receive benefits (collectively, the "FABC Benefit Plans"). The FABC Benefit
Plans documents delivered or made available to CCBG by FABC include true and
complete copies of each plan, together with any amendments thereto, any trust
agreements associated with an FABC Benefit Plan, together with any amendments
thereto, any insurance or annuity contracts with respect to any FABC Benefit
Plan, all corporate resolutions with respect to any FABC Benefit Plan, all
summary plan descriptions with respect to any FABC Benefit Plan together with
any amendments thereto, all Internal Revenue Service ("IRS") Forms 5500 (or
variations thereof) together with any Schedule B and any other attachment
thereto filed with respect to any FABC Benefit Plan (for each of the three
most recent plan years), all certified actuarial statements (for each of the
three most recent plan years) with respect to any FABC Benefit Plan, any
auditor's reports (for each of the three most recent plan years) with respect
to any FABC Benefit Plan, all agreements or Contracts entered into with any
third party administrator or trustee with respect to any FABC Benefit Plan,
and all agreements or contracts with any investment manager, investment
advisor or third party administrator with respect to any FABC Benefit Plan.
FABC will further provide CCBG with a list of each pension consultant,
actuary, attorney, and accountant providing professional services with
respect to any FABC Benefit Plan or the fiduciaries of any FABC Benefit Plan,
as well as the location of all other records and the name of the individual
responsible for such records with respect to any FABC Benefit Plan. Any of
the FABC Benefit Plans which is an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as a "FABC
ERISA Plan." Each FABC ERISA Plan that is also a "defined benefit plan" (as
defined in Section 414(j) of the Code) is referred to herein as a "FABC
Pension Plan." No FABC Pension Plan is or has been a multiemployer plan
within the meaning of Section 3(37) of ERISA.
(b) Except as otherwise provided for in this Agreement or
disclosed in Section 4.15(b) of the FABC Disclosure Memorandum, FABC, First
National, their agents, the trustees and other fiduciaries of the FABC
Benefit Plans have, at all times, complied in all Material respects in the
aggregate with the applicable provisions of the FABC Benefit Plans, the Code
and ERISA, including, but not limited to, COBRA, HIPAA (as those terms are
defined below) and any applicable, similar state law, and with all agreements
relating to the administration of such FABC Benefit Plans. Except as
otherwise provided for or disclosed elsewhere in this Agreement, each FABC
Benefit Plan has been administered and communicated to the Participants and
beneficiaries in accordance with its provisions, and all required annual
reports, filings, disclosures, or other communications, which have been
required to be made to the Participants and beneficiaries, other employees,
the IRS, the U.S. Department of Labor, or any other applicable governmental
agency, in connection with each FABC Benefit Plan, pursuant to the Code,
ERISA, or other applicable statute or regulation, have been made in a timely
manner and no Liability has been incurred on account of delinquent or
incomplete compliance or failure to comply with such requirements. All
amendments and actions required to bring the FABC ERISA Plans into conformity
in all Material respects with all of the applicable provisions of ERISA and
other applicable Laws have been made or taken. Any bonding required with
respect to any FABC Benefit Plan in accordance with applicable provisions of
ERISA has been obtained and is in full force and effect. Each FABC ERISA
Plan, which is intended to be qualified under Section 401(a) of the Code has
heretofore received a favorable determination letter from the IRS, and
neither FABC nor any ERISA Affiliate is aware of any circumstances likely to
result in revocation of any such favorable determination letter(s); provided,
however, that if such FABC ERISA Plan is in the form of a master plan, a
prototype plan or a volume submitter plan, then the term "determination
letter" includes a favorable opinion or advisory letter issued by the IRS to
the submitter practitioner covering the underlying master plan, prototype
plan or volume submitter plan, provided the requirements of Announcement
2001-77 (or its successors) are satisfied, which permit FABC and First
National to rely on the determination letter issued to the submitter
practitioner of such master plan, a prototype plan or a volume submitter
plan.
12
(c) Except as disclosed in Section 4.15 of the FABC Disclosure
Memorandum:
(1) There are no actions, suits, investigations,
arbitrations, proceedings, or adverse Participant claims pending against any
FABC Benefit Plan, against the Assets of any of the trusts under such plans
or the plan sponsor or the plan administrator, or, to the Knowledge of FABC
and its Affiliates, against any agent or fiduciary of any FABC Benefit Plan
with respect to the operation of such plans (other than routine benefit
claims);
(2) Neither FABC nor any ERISA Affiliate or any
disqualified person (as defined in Section 4975 of the Code) have engaged in
a transaction with respect to any FABC Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject FABC, First National, their agents, the trustees or the other
fiduciaries of the FABC Benefit Plans to a Tax imposed by either Section 4975
of the Code or any penalty under Section 502(i) of ERISA;
(3) There have been no governmental audits of any FABC
Benefit Plan within the last six (6) years that have resulted in any
penalties, fines, excise taxes, additional benefit accruals, and to the
Knowledge of FABC and its Affiliates, there are no threatened or pending
governmental audits as of the date hereof and as of the date of Closing; and
(4) No FABC Entity will issue any stock, stock options or
amend or terminate any FABC Benefit Plan subsequent to the date of this
Agreement without the written consent of CCBG except as may be necessary to
honor any pre-existing contract or to maintain the qualification of such FABC
Benefit Plan, in which case FABC shall promptly notify CCBG of such issuance,
amendment or termination in writing prior to its implementation.
(d) No FABC Pension Plan has any "unfunded current liability,"
as that term is defined in Section 302(d)(8)(A) of ERISA, based on actuarial
assumptions used for ongoing funding purposes, as set forth for such plan's
most recent actuarial valuation or upon termination of such plan and payment
of accrued benefits using terminal funding annuities to satisfy accrued
benefit obligations. Since the date of the most recent actuarial valuation,
there has been (i) no Material change in the financial position of any FABC
Pension Plan, (ii) no change in the actuarial assumptions with respect to any
FABC Pension Plan, and (iii) no increase in benefits under any FABC ERISA
Plan as a result of plan amendments or changes in applicable Law. Neither
any FABC Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by FABC, or
the single-employer plan of any entity which is considered one employer with
FABC under Section 4001 of ERISA or Section 414 of the Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated
funding deficiency" within the meaning of Section 412 of the Code or Section
302 of ERISA. Neither FABC nor any ERISA Affiliate has any outstanding
Liability under Section 4971 of the Code. FABC has not provided, nor is it
required to provide, security to an FABC Pension Plan or to any single-
employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
(e) Within the six-year period preceding the Effective Time, no
Liability to the Pension Benefit Guaranty Corporation ("PBGC") under Subtitle
C or D of Title IV of ERISA has been or is expected to be incurred by any
FABC Entity with respect to any ongoing, frozen, or terminated single-
employer plan or the single-employer plan of FABC or an ERISA Affiliate.
Neither FABC nor any ERISA Affiliate has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event," within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, has been
required to be filed for any FABC Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof. All premiums due the
PBGC with respect to any FABC Pension Plan have been paid.
(f) Except as disclosed in Section 4.15 of the FABC Disclosure
Memorandum, neither FABC nor any ERISA Affiliate has any Liability for
retiree health and life benefits under any of the FABC Benefit Plans and if
there are any such plans, there are no restrictions on the rights of FABC or
on any ERISA Affiliate to amend or terminate any such retiree health or
benefit Plan without incurring any post-termination Liability thereunder
(except for administrative costs and professional fees to terminate same).
(g) Except as provided for in this Agreement or as disclosed in
Section 4.15 of the FABC Disclosure Memorandum, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including severance,
unemployment compensation, golden parachute, change of control, or otherwise)
becoming due to any director or any employee of any FABC Entity under any
FABC Benefit Plan or otherwise,
13
(ii) increase any benefits otherwise payable under any FABC Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any
such benefit.
(h) Except as disclosed in Section 4.15 of the FABC Disclosure
Memorandum, the actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any FABC Entity and respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Sections 401(a) and/or 412 of the Code or Section 302 of ERISA,
have been fully reflected on the FABC Financial Statements to the extent
required by and in accordance with GAAP.
(i) No Liability under any FABC Pension Plan has been funded or
satisfied with the purchase of a contract from an insurance company that is
not rated "A(Excellent)" or better by A.M. Best Company, Inc.
(j) Except as disclosed in Section 4.15 of the FABC Disclosure
Memorandum, no stock or other security issued by any FABC Entity forms or has
formed a part of the Assets of any FABC Benefit Plan.
(k) To the Knowledge of FABC or to the Knowledge of First
National, neither FABC, First National, any FABC Benefit Plan nor any
employee, administrator or agent thereof, is or has been in violation of the
transaction code set rules enacted by HIPAA and codified at 42 U.S.C.
SectionSection 1320d-1 to 1320d-3 or the HIPAA privacy rules under 45 C.F.R.
Part 160 and subparts A and E of Part 164. No penalties have been imposed on
FABC, First National, any FABC Benefit Plan, or any employee, administrator
or agent thereof, under 42 U.S.C. Section 1320d-5 or Section 1320d-6 as
enacted by HIPAA. For purposes of this Agreement, "COBRA" means the
provision of Section 4980B of the Code and the regulations thereunder, and
Part 6 of Subtitle B of Title I of ERISA and any regulations thereunder.
"HIPAA" means provisions of the Code, ERISA, and Social Security Act as
enacted by the Health Insurance Portability and Accountability Act of 1996,
and any regulations thereunder.
4.16 MATERIAL CONTRACTS.
------------------ Except as disclosed in Section 4.16 of the
FABC Disclosure Memorandum or otherwise reflected in the FABC Financial
Statements, none of the FABC Entities, nor any of their Assets, businesses,
or operations, is a party to, or is bound or affected by, or receives
benefits under, (i) any employment, severance, termination, consulting, or
retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $25,000, (ii) any Contract relating to the
borrowing of money by any FABC Entity or the guarantee by any FABC Entity of
any such obligation (other than Contracts evidencing deposit liabilities,
purchases of federal funds, fully-secured repurchase agreements, and Federal
Home Loan Bank advances of depository institution Subsidiaries, trade
payables and Contracts relating to borrowings or guarantees made in the
ordinary course of business), (iii) any Contract which prohibits or restricts
any FABC Entity from engaging in any business activities in any geographic
area, line of business or otherwise in competition with any other Person,
(iv) any Contract between or among FABC Entities, (v) any Contract involving
Intellectual Property (other than Contracts entered into in the ordinary
course with customers and commercial "shrink-wrap" software licenses), (vi)
any Contract relating to the provision of data processing, network
communication, or other technical services to or by any FABC Entity, (vii)
any Contract relating to the purchase or sale of any goods or services (other
than Contracts entered into in the ordinary course of business and involving
payments under any individual Contract of less than $25,000), (viii) any
exchange-traded or over-the-counter swap, forward, future, option, cap,
floor, or collar financial Contract, or any other interest rate or foreign
currency protection Contract not included on its balance sheet which is a
financial derivative Contract, and (ix) any other Contract or amendment
thereto that would be required to be filed with any relevant Regulatory
Authority as of the date of this Agreement (together with all Contracts
referred to in Sections 4.10 and 4.15(e), the "FABC Contracts"). With
respect to each FABC Contract and except as disclosed in Section 4.16 of the
FABC Disclosure Memorandum: (i) the Contract is in full force and effect;
(ii) no FABC Entity is in Default thereunder in any Material respect or would
be in Default thereunder in any Material respect as a result of this
Agreement or the transaction contemplated herein; (iii) no FABC Entity has
repudiated or waived any Material provision of any such Contract; and (iv) no
other party to any such Contract is, to the Knowledge of FABC or to the
Knowledge of First National, in Default in any respect or has repudiated or
waived any Material provision thereunder. Except as disclosed in Section
4.16 of the FABC Disclosure Memorandum, all of the indebtedness of any FABC
Entity for money borrowed is prepayable at any time by such FABC Entity
without penalty or premium and no FABC Entity has any obligation or Liability
to any wholesale mortgage business or to any Affiliate of such Persons to
purchase, fund or extend credit with respect to any loans, extensions of
credit, mortgages, or any participation or other interest therein originated,
brokered or referred by or through such Persons. Except as described in
Section 4.16 of the FABC Disclosure Memorandum, all Contracts to which any
FABC Entity is a party may be terminated by such FABC Entity and its
successors and assigns without penalty, charge, liability or further
obligation.
14
4.17 LEGAL PROCEEDINGS.
----------------- There is no Litigation instituted or pending,
or, to the Knowledge of FABC or to the Knowledge of First National,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable
outcome) against any FABC Entity or any FABC Benefit Plan, or against any
director or employee of any FABC Entity, in their capacity as such, or
against any Asset, interest, or right of any of them, nor are there any
Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any FABC Entity. Section 4.17 of the FABC
Disclosure Memorandum contains a summary of all Litigation as of the date of
this Agreement to which any FABC Entity is a party and which names any FABC
Entity as a defendant or cross-defendant or for which any FABC Entity has any
potential Liability.
4.18 REPORTS.
------- Except as set forth in Section 4.18 of the FABC
Disclosure Memorandum, since January 1, 2001, or the date of organization if
later, each FABC Entity has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with Regulatory Authorities. As of their respective dates,
each of such reports and documents, including the financial statements,
exhibits and schedules thereto, complied in all Material respects with all
applicable Laws. As of its respective date, each such report and document
did not contain any untrue statement of a Material fact or omit to state a
Material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
4.19 STATEMENTS TRUE AND CORRECT.
--------------------------- No statement, certificate,
instrument, or other writing furnished or to be furnished by any FABC Entity
or any Affiliate thereof to CCBG pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains or will
contain any untrue statement of Material fact or will omit to state a
Material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any FABC Entity or any Affiliate
thereof for inclusion in the Registration Statement to be filed by CCBG with
the SEC will, when the Registration Statement becomes effective, be false or
misleading with respect to any Material fact, or omit to state any Material
fact necessary to make the statements therein not misleading. None of the
information supplied or to be supplied by any FABC Entity or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to FABC
shareholders in connection with the Shareholders' Meeting, and none of the
information contained in any other documents to be filed by any FABC Entity
or any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
times such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of FABC, be false or misleading with respect
to any Material fact, or omit to state any Material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Shareholders' Meeting, be
false or misleading with respect to any Material fact, or omit to state any
Material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Shareholders' Meeting.
All documents that any FABC Entity or any Affiliate thereof is responsible
for filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all Material respects with the
provisions of applicable Law.
4.20 ACCOUNTING, TAX, AND REGULATORY MATTERS.
--------------------------------------- No FABC Entity or any
Affiliate thereof has taken or agreed to take any action or has any Knowledge
of any fact or circumstance that is reasonably likely to (i) prevent the
Mergers from qualifying as a reorganization within the meaning of Section
368(a) of the Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 8.1(b) or result in
the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
4.21 STATE TAKEOVER LAWS.
------------------- Each FABC Entity has taken all necessary
action to exempt the transactions contemplated by this Agreement from, or if
necessary to challenge the validity or applicability of, any applicable
"moratorium," "fair price," "business combination," "control share," or other
anti-takeover Laws (collectively, "Takeover Laws"), including Sections
607.0901 and 607.0902 of the FBCA.
4.22 CHARTER PROVISIONS.
------------------ Each FABC Entity has taken all action so that
the entering into of this Agreement and the consummation of the Mergers and
the other transactions contemplated by this Agreement do not and will not
result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any FABC Entity or
restrict or impair the ability of CCBG or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of
any FABC Entity that may be directly or indirectly acquired or controlled by
them. This Agreement and the transactions contemplated herein will not
trigger any supermajority voting provisions under the Articles of
Incorporation, Bylaws, or other governing instruments of any FABC Entity.
15
4.23 OPINION OF FINANCIAL ADVISOR.
---------------------------- FABC has received the opinion of
SunTrust Robinson Humphrey, dated the date that the FABC Board of Directors
approved this Agreement, to the effect that the consideration to be received
in the Mergers by the holders of FABC Common Stock is fair, from a financial
point of view, to such holders, a signed copy of which has been delivered to
CCBG.
4.24 BOARD RECOMMENDATION.
-------------------- The Board of Directors of FABC, at a
meeting duly called and held, has by unanimous vote of the directors present
(who constituted all of the directors then in office) (i) determined that
this Agreement and the transactions contemplated hereby, including the
Mergers, taken together, are fair to and in the best interests of the
shareholders and (ii) resolved to recommend that the holders of the shares of
FABC Common Stock approve this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CCBG
CCBG hereby represents and warrants to FABC and First National as follows:
5.1 ORGANIZATION, STANDING, AND POWER.
--------------------------------- CCBG is a corporation duly
organized, validly existing, and in good standing under the Laws of the State
of Florida, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Material Assets.
CCBG is duly qualified or licensed to transact business in good standing in
the jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a CCBG Material
Adverse Effect.
5.2 AUTHORITY OF CCBG; NO BREACH BY AGREEMENT.
-----------------------------------------
(a) CCBG has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Mergers, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of CCBG, subject to receipt of the requisite Consents referred to in Section
8.1(b). This Agreement represents a legal, valid, and binding obligation of
CCBG, enforceable against CCBG in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance
or injunctive relief is subject to the discretion of the court before which
any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
CCBG, nor the consummation by CCBG of the transactions contemplated hereby,
nor compliance by CCBG with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of CCBG's Articles of
Incorporation or Bylaws, or (ii) subject to receipt of the requisite Consents
referred to Section 8.1(b), constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any CCBG Entity under, any Contract or Permit of any CCBG Entity,
where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a CCBG Material
Adverse Effect, or, (iii) subject to receipt of the requisite Consents
referred to in Section 8.1(b), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to any CCBG
Entity or any of their respective Material Assets (including any CCBG Entity
or any FABC Entity becoming subject to or liable for the payment of any Tax
or any of the Assets owned by any CCBG Entity or any FABC Entity being
reassessed or revalued by any taxing authority).
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the IRS or the PBGC
with respect to any employee benefit plans, or under the HSR Act, and other
than Consents, filings, or notifications which, if not obtained or made, are
not reasonably likely to have, individually or in the aggregate, a CCBG
Material Adverse Effect, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by CCBG of the Mergers
and the other transactions contemplated in this Agreement.
16
5.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of CCBG consists of (i)
90,000,000 shares of CCBG Common Stock, of which 14,162,048 shares are issued
and outstanding as of the date of this Agreement, and (ii) 3,000,000 shares
of CCBG Preferred Stock, none of which is issued and outstanding. All of the
issued and outstanding shares of CCBG Capital Stock are, and all of the
shares of CCBG Common Stock to be issued in exchange for shares of FABC
Common Stock upon consummation of the Mergers, when issued in accordance with
the terms of this Agreement, will be, duly and validly issued and outstanding
and fully paid and nonassessable under the FBCA. None of the outstanding
shares of CCBG Capital Stock has been, and none of the shares of CCBG Common
Stock to be issued in exchange for shares of FABC Common Stock upon
consummation of the Mergers will be, issued in violation of any preemptive
rights of the current or past shareholders of CCBG.
(b) Except as set forth in Section 5.3(a), or as provided
pursuant to the CCBG Stock Plans, or as disclosed in Section 5.3 of the CCBG
Disclosure Memorandum, there are no shares of capital stock or other equity
securities outstanding and no outstanding Equity Rights relating to the CCBG
Capital Stock.
5.4 CCBG SUBSIDIARIES.
----------------- CCBG has disclosed in Section 5.4 of the CCBG
Disclosure Memorandum all of its Significant Subsidiaries as of the date of
this Agreement that are corporations and all of the CCBG Subsidiaries that
are general or limited partnerships or other non-corporate entities. Each
CCBG Subsidiary that is a depository institution is an "insured institution"
as defined in the Federal Deposit Insurance Act and applicable regulations
thereunder.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
---------------------------------
(a) CCBG has timely filed and made available to FABC all SEC
Documents required to be filed by CCBG since December 31, 2001 (the "CCBG SEC
Reports"). The CCBG SEC Reports (i) at the time filed, complied in all
Material respects with the applicable requirements of the Securities Laws and
other applicable Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a Material fact
or omit to state a Material fact required to be stated in such CCBG SEC
Reports or necessary in order to make the statements in such CCBG SEC
Reports, in light of the circumstances under which they were made, not
misleading.
(b) Each of the CCBG Financial Statements (including, in each
case, any related notes) contained in the CCBG SEC Reports, including any
CCBG SEC Reports filed after the date of this Agreement until the Effective
Time, complied as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by
Form 10-Q of the SEC), and fairly presented in all Material respects the
consolidated financial position of CCBG and its Subsidiaries as at the
respective dates and the consolidated results of operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be Material in amount or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES.
---------------------------------- Except as disclosed in the
CCBG Disclosure Memorandum, no CCBG Entity has any Liabilities that are
reasonably likely to have, individually or in the aggregate, a CCBG Material
Adverse Effect, except Liabilities which are accrued or reserved against in
the consolidated balance sheets of CCBG as of December 31, 2003, included in
the CCBG Financial Statements delivered prior to the date of this Agreement or
reflected in the notes thereto. Except as disclosed in the CCBG Disclosure
Memorandum, no CCBG Entity has incurred or paid any Liability since
December 31, 2003, except for such Liabilities incurred or paid (i) in the
ordinary course of business consistent with past business practice and which
are not reasonably likely to have, individually or in the aggregate, a CCBG
Material Adverse Effect or (ii) in connection with the transactions
contemplated by this Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
------------------------------------ Since December 31, 2003,
except as disclosed in the CCBG Financial Statements delivered prior to the
date of this Agreement or as disclosed in Section 5.7 of the CCBG Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
CCBG Material Adverse Effect, and (ii) the CCBG Entities have not taken any
action, or failed to take any action, prior to the date of this Agreement,
which action or failure, if taken after the date of this Agreement, would
represent or result in a Material breach or violation of any of the covenants
and agreements of CCBG provided in Article 6.
17
5.8 ALLOWANCE FOR POSSIBLE LOAN LOSSES.
---------------------------------- In the opinion of management
of CCBG, the Allowance shown on the consolidated balance sheets of CCBG
included in the most recent CCBG Financial Statements dated prior to the date
of this Agreement was, and the Allowance shown on the consolidated balance
sheets of CCBG included in the CCBG Financial Statements as of dates
subsequent to the execution of this Agreement will be, as of the dates
thereof, adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for all known or reasonably
anticipated losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the CCBG Entities and other
extensions of credit (including letters of credit) by the CCBG Entities as of
the dates thereof.
5.9 INTELLECTUAL PROPERTY.
--------------------- Each CCBG Entity owns or has a license to
use all of the Intellectual Property used by such CCBG Entity in the course
of its business. Each CCBG Entity is the owner of or has a license to any
Intellectual Property sold or licensed to a third party by such CCBG Entity
in connection with such CCBG Entity's business operations, and such CCBG
Entity has the right to convey by sale or license any Intellectual Property
so conveyed. No CCBG Entity is in Default under any of its Intellectual
Property licenses. No proceedings have been instituted, or are pending or to
the Knowledge of CCBG threatened, which challenge the rights of any CCBG
Entity with respect to Intellectual Property used, sold or licensed by such
CCBG Entity in the course of its business, nor has any person claimed or
alleged any rights to such Intellectual Property. The conduct of the
business of the CCBG Entities does not infringe any Intellectual Property of
any other person. Except as disclosed in Section 5.6 of the CCBG Disclosure
Memorandum, no CCBG Entity is obligated to pay any recurring royalties to any
Person with respect to any such Intellectual Property. Except as disclosed
in Section 5.9 of the CCBG Disclosure Memorandum, every officer, director, or
employee of any CCBG Entity is a party to a Contract which requires such
officer, director or employee to assign any interest in any Intellectual
Property to a CCBG Entity and to keep confidential any trade secrets,
proprietary data, customer information, or other business information of a
CCBG Entity, and to the Knowledge of CCBG, no such officer, director or
employee is party to any Contract with any Person other than a CCBG Entity
which requires such officer, director or employee to assign any interest in
any Intellectual Property to any Person other than a CCBG Entity or to keep
confidential any trade secrets, proprietary data, customer information, or
other business information of any Person other than a CCBG Entity. Except as
disclosed in Section 5.9 of the CCBG Disclosure Memorandum, no officer,
director or, to the Knowledge of CCBG, any employee of any CCBG Entity is
party to any Contract which restricts or prohibits such officer, director or
employee from engaging in activities competitive with any Person, including
any CCBG Entity.
5.10 COMPLIANCE WITH LAWS.
-------------------- CCBG is duly registered as a financial
holding company under the BHC Act. Each CCBG Entity has in effect all
Permits necessary for it to own, lease or operate its Material Assets and to
carry on its business as now conducted, except for those Permits the absence
of which are not reasonably likely to have, individually or in the aggregate,
a CCBG Material Adverse Effect, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a CCBG Material Adverse Effect. Except as
disclosed in Section 5.10 of the CCBG Disclosure Memorandum, none of the CCBG
Entities:
(a) is in Default under its Articles of Incorporation or Bylaws
(or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for Defaults
which are not reasonably likely to have, individually or in the aggregate, a
CCBG Material Adverse Effect; or
(c) since January 1, 2001, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that any CCBG Entity is not in compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces, where
such noncompliance is reasonably likely to have, individually or in the
aggregate, a CCBG Material Adverse Effect, (ii) threatening to revoke any
Permits, or (iii) requiring any CCBG Entity to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive, commitment
or memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
5.11 LEGAL PROCEEDINGS.
----------------- Except as disclosed in Section 5.11 of the
CCBG Disclosure Memorandum, there is no Litigation instituted or pending, or,
to the Knowledge of CCBG, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any CCBG Entity or employee
benefit plan of any CCBG Entity, or against any director or employee of any
CCBG Entity, in their capacity as such, or against any Asset, interest, or
right of any of them, that is reasonably likely to have, individually or in
the
18
aggregate, a CCBG Material Adverse Effect, nor are there any Orders of
any Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any CCBG Entity, that are reasonably likely
to have, individually or in the aggregate, a CCBG Material Adverse Effect.
5.12 REPORTS.
------- Since January 1, 2001, or the date of organization if
later, each CCBG Entity has filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required
to file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a CCBG Material Adverse Effect). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all
Material respects with all applicable Laws. As of its respective date, each
such report and document did not contain any untrue statement of a Material
fact or omit to state a Material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5.13 STATEMENTS TRUE AND CORRECT.
--------------------------- No statement, certificate,
instrument or other writing furnished or to be furnished by any CCBG Entity
or any Affiliate thereof to FABC pursuant to this Agreement or any other
document, agreement or instrument referred to herein contains or will contain
any untrue statement of Material fact or will omit to state a Material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to
be supplied by any CCBG Entity or any Affiliate thereof for inclusion in the
Registration Statement to be filed by CCBG with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect
to any Material fact, or omit to state any Material fact necessary to make
the statements therein not misleading. None of the information supplied or
to be supplied by any CCBG Entity or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to the shareholders of FABC in connection
with the Shareholders' Meeting, and none of the information contained in any
other documents to be filed by any CCBG Entity or any Affiliate thereof with
the SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective times such documents are filed,
and with respect to the Proxy Statement, when first mailed to the
shareholders of FABC, be false or misleading with respect to any Material
fact, or omit to state any Material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of any proxy for the Shareholders' Meeting. All
documents that any CCBG Entity or any Affiliate thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all Material respects with the
provisions of applicable Law.
5.14 ACCOUNTING, TAX AND REGULATORY MATTERS.
-------------------------------------- No CCBG Entity or any
Affiliate thereof has taken or agreed to take any action or has any Knowledge
of any fact or circumstance that is reasonably likely to (i) prevent the
Mergers from qualifying as a reorganization within the meaning of Section
368(a) of the Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 8.1(b) or result in
the imposition of a condition or restriction of the type referred to in the
last sentence of such Section. All Tax Returns required under applicable Law
to be filed by or on behalf of any of the CCBG Entities through the date
hereof have been timely filed, and all such Tax Returns filed are complete
and accurate in all Material respects. All Taxes due and owing by any CCBG
Entity (whether or not shown on Tax Returns) have been paid. As of the date
of this Agreement, there is no audit examination, deficiency, or refund
Litigation with respect to any Taxes, except as reserved against in the most
recent CCBG Financial Statements delivered prior to the date of this
Agreement and as disclosed in Section 5.14 of the CCBG Disclosure Memorandum.
Provision for Taxes due or to become due for any of the CCBG Entities for the
period or periods through and including the day of the respective CCBG
Financial Statements has been made and is reflected on such CCBG Financial
Statements and is sufficient to cover all such Taxes.
ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 AFFIRMATIVE COVENANTS OF FABC AND FIRST NATIONAL.
------------------------------------------------ From the date
of this Agreement until the earlier of the Effective Time or the termination
of this Agreement, unless the prior written consent of CCBG shall have been
obtained, and except as otherwise expressly contemplated herein, FABC and
First National shall operate their businesses only in the usual, regular and
ordinary course, and in a manner designed to preserve intact their business
organizations and Assets and maintain their rights and franchises, and shall
take no action which would (i) adversely affect the
19
ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the
type referred to in the last sentences of Section 8.1(b) or 8.1(c), or (ii)
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
6.2 NEGATIVE COVENANTS OF FABC AND FIRST NATIONAL.
--------------------------------------------- From the date of
this Agreement until the earlier of the Effective Time or the termination of
this Agreement, unless the prior written consent of CCBG shall have been
obtained, and except as otherwise expressly contemplated herein, each of FABC
and First National covenants and agrees that it will not do or agree or
commit to do, or permit any of its Subsidiaries to do or agree or commit to
do, any of the following:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any FABC Entity, except as expressly contemplated by
this Agreement; or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a FABC Entity to another FABC
Entity) in excess of an aggregate of $25,000 (for the FABC Entities on a
consolidated basis) except in the ordinary course of the business of FABC
Subsidiaries consistent with past practices (which shall include, for FABC
Subsidiaries that are depository institutions, creation of deposit
liabilities, purchases of federal funds and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer
the imposition, on any Asset of any FABC Entity of any Lien or permit any
such Lien to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts established
in the ordinary course of business, the satisfaction of legal requirements in
the exercise of trust powers, and Liens in effect as of the date hereof that
are disclosed in the FABC Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under FABC Benefit Plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any FABC Entity, or except as consistent with past practice,
declare or pay any dividend or make any other distribution in respect of FABC
Capital Stock or First National Capital Stock; or
(d) except for this Agreement or as disclosed in Section 6.2(d)
of the FABC Disclosure Memorandum, issue, sell, pledge, encumber, authorize
the issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of FABC Common Stock or any other capital stock of any FABC
Entity, or any stock appreciation rights, or any option, warrant, or other
Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of
any FABC Entity or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of FABC Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber (x) any shares
of capital stock of any FABC Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another FABC Entity) or (y) any Asset having
a book value in excess of $25,000 other than in the ordinary course of
business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of one
year or less, purchase any securities or make any Material investment, either
by purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly owned
FABC Subsidiary, or otherwise acquire direct or indirect control over any
Person, other than in connection with (i) foreclosures in the ordinary course
of business, or (ii) acquisitions of control by a depository Subsidiary
solely in its fiduciary capacity; or
(g) (1) make any new loans or extensions of credit or renew,
extend or renegotiate any existing loans or extensions of credit (i) with
respect to properties or businesses outside of the current market area for
First National or to borrowers whose principal residence is outside of the
current market area for First National, (ii) that are unsecured in excess of
$100,000, or (iii) that are secured in excess of $300,000; (2) purchase or
sell (except for sales of single family residential first mortgage loans in
the ordinary course of FABC's or First National's business for fair market
value) any whole loans, leases, mortgages or any loan participations or
agented credits or other interest therein, or (3) renew or renegotiate any
loans or credits that are on any watch list and/or are classified or special
mentioned or take any similar actions with respect to collateral held with
respect to debts previously contracted or other real estate owned, except
pursuant to safe and sound banking practices and with prior disclosure to
CCBG; provided, however, that FABC or First National may, without the prior
notice to or written consent of CCBG, renew or extend existing credits on
substantially similar terms and conditions as present at the time such credit
was made or last extended, renewed or modified, for a period not to exceed
one year and at rates not less than market
20
rates for comparable credits and transactions and without any release of any
collateral except as any FABC Entity is presently obligated under existing
written agreements kept as part of such FABC Entity's official records; or
(h) grant any increase in compensation or benefits to the
employees or officers of any FABC Entity, except in accordance with past
practice as disclosed in Section 6.2(h) of the FABC Disclosure Memorandum or
as required by Law; pay any severance or termination pay or any bonus other
than pursuant to plans, written policies or written Contracts in effect on
the date of this Agreement as disclosed in Section 6.2(h) of the FABC
Disclosure Memorandum; enter into or amend any severance agreements with
officers of any FABC Entity; grant any increase in fees or other increases in
compensation or other benefits to directors of any FABC Entity except in
accordance with past practice disclosed in Section 6.2(h) of the FABC
Disclosure Memorandum; or voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits or other
Equity Rights; or
(i) enter into or amend any employment Contract between any
FABC Entity and any Person (unless such amendment is required by Law) that
such FABC Entity does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time
on or after the Effective Time; or
(j) adopt any new FABC Benefit Plan or terminate or withdraw
from, or make any Material change in or to, any existing FABC Benefit Plan
other than any such change that is required by Law or this Agreement or that,
in the opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan, or make any distributions from such FABC
Benefit Plans, except as required by Law, the terms of such plans or
consistent with past practice; or
(k) make any significant change in any Tax or accounting
methods or estimates or systems of internal accounting controls, except as
may be appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(l) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any FABC Entity
for Material money damages or restrictions upon the operations of any FABC
Entity; or
(m) except in the ordinary course of business and as expressly
permitted in Section 6.2(g), enter into, modify, amend or terminate any
Material Contract calling for payments exceeding $25,000 or waive, release,
compromise or assign any Material rights or claims.
6.3 COVENANTS OF CCBG.
----------------- From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of FABC shall have been obtained, and except as
otherwise expressly contemplated herein, CCBG covenants and agrees that it
shall (a) continue to conduct its business and the business of its
Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the CCBG Capital Stock and the business prospects of the
CCBG Entities and to the extent consistent therewith use all reasonable
efforts to preserve intact the CCBG Entities' core businesses and goodwill
with their respective employees and the communities they serve, and (b) take
no action which would (i) materially adversely affect the ability of any
Party to obtain any Consents required for the transactions contemplated
hereby without imposition of a condition or restriction of the type referred
to in the last sentences of Section 8.1(b) or 8.1(c), or (ii)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; provided, that the foregoing shall not
prevent any CCBG Entity from acquiring any Assets or other businesses or from
discontinuing or disposing of any of its Assets or business if such action
is, in the judgment of CCBG, desirable in the conduct of the business of CCBG
and its Subsidiaries. CCBG further covenants and agrees that it will not
amend or agree or commit to amend or permit any of its Subsidiaries to amend
or agree or commit to amend, without the prior written consent of FABC, which
consent shall not be unreasonably withheld, the Articles of Incorporation or
Bylaws of CCBG, in each case, in any manner adverse to the holders of FABC
Common Stock as compared to the rights of holders of CCBG Common Stock
generally as of the date of this Agreement.
6.4 ADVERSE CHANGES IN CONDITION.
---------------------------- Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in
the aggregate, an FABC Material Adverse Effect or a CCBG Material Adverse
Effect, as applicable, or (ii) would cause or constitute a breach of any of
its representations, warranties, or covenants contained herein, and to use
its reasonable efforts to prevent or promptly to remedy the same.
21
6.5 REPORTS.
------- Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of
this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such
financial statements will fairly present in all Material respects the
consolidated financial position of the entity filing such statements as of
the dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not Material). As of their
respective dates, such reports filed with the SEC will comply in all Material
respects with the Securities Laws and will not contain any untrue statement
of a Material fact or omit to state a Material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority
shall be prepared in accordance with Laws applicable to such reports.
6.6 TAXES.
-----
(a) Actions Prior to Closing.
------------------------
(1) Termination of Existing Tax-Sharing Agreements.
---------------------------------------------- All
tax-sharing agreements or similar arrangements involving an FABC Entity or to
which an FABC Entity is a party shall be terminated with respect to such FABC
Entity before the Closing Date, and, after the Closing Date, such FABC Entity
shall not be bound thereby or have any Liability thereunder.
(2) Tax Elections.
------------- No new elections, and no changes in
current elections, with respect to Taxes affecting any FABC Entity shall be
made after the date of this Agreement without the prior written consent of
CCBG, if such election or change would have the effect of increasing the Tax
Liability of any FABC Entity for any period after the Closing Date.
(3) Tax Certificates.
---------------- FABC shall provide CCBG, on or
before the Closing Date, with (i) all forms, certificates and/or other
instruments required in connection with the transfer and recording taxes and
charges arising from the transactions contemplated by this Agreement,
together with evidence satisfactory to CCBG that such transfer taxes and
charges have been paid in full by FABC, and (ii) a clearance certificate or
similar documents which may be required by any state taxing authority to
relieve CCBG of any obligation to withhold any portion of payments to FABC
pursuant to this Agreement.
(4) Access to Books and Records.
--------------------------- Between the date of the
Agreement and the Closing Date, FABC and First National shall give CCBG and
its authorized representatives reasonable access to all books, records and
returns of each FABC Entity and have its personnel and accountants available
during normal business hours to respond to reasonable requests of CCBG and
its authorized representatives.
(b) Filing of Tax Returns.
---------------------
(1) FABC shall prepare and timely file all Tax returns
for all periods ending on or before the Closing Date. All such returns shall
be prepared in accordance with past practice (unless a contrary position is
required by Law) as to elections and accounting practices to the extent any
position taken in such returns may affect the Tax Liability of FABC after the
Closing. FABC shall discharge all tax liabilities shown on such returns. In
connection with preparation of such returns, FABC shall prepare books and
working papers (including a closing of the books as of the Closing Date)
which shall clearly demonstrate the income and activities of each FABC Entity
for the period ending on the Closing Date. FABC shall provide a copy of such
returns to CCBG for its review at least 20 days before the filing of such
returns. FABC shall not file any amended return for a period ending on or
before the Closing without CCBG's written consent (which consent shall not be
unreasonably withheld or delayed) if the filing of any such amended return
may affect the Tax Liability of any FABC Entity or for which CCBG is or may
become liable.
(2) CCBG shall prepare and timely file all Tax returns
with respect to FABC other than the Tax returns referred to in Section
6.6(b)(1)above, that are required to be filed after the Closing, and shall
duly and timely pay Taxes due on such Tax returns.
22
(c) Carryovers and Carrybacks.
------------------------- For purposes of this Section,
Tax or Taxes shall include the amount of Taxes which would have been paid but
for the application of any credit or net operating or capital loss deduction
attributable to periods beginning after the Closing Date or to any Post-
Closing Partial Period.
(d) Allocation Between Partial Periods. Any Taxes for any
period beginning before the Closing Date and ending after the Closing Date (a
"Straddle Period") shall be apportioned between the Pre-Closing Partial
Period and the Post-Closing Partial Period, based, in the case of real and
personal property Taxes, on a per diem basis and, in the case of other Taxes
(including, without limitation, income Taxes and Taxes in lieu of income
Taxes), on the actual activities, taxable income or taxable loss of FABC
during such Pre-Closing Partial Period and such Post-Closing Partial Period,
based on a closing of the books as of the close of business on the Closing
Date. FABC shall not be permitted to carry out any transaction outside the
ordinary course of its trade or business on the Closing Date after the
Closing (other than the transactions expressly permitted by this Agreement).
"Pre-Closing Partial Period" shall mean the portion of the Straddle Period up
to and including the Closing Date, and "Post-Closing Partial Period" shall
mean the portion of the Straddle Period following the Closing Date.
(e) Control of Post-Closing Audits and Other Proceedings.
---------------------------------------------------- FABC
shall cause Jerry M. Smith to deliver to CCBG upon the execution of this
Agreement a letter agreement, substantially in the form of Exhibit 2.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHARE-HOLDER APPROVAL.
--------------------------------------------------------------
As soon as reasonably practicable after execution of this Agreement, at a
date determined by CCBG in its sole discretion, CCBG shall prepare and file
the Registration Statement with the SEC, and shall use its reasonable best
efforts to cause the Registration Statement to become effective under the
1933 Act and take any action required to be taken under the applicable state
Blue Sky or securities Laws in connection with the issuance of the shares of
CCBG Common Stock upon consummation of the Mergers. FABC and First National
shall each cooperate in the preparation and filing of the Registration
Statement and shall each furnish all information concerning it and the
holders of its capital stock as CCBG may reasonably request in connection
with such action. FABC shall call a Shareholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of this
Agreement and such other related matters as it deems appropriate. In
connection with the Shareholders' Meeting, (i) CCBG shall prepare and file
with the SEC the Registration Statement which shall contain the Proxy
Statement and FABC shall mail such Proxy Statement to the FABC shareholders,
(ii) FABC shall furnish to CCBG all information concerning FABC that CCBG may
reasonably request in connection with such Proxy Statement, (iii) the Board
of Directors of FABC shall recommend to FABC shareholders the approval of the
matters submitted for approval, and (iv) the Board of Directors and officers
of FABC shall use their reasonable efforts to obtain such shareholders'
approval. CCBG and FABC shall make all necessary filings with respect to the
Mergers under the Securities Laws.
7.2 NASDAQ LISTING.
-------------- CCBG shall use its reasonable best efforts to
list, prior to the Effective Time, on the Nasdaq National Market the shares
of CCBG Common Stock to be issued to the holders of FABC Common Stock
pursuant to the Holding Company Merger, and CCBG shall give all notices and
make all filings with the NASD required in connection with the transactions
contemplated herein.
7.3 APPLICATIONS.
------------ CCBG shall promptly prepare and file, and FABC and
First National shall cooperate in the preparation and, where appropriate,
filing of, applications with all Regulatory Authorities having jurisdiction
over the transactions contemplated by this Agreement seeking the requisite
Consents necessary to consummate the transactions contemplated by this
Agreement. The Parties shall deliver to each other copies of all filings,
correspondence and orders to and from all Regulatory Authorities in
connection with the transactions contemplated hereby.
7.4 FILINGS WITH STATE OFFICES.
-------------------------- Upon the terms and subject to the
conditions of this Agreement, CCBG shall execute and file, in connection with
the Closing, the Articles of Merger, or such other required filings to
effectuate the Mergers, with the Secretary of State of the State of Florida.
7.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE.
------------------------------------- Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and
23
make effective, as soon as reasonably practicable after the date of this
Agreement, the transactions contemplated by this Agreement, including using
its reasonable efforts to lift or rescind any Order adversely affecting its
ability to consummate the transactions contemplated herein and to cause to be
satisfied the conditions referred to in Article 8; provided, that nothing
herein shall preclude any Party from exercising its rights under this
Agreement. Each Party shall use, and shall cause each of its Subsidiaries to
use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
7.6 INVESTIGATION AND CONFIDENTIALITY.
---------------------------------
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all Material developments relevant to its business and
to consummation of the Mergers.
(b) Prior to the Effective Time, FABC and First National shall
permit and allow CCBG to make or cause to be made, at CCBG's own expense,
such investigation(s) of the business and properties of FABC and its
Subsidiaries, and of their respective financial and legal conditions, as CCBG
reasonably requests, provided that such investigation(s) shall be reasonably
related to the transactions contemplated hereby. In order to perform or to
conduct any such investigation(s) described in this Section 7.6(b), or as
permitted in Section 7.20, FABC and First National shall grant CCBG the right
to gain reasonable access to the businesses and properties of each FABC
Entity. No investigations by a Party shall affect the representations and
warranties of the other Party.
(c) If any investigation(s) of CCBG conducted pursuant to
Section 7.6(b) results in a finding of an event or circumstance that has had
or is reasonably likely to have an FABC Material Adverse Effect (an "Adverse
Finding"), CCBG shall have the right, but not the obligation (unless required
by Section 7.6(f)), to elect to identify and describe in writing to FABC such
Adverse Finding and to request its correction, cure, or other resolution, to
CCBG's complete satisfaction (which CCBG shall in good faith determine in its
sole discretion), within a specific period of time. Any such action taken by
CCBG pursuant to the foregoing sentence (1) shall not waive CCBG's right to
terminate this Agreement and abandon the Mergers without penalty and at any
time before the Closing Date pursuant to Section 9.1(h), provided FABC fails
to cure the Adverse Finding to CCBG's satisfaction in the time granted to
FABC, and (2) shall not, in any way, act as a waiver as to any other right(s)
granted to CCBG pursuant to this Agreement.
(d) In addition to the Parties' respective obligations under
the Confidentiality Agreement, which are hereby reaffirmed and incorporated
by reference herein, each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. In the event that a Party is required by
applicable Law or valid court process to disclose any such confidential
information, then such Party shall provide the other Party with prompt
written notice of any such requirement so that the other Party may seek a
protective Order or other appropriate remedy and/or waive compliance with
this Section 7.6. If in the absence of a protective Order or other remedy or
the receipt of a waiver by the other Party, a Party is nonetheless, in the
written opinion of counsel, legally compelled to disclose any such
confidential information to any tribunal or else stand liable for contempt or
suffer other censure or penalty, a Party may, without Liability hereunder,
disclose to such tribunal only that portion of the confidential information
which such counsel advises such Party is legally required to be disclosed,
provided that such disclosing Party uses its best efforts to preserve the
confidentiality of such confidential information, including without
limitation, by cooperating with the other Party to obtain an appropriate
protective Order or other reliable assurance that confidential treatment will
be accorded such confidential information by such tribunal. If this
Agreement is terminated prior to the Effective Time, upon written request of
the other Party, each Party shall promptly return or certify the destruction
of all documents and copies thereof, and all work papers containing
confidential information received from the other Party.
(e) FABC shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with Persons, if any,
which were considering an Acquisition Proposal with respect to any FABC
Entity to preserve the confidentiality of the information relating to such
FABC Entity provided to such Persons and their Affiliates and
Representatives.
(f) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating
to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent,
either a Material breach of any representation, warranty, covenant or
agreement
24
of the other Party or which has had or is reasonably likely to have an FABC
Material Adverse Effect or a CCBG Material Adverse Effect, as applicable;
provided, that, as applied to any obligations of CCBG, CCBG shall be governed
by the provisions of Section 7.6(c).
(g) Upon request of CCBG, FABC and First National shall request
within 10 days of the date thereof, that all third parties that received
confidential information regarding FABC or any of its Subsidiaries within the
last 12 months in connection with a possible sale or merger transaction
involving FABC or any of its Subsidiaries promptly return such confidential
information to FABC or First National.
7.7 PRESS RELEASES.
-------------- Prior to the Effective Time, FABC, First National
and CCBG shall consult with each other as to the form and substance of any
press release or other public disclosure materially related to this Agreement
or any other transaction contemplated hereby; provided, that nothing in this
Section 7.7 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such
Party's disclosure obligations imposed by Law.
7.8 CERTAIN ACTIONS.
--------------- Except with respect to this Agreement and the
transactions contemplated hereby, no FABC Entity nor any Affiliate thereof
nor any Representatives thereof retained by any FABC Entity shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the
extent the Board of Directors of FABC reasonably determines in good faith,
based and relying upon a written opinion from its outside counsel, that the
failure to take such actions would constitute a breach of fiduciary duties of
the members of such Board of Directors to FABC's shareholders under
applicable Law, no FABC Entity or any Affiliate or Representative thereof
shall furnish any non-public information that it is not legally obligated to
furnish, negotiate with respect to, or enter into any discussions or Contract
with respect to, any Acquisition Proposal, but FABC may communicate
information about such an Acquisition Proposal to its shareholders if and to
the extent that it is required to do so in order to comply with its legal
obligations. FABC and First National shall promptly advise CCBG following
the receipt of any Acquisition Proposal and the details thereof, and advise
CCBG of any developments with respect to such Acquisition Proposal promptly
upon the occurrence thereof. FABC and First National shall (i) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any of the
foregoing, (ii) direct and use its reasonable best efforts to cause all of
its Affiliates and Representatives not to engage in any of the foregoing, and
(iii) use its reasonable best efforts to enforce any confidentiality or
similar agreement relating to any such activities, discussions, negotiations
or Acquisition Proposal. FABC and First National will take all actions
necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence of this Section 7.8 of the obligations
undertaken in this Section 7.8.
7.9 ACCOUNTING AND TAX TREATMENT.
---------------------------- Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Mergers, and to use its
reasonable efforts to take no action which would cause the Mergers not, to
qualify as a "reorganization" within the meaning of Section 368(a) of the
Code for federal income tax purposes.
7.10 STATE TAKEOVER LAWS.
------------------- Each FABC Entity and its Affiliates shall
take the necessary steps to exempt the transactions contemplated by this
Agreement from, or if necessary to challenge the validity or applicability
of, any applicable Takeover Law, including Sections 607.0901 and 607.0902 of
the FBCA.
7.11 CHARTER PROVISIONS.
------------------ Each FABC Entity shall take all necessary
action to ensure that the entering into of this Agreement and the
consummation of the Mergers and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any Person under the
Articles of Incorporation, Bylaws or other governing instruments of any FABC
Entity or restrict or impair the ability of CCBG or any of its Subsidiaries
to vote, or otherwise to exercise the rights of a shareholder with respect
to, shares of any FABC Entity that may be directly or indirectly acquired or
controlled by them.
7.12 FABC AND FIRST NATIONAL MEETINGS.
-------------------------------- Each FABC Entity shall give
CCBG prior notice of each meeting or proposed action by any of their
respective Board of Directors and/or committees, including a description of
any matters to be discussed and/or acted upon, and shall within a reasonable
period of time after each such meeting occurs provide CCBG copies of all
Minutes of each such meeting, except portions of the Minutes discussing the
transactions contemplated herein that present conflict of interest and/or
confidentiality issues.
7.13 AGREEMENT OF AFFILIATES.
----------------------- FABC has disclosed in Section 7.13 of
the FABC Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of FABC for purposes of Rule 145 under the 1933 Act. FABC shall
cause each such Person to deliver to CCBG upon the execution of this
Agreement a written agreement,
25
substantially in the form of Exhibit 3, providing that such Person will not
sell, pledge, transfer, or otherwise dispose of the shares of FABC Common
Stock held by such Person except as contemplated by such agreement or by this
Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of CCBG Common Stock to be received by such Person upon consummation
of the Mergers except in compliance with applicable provisions of the 1933
Act and the rules and regulations thereunder. CCBG shall be entitled to
place restrictive legends upon certificates for shares of CCBG Common Stock
issued to affiliates of FABC pursuant to this Agreement to enforce the
provisions of this Section 7.13; provided that CCBG removes such legends at
the appropriate time. CCBG shall not be required to maintain the
effectiveness of the Registration Statement under the 1933 Act for the
purposes of resale of CCBG Common Stock by such affiliates.
7.14 EMPLOYEE BENEFITS AND CONTRACTS.
-------------------------------
(a) Following the Effective Time, CCBG shall provide generally
to officers and employees of the FABC Entities employee benefits under
employee benefit and welfare plans (other than stock option or other plans
involving the potential issuance of CCBG Common Stock), on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the CCBG Entities to their similarly situated officers
and employees. CCBG shall waive any pre-existing condition exclusion under
any employee health plan for which any employees and/or officers and
dependents are covered by FABC plans as of Closing, to the extent that (i)
such pre-existing condition was covered under the corresponding plan
maintained by the FABC Entity and (ii) the individual affected by the pre-
existing condition was covered by the FABC Entity's corresponding plan on the
date which immediately precedes the Effective Time, provided further,
however, that any portion of a pre-existing condition exclusion period
imposed by a CCBG employee health plan shall not be enforced to the extent it
exceeds in duration any corresponding provision in effect under an FABC
Benefit Plan immediately prior to Closing. In addition, CCBG shall credit
employees of any FABC Entity for amounts paid under FABC Benefit Plans for
the applicable plan year that contains the Closing Date for purposes of
applying deductibles, co-payments and out-of-pocket limitations under CCBG
health plans. For purposes of participation and vesting (but not benefit
accrual) under CCBG's employee benefit plans, the service of the employees of
any FABC Entity prior to the Effective Time shall be treated as service with
a CCBG Entity participating in such employee benefit plans. For purposes of
participation and vesting (but not benefit accrual) under CCBG's vacation
policy, the service of the employees of the FABC Entities prior to the
Effective Time shall be treated as service with a CCBG Entity subject to such
policy.
(b) Jerry M. Smith shall enter into a three year employment
agreement with CCBG in the form attached hereto as Exhibit 4 (the "Executive
Employment Agreement").
(c) Subject to compliance with applicable Laws and the absence
of any Material Adverse Effect upon CCBG or any FABC Benefit Plans or CCBG
Benefit Plans, FABC shall prior to Closing take such actions as are
necessary to terminate each FABC Benefit Plan (other than the Executive
Indexed Salary Continuation Plan, by and between Jerry M. Smith and First
National Bank of Alachua, dated June 1, 1995 (the "Executive Indexed Salary
Continuation Plan"), the Endorsement Method Split Dollar Plan Agreement,
dated June 1, 1995, and the First National Bank of Alachua 401(k) Profit
Sharing Plan (the "Alachua 401(k) Plan")) and to distribute all benefits
attributable thereto as soon as administratively feasible.
7.15 ALACHUA 401(K) PLAN QUALIFICATION.
---------------------------------
(a) First National, as the sponsor of the Alachua 401(k) Plan,
and Jerry M. Smith, as co-trustee of the Alachua 401(k) Plan, shall take all
actions reasonably necessary prior to the Closing Date to submit a proper
application to the IRS pursuant to the Employee Plans Compliance Resolution
System ("EPCRS Application") as set forth in Revenue Procedure 2003-44 (or
successor guidance) that will contain a reasonable proposal to address the
matters described in Section 4.15 of the FABC Disclosure Memorandum so as to
obtain IRS approval of such corrections thereto. It is understood and agreed
that such corrections may, if necessary, be made after the Closing Date and
that such IRS approval may be obtained after the Closing Date. Jerry M. Smith,
as co-trustee of the Alachua 401(k) Plan, shall consult with CCBG and CCBG's
legal counsel prior to taking any such actions, shall obtain CCBG and CCBG's
legal counsel's prior approval in connection with any IRS or PBGC submissions,
communications, filings, or applications, and shall provide CCBG at Closing
with documentation of the actions ultimately implemented.
(b) CCBG, FABC, First National, and Jerry M. Smith, as co-
trustee of the Alachua 401(k) Plan, expressly agree that, at all times
subsequent to Closing, all Participants in the Alachua 401(k) Plan shall make
all elective deferrals exclusively to the Capital City Bank Group, Inc.
401(k) Plan. Upon approval by the IRS of the EPCRS Application, CCBG, in its
sole discretion, may elect to (x) freeze the Alachua 401(k) Plan; (y)
terminate the Alachua 401(k) Plan; or (z)
25
merge the Alachua 401(k) Plan with the Capital City Bank Group, Inc. 401(k)
Plan as a successor plan. Prior to the Closing, First National may continue
to pay in the ordinary course the reasonable fees and expenses relating to
the administration of the Alachua 401(k) Plan, subject, however, to the
provisions of this Agreement relating to certain 401(k) Plan Liabilities and
any Corrections required pursuant to the EPCRS Application. After the
Closing, CCBG will pay in the ordinary course all reasonable fees and
expenses relating to the administration of the Alachua 401(k) Plan, subject,
however, to the provisions of this Agreement relating to certain Alachua
401(k) Plan Liabilities and any Corrections required pursuant to the EPCRS
Application. FABC and First National have described in Section 7.15(b) of
the FABC Disclosure Memorandum the fees and expenses that First National has
paid to service providers relating to the Alachua 401(k) Plan.
(c) CCBG, FABC, First National, and Jerry M. Smith, as co-
trustee of the Alachua 401(k) Plan, expressly agree that, at all times
subsequent to the execution of this Agreement, no stock or other security
issued by any FABC Entity or CCBG Entity held in the Alachua 401(k) Plan
shall be withdrawn or transferred by any Participant until CCBG, in its sole
discretion, determines that the terms of the IRS compliance statement
pursuant to the EPCRS Application have been met.
(d) With respect to the EPCRS Application, First National, and
subsequent to Closing, CCBG, shall pay all fees and expenses, including all
legal fees of counsel to First National, accounting fees, filing fees, and
application fees, subject to the indemnification provisions in the letter
agreement, which is attached to this Agreement substantially in the form of
Exhibit 2; provided, however, that to the extent the IRS or any other
governmental agency or applicable Law (i) prohibits any FABC Entity or CCBG
Entity from paying such fees and expenses; or (ii) deems such amount to be
penalties, Jerry M. Smith, individually, shall pay all fees and expenses,
including all legal fees, accounting fees, filing fees, and application fees.
(e) Jerry M. Smith, to the extent Mr. Smith has direct control
over the implementation of corrections set forth in the IRS compliance
statement, and the then sponsor of the Alachua 401(k) Plan shall be
responsible for timely and properly implementing the corrections set forth in
the IRS compliance statement pursuant to the EPCRS Application, subject to
the indemnification provisions in the letter agreement, which is attached to
this Agreement substantially in the form of Exhibit 2.
(f) FABC shall cause Jerry M. Smith to deliver to CCBG upon
execution of this Agreement a letter agreement, substantially in the form of
Exhibit 2.
7.16 INDEMNIFICATION.
---------------
(a) With respect to all claims brought during the period of
three (3) years after the Effective Time, CCBG shall indemnify, defend and
hold harmless the present and former directors, officers and employees of
FABC and First National (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions arising out of the
Indemnified Party's service or services as directors, officers or employees
of FABC and First National or, at FABC's request, of another corporation,
partnership, joint venture, trust or other enterprise occurring at or prior
to the Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under Florida Law.
Notwithstanding the foregoing, with respect to all losses, Liabilities,
damage, costs, claims, and expenses related to Alachua 401(k) Plan
Liabilities, no CCBG Entity shall indemnify, defend or hold harmless the
present and former trustees of the Alachua 401(k) Plan, including Jerry M.
Smith and Frank Bevis. Without limiting the foregoing, in any case in which
approval by the Surviving Corporation is required to effectuate any
indemnification, the Surviving Corporation shall direct, at the election of
the Indemnified Party, that the determination of any such approval shall be
made by independent counsel mutually agreed upon between CCBG and the
Indemnified Party.
(b) CCBG shall, to the extent available, (and FABC and First
National shall cooperate prior to the Effective Time in these efforts)
maintain in effect for a period of three years after the Effective Time
directors' and officers' liability insurance with respect to claims arising
from facts or events which occurred up to twelve (12) months prior to the
Effective Time and covering the Indemnified Parties; provided, that CCBG
shall not be obligated to make aggregate premium payments for such three-year
period in respect of such an insurance policy (or coverage replacing such a
policy) which exceed $45,000 for the portion related to FABC's and First
National's directors and officers.
(c) Promptly after receipt by an Indemnified Party of notice of
any complaint or the commencement of any action or proceeding with respect to
which indemnification is being sought hereunder, such party will notify the
indemnifying party in writing of such complaint or of the commencement of
such action or proceeding. A failure to notify the indemnifying party will
not relieve the indemnifying party from any Liability it may have hereunder
or otherwise, except to the
27
extent that such failure materially prejudices the indemnifying party's
rights or its ability to defend against such complaint, action or proceeding.
If the indemnifying party so elects or is requested by such Indemnified
Party, it will assume the defense of such action or proceeding, including the
employment of counsel (which may be counsel to the indemnifying party)
reasonably satisfactory to the Indemnified Party and the payment of the fees
and disbursements of such counsel. In the event, however, that such
Indemnified Party reasonably determines in its judgment that having common
counsel would present such counsel with a conflict of interest or if the
indemnifying party fails to assume the defense of the action or proceeding in
a timely manner, then such Indemnified Party may employ separate counsel to
represent or defend it in any such action or proceeding and the indemnifying
party will pay the fees and disbursements of such counsel; provided, however,
that the indemnifying party will not be required to pay the fees and
disbursements of more than one separate counsel for all indemnified parties
in any jurisdiction in any single action or proceeding. The Indemnified
Party will cooperate with the indemnifying party in the defense of any such
action or proceeding. In any action or proceeding the defense of which is
assumed by the indemnifying party, the Indemnified Party will have the right
to participate in such action or proceeding and to retain its own counsel at
such Indemnified Party's own expense. The indemnifying party shall not be
liable for any settlement effected without its prior written consent. The
indemnifying party shall not have any obligation hereunder to the Indemnified
Party when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of the
Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law.
7.17 CERTAIN POLICIES OF FABC.
------------------------ CCBG, FABC, and First National shall
consult with respect to their respective major policies and practices and
FABC and First National shall make such modification or changes to their
policies and practices, if any, prior to the Effective Time as may be
mutually agreed upon. CCBG, FABC, and First National also shall consult with
respect to the character, amount and timing of restructuring and Merger-
related expense charges to be taken by each of the Parties in connection with
the transactions contemplated by this Agreement and shall take such charges
in accordance with GAAP, prior to the Effective Time, as may be mutually
agreed upon by the Parties. Neither Party's representations, warranties,
covenants or agreements contained in this Agreement shall be deemed to be
inaccurate or breached in any respect as a consequence of any modifications
or charges undertaken solely on account of this Section.
7.18 DIRECTOR AND VOTING AGREEMENTS.
------------------------------ Concurrently with the execution
and delivery of this Agreement, FABC and First National agree to cause each
of their directors to execute and deliver a Director and Voting Agreement in
the form attached hereto as Exhibit 5.
7.19 PAYMENT OF BONUS.
---------------- CCBG agrees that either CCBG or CCB shall pay
to Jerry M. Smith on the Closing Date a lump-sum bonus in cash in an amount
equal to the maximum amount payable without triggering an excise tax under
Section 4999 of the Code or a deduction limitation under Section 280G of the
Code; provided that such bonus shall not exceed $1 million.
7.20 REAL PROPERTY MATTERS.
--------------------- At its option and expense, CCBG may cause
to be conducted: (1) a title examination, physical survey, zoning compliance
review, and structural inspection of the Real Property and improvements
thereon that is used by any FABC Entity as a banking office (collectively,
the "Property Examination"); and (2) site inspections, historic reviews,
regulatory analyses, and environmental investigations and assessments of the
Real Property as CCBG shall deem necessary or desirable (collectively, the
"Environmental Survey"). The Environmental Survey may include, but shall not
be limited to: (i) CCBG's right to perform a Phase I Environmental Site
Assessment (pursuant to ASTM Standard E 1527-00 or ASTM Standard E 1527-97)
in connection with any businesses or properties of any FABC Entity, including
any of its Participation Facilities or its Operating Facilities, (ii) CCBG's
right to perform or to conduct any other environmental investigations,
inspections, assessments, site reconnaissance, or site visits, or
environmental sampling, testing, analysis, or monitoring activities, in
connection with any businesses or properties of any FABC Entity, including
its Participation Facilities or its Operating Facilities, and (iii) CCBG's
right to request and to obtain from any FABC Entity any information or
documents, including, but not limited to, environmental reports and
regulatory agency correspondence, in any FABC Entity's possession or control
relating to the matters described in this Section 7.20. In order to perform
or to conduct any such investigation(s) described in this Section 7.20, each
FABC Entity shall grant CCBG the right to gain reasonable access to any
businesses and properties of any FABC Entity, including access to its
Participation Facilities or its Operating Facilities. Should CCBG elect to
complete an Environmental Survey of any Real Property, it shall notify FABC
or First National before commencing the Environmental Survey and shall make
reasonable efforts to coordinate the Environmental Survey with FABC and First
National.
If, in the course of the Property Examination or Environmental Survey,
CCBG determines that a "Material Defect" (as defined below) exists with
respect to the Real Property, CCBG shall have the option, at its sole
discretion, exercisable upon
28
written notice to FABC or First National ("Material Defect Notice") to: (1)
direct FABC or First National to cure the Material Defect to CCBG's
reasonable satisfaction; (2) terminate this Agreement in the event of a
Material Defect under Subsection (a) of the "Material Defect" definition; (3)
terminate this Agreement in the event of a Material Defect under Subsections
(b) or (c) of the "Material Defect" definition if CCBG reasonably believes
the cost to cure the Material Defect will be greater than or equal to
$200,000; or (4) waive the Material Defect. A termination under Section (2)
or (3) of this paragraph shall be deemed to be a termination under Section
9.1(a).
If CCBG elects to direct FABC or First National to cure, then FABC or
First National shall have thirty (30) days from the date of the receipt of
the Material Defect Notice, or such later time, which shall not be later than
the Closing Date, as shall be mutually agreeable to the parties in which to
cure such Material Defect to CCBG's reasonable satisfaction. If FABC or
First National fails to cure a Material Defect to CCBG's reasonable
satisfaction within the period specified above, then CCBG may terminate this
Agreement (with such termination being deemed to be a termination under
Section 9.1(h)).
For purposes of this Agreement, a "Material Defect" shall include:
(a) the existence of any Lien (other than the lien of Real
Property Taxes not yet due and payable), encumbrance, zoning restriction,
easement, covenant or other restriction, title imperfection or title
irregularity, or the existence of any facts or conditions that constitute a
Material breach of the representations and warranties contained in Section
4.10 or 4.11, in either such case that CCBG reasonably believes will
materially adversely affect its use of any parcel of the Real Property for
the purpose for which it currently is used or the value or marketability of
any parcel of the Real Property, or as to which CCBG otherwise reasonably
objects;
(b) the existence of any structural defects or conditions of
disrepair in the improvements on the Real Property (including any equipment,
fixtures or other components related thereto) that CCBG reasonably believes
would cost more than $25,000 in the aggregate to repair, remove or correct as
to all such Real Property; or
(c) the existence of facts or circumstances relating to any of
the Real Property reflecting that: (1) there likely has been a discharge,
disposal, release, threatened release, or emission by any Person of any
Hazardous Material on, from, under, at, or relating to the Real Property; or
(2) any action has been taken or not taken, or a condition or event likely
has occurred or exists, with respect to the Real Property which constitutes
or would constitute a violation of any Environmental Laws as to which CCBG
reasonably believes, based on the advice of legal counsel or other
consultants, that an FABC Entity could become responsible or liable, or that
CCBG could become responsible or liable, following the Closing Date, for
assessment, removal, remediation, monetary damages, or civil, criminal or
administrative penalties or other corrective action and in connection with
which the amount of expense or Liability which an FABC Entity could incur, or
for which CCBG could become responsible or liable, following the Closing
Date, could equal or exceed an aggregate of $25,000 or more as to all such
Real Property.
7.21 FAIRNESS OPINION.
---------------- FABC shall obtain from SunTrust Robinson
Humphrey, a letter, dated the date that the FABC Board of Directors approved
this Agreement, to the effect that, in the opinion of such firm, the
consideration to be received by FABC shareholders in connection with the
Mergers is fair, from a financial point of view, to such shareholders, a
signed copy of which shall be promptly delivered to CCBG.
7.22 NON-COMPETITION AGREEMENTS.
-------------------------- Following the execution and delivery
of this Agreement, FABC agrees to use its best efforts to cause individuals
identified by CCBG to execute and deliver a Non-Competition Agreement in the
form attached hereto as Exhibit 6.
7.23 FABC AUDITED FINANCIAL STATEMENTS.
--------------------------------- FABC agrees to engage Crowe
Chizek and Company LLC, certified public accountants (the "Auditor"), on or
before the twentieth (20th) day after the date this Agreement is executed, to
audit the FABC Audited Financial Statements and to use its best efforts to
cause the Auditor to certify such audited financial statements on or before
April 15, 2005. FABC and CCBG agree to each pay one-half of the fees for this
audit of the FABC Audited Financial Statements. FABC shall book the Audit
Adjustments to the FABC Financial Statements, and these Audit Adjustments
shall be reflected in the calculation of "net worth" in Section 8.2(f). In
the event that the Audit Adjustments reflect, in whole or in part, accounting
procedures or policies of FABC or First National that are not consistent with
GAAP, FABC and First National agree to modify immediately their accounting
procedures and policies to conform with GAAP. FABC and First National shall
prepare the FABC Financial Statements, for periods as of or ending on a date
that occurs subsequent to September 30, 2004, in accordance with such modified
accounting procedures and policies.
29
7.24 ALLOWANCE FOR POSSIBLE LOAN LOSSES.
---------------------------------- The Allowance reflected in
the FABC Financial Statements as of the Effective Time will be adequate
(within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known or reasonably anticipated losses
relating to or inherent in the loan and lease portfolio of the FABC Entities
and other extensions of credit (including letters of credit) by the FABC
Entities as of the dates thereof.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY.
--------------------------------------- The respective
obligations of each Party to perform this Agreement and consummate the
Mergers and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 10.6:
(a) Shareholder Approval.
-------------------- The shareholders of FABC shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Mergers, as and to the extent required by
Law or by the provisions of any governing instruments. The shareholders of
CCBG shall have approved the issuance of shares of CCBG Common Stock pursuant
to the Mergers, as and to the extent required by Law, by the provisions of
any governing instruments, or by the rules of the NASD.
(b) Regulatory Approvals.
-------------------- All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Mergers shall have been obtained or made and shall be
in full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to the
raising of additional capital or the disposition of Assets) which in the
reasonable judgment of the Board of Directors of CCBG or of FABC would so
materially adversely affect the economic or business benefits of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its reasonable judgment,
have entered into this Agreement.
(c) Consents And Approvals.
---------------------- Each Party shall have obtained any
and all Consents required for consummation of the Mergers (other than those
referred to in Section 8.1(b)) or for the preventing of any Default under any
Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, an FABC Material
Adverse Effect or a CCBG Material Adverse Effect, as applicable. No Consent
so obtained which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner which in the reasonable
judgment of the Board of Directors of CCBG or of FABC would so materially
adversely affect the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or requirement been
known, such Party would not, in its reasonable judgment, have entered into
this Agreement.
(d) Legal Proceedings.
----------------- No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes
illegal consummation of the transactions contemplated by this Agreement.
(e) Registration Statement.
---------------------- The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness of
the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the
issuance or trading of the shares of CCBG Common Stock issuable pursuant to
the Mergers shall have been received.
(f) Share Listing.
------------- The shares of CCBG Common Stock issuable
pursuant to the Mergers shall have been approved for listing on the Nasdaq
National Market.
(g) Tax Matters.
----------- Each Party shall have received a written
opinion of its counsel, in form reasonably satisfactory to such Party (the
"Tax Opinion"), to the effect that (i) each of the Mergers will constitute a
reorganization within the meaning of Section 368(a) of the Code, (ii) the
exchange in the Holding Company Merger of FABC Common Stock for CCBG Common
Stock will not give rise to gain or loss to the shareholders of FABC with
respect to such exchange (except to
30
the extent of any cash received), and (iii) neither FABC nor CCBG will
recognize gain or loss as a consequence of the Mergers (except for amounts
resulting from any required change in accounting methods and any income and
deferred gain recognized pursuant to Treasury regulations issued under
Section 1502 of the Code). In rendering such Tax Opinion, such counsel shall
be entitled to rely upon representations of officers of FABC and CCBG
reasonably satisfactory in form and substance to such counsel.
8.2 CONDITIONS TO OBLIGATIONS OF CCBG.
--------------------------------- The obligations of CCBG to
perform this Agreement and consummate the Mergers and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by CCBG pursuant to Section 10.6(a):
(a) Representations And Warranties.
------------------------------ For purposes of this
Section 8.2(a), the accuracy of the representations and warranties of FABC
and First National set forth in this Agreement shall be assessed as of the
date of this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). There shall
not exist inaccuracies in the representations and warranties of FABC and
First National set forth in this Agreement (including, without limitation,
the representations and warranties set forth in Sections 4.3, 4.20, 4.21, and
4.22) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, an FABC Material Adverse Effect; provided that,
for purposes of this sentence only, those representations and warranties
which are qualified by references to "Material" or "Material Adverse Effect"
or to the "Knowledge" of any Person shall be deemed not to include such
qualifications.
(b) Performance Of Agreements And Covenants.
--------------------------------------- Each and all of
the agreements and covenants of FABC and First National to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with.
(c) Certificates.
------------ FABC and First National shall have delivered
to CCBG (i) a certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 8.1 as relates to FABC or
First National and in Section 8.2(a) and 8.2(b) have been satisfied, and (ii)
certified copies of resolutions duly adopted by FABC's and First National's
Board of Directors and shareholders evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all
in such reasonable detail as CCBG and its counsel shall request.
(d) Opinion Of Counsel.
------------------ CCBG shall have received an opinion of
Smith, Gambrell & Russell, LLP, counsel to FABC and First National, dated as
of the Closing, in form reasonably satisfactory to CCBG, as to the matters
set forth in Exhibit 7.
(e) Affiliates' Agreements.
---------------------- CCBG shall have received from each
Affiliate of FABC the Affiliates Letter referred to in Section 7.13.
(f) Net Worth And Capital Requirements.
---------------------------------- Immediately prior to
the Effective Time, FABC shall have a consolidated minimum net worth of at
least $25,375,000. For purposes of calculating "net worth" for this Section
8.2(f), "net worth" shall not be reduced by fees, costs and expenses (a)
incurred or paid by FABC in connection with the execution and performance of
this Agreement up to a maximum amount of $1,100,000 or (b) incurred or paid
at the request of CCBG; provided, however, "net worth" shall be reduced for
adjustments requested by CCBG for purposes of complying with GAAP and
adjustments for purposes of complying with Sections 7.23 or 7.24. For
purposes of this Section 8.2(f), "net worth" shall mean the sum of the
amounts set forth on the balance sheet as stockholders' equity (including the
par or stated value of all outstanding capital stock, additional paid-in
surplus, retained earnings, treasury stock, and unrealized gains or losses on
securities available for sale) determined in accordance with GAAP.
(g) Director and Voting Agreements.
------------------------------ CCBG shall have received
from each director of FABC and First National the Director and Voting
Agreement set forth hereto at Exhibit 5.
(h) Claims Letter.
------------- CCBG shall have received from each director
and officer of FABC and First National the Claims Letter set forth hereto at
Exhibit 8.
31
(i) Clearance Certificate.
--------------------- FABC and First National shall
provide CCBG with a clearance certificate or similar document(s) which may be
required by any state taxing authority in order to relieve CCBG of any
obligation to withhold any portion of the consideration under this Agreement.
(j) Executive Employment Agreement.
------------------------------ CCBG shall have received from
Jerry M. Smith an executed Executive Employment Agreement in the form attached
hereto as Exhibit 4.
(k) Letter Agreement.
---------------- CCBG shall have received from Jerry M.
Smith an executed letter agreement in the form attached hereto as Exhibit 2.
8.3 CONDITIONS TO OBLIGATIONS OF FABC AND FIRST NATIONAL.
---------------------------------------------------- The
obligations of FABC and First National to perform this Agreement and
consummate the Merger and the other transactions contemplated hereby are
subject to the satisfaction of the following conditions, unless waived by
FABC or First National pursuant to Section 10.6(b):
(a) Representations And Warranties.
------------------------------ For purposes of this
Section 8.3(a), the accuracy of the representations and warranties of CCBG
set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all
such representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). There shall not exist
inaccuracies in the representations and warranties of CCBG set forth in this
Agreement such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a CCBG Material Adverse Effect; provided that, for
purposes of this sentence only, those representations and warranties which
are qualified by references to "Material" or "Material Adverse Effect" or to
the "Knowledge" of any Person shall be deemed not to include such
qualifications.
(b) Performance Of Agreements And Covenants.
--------------------------------------- Each and all of
the agreements and covenants of CCBG to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior
to the Effective Time shall have been duly performed and complied with in all
Material respects.
(c) Certificates.
------------ CCBG shall have delivered to FABC and First
National (i) a certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 8.1 as relates to CCBG and in
Section 8.3(a) and 8.3(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by CCBG's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, all in such reasonable detail as
FABC and First National and their counsel shall request.
(d) Opinion Of Counsel.
------------------ FABC and First National shall have
received an opinion of Gunster, Yoakley & Stewart, P.A., counsel to CCBG,
dated as of the Effective Time, in form reasonably acceptable to FABC, as to
the matters set forth in Exhibit 9.
(e) Agreement relating to Executive Indexed Salary Continuation
Plan. -----------------------------------------------------------
- ----
CCBG shall have delivered to FABC and First National an agreement as
contemplated in Section VI(B) of the Executive Indexed Salary Continuation
Plan, in form reasonably acceptable to FABC and First National and their
counsel.
ARTICLE 9
TERMINATION
9.1 TERMINATION.
----------- Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of FABC, this Agreement may be terminated and the Mergers
abandoned at any time prior to the Effective Time:
(a) By mutual consent of CCBG and FABC; or
(b) By either Party (provided that the terminating Party is not
then in Material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a breach by the other
Party of any representation or warranty contained in this Agreement which
cannot be or has not been cured within 30 days after the
32
giving of written notice to the breaching Party of such breach and which
breach is reasonably likely, in the opinion of the non-breaching Party, to
have, individually or in the aggregate, an FABC Material Adverse Effect or a
CCBG Material Adverse Effect, as applicable, on the breaching Party; or
(c) By either Party (provided that the terminating Party is not
then in Material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a Material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is not
then in Material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Mergers and the other
transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of FABC fail to vote their approval of the matters relating to
this Agreement and the transactions contemplated hereby at the Shareholders'
Meeting where such matters were presented to such shareholders for approval
and voted upon; or
(e) By either Party in the event that the Mergers shall not
have been consummated by August 31, 2005, which date may be extended by the
mutual consent of the Parties, if the failure to consummate the transactions
contemplated hereby on or before such date is not caused by any breach of
this Agreement by the Party electing to terminate pursuant to this Section
9.1(e); or
(f) By either Party (provided that the terminating Party is not
then in Material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Mergers cannot be
satisfied or fulfilled by the date specified in Section 9.1(e); or
(g) By CCBG, in the event that the Board of Directors of FABC
or First National shall have failed to reaffirm its approval of the Mergers
and the transactions contemplated by this Agreement (to the exclusion of any
other Acquisition Proposal), or shall have resolved not to reaffirm the
Mergers, or shall have affirmed, recommended or authorized entering into any
other Acquisition Proposal or other transaction involving a merger, share
exchange, consolidation or transfer of substantially all of the Assets of
FABC; or
(h) By CCBG, in the event of an Adverse Finding and, if time is
granted by CCBG to cure such Adverse Finding pursuant to Section 7.6(c), such
Adverse Finding is not cured to the satisfaction of CCBG within the time
specified in CCBG's notice of such Adverse Finding; or
(i) By FABC, pursuant to Section 9.3; or
(j) By CCBG, pursuant to Section 2.1(e); or
(k) By FABC, at any time during the two-day period commencing
at the close of trading on the Determination Date, if both (i) the Average
Closing Price is less than or equal to $34, and (ii) the quotient obtained by
dividing the Average Closing Price by 40 is less than the number obtained by
subtracting 0.15 from the quotient obtained by dividing (x) the Index Price
at the close of trading on the Determination Date by (y) the Index Price on
the Starting Date, subject to the following three sentences. If FABC elects
to exercise its termination right pursuant to the immediately preceding
sentence, then it shall give prompt written notice to CCBG; provided that
such notice of election to terminate may be withdrawn at any time within the
aforementioned two-day period. During the three-day period commencing with
its receipt of such notice, CCBG shall have the option of adjusting the Share
Exchange Ratio to a number equal to a quotient (rounded to the nearest one-
ten-thousandth) obtained by dividing (i) the product obtained by multiplying
(x) $34 and (y) the Share Exchange Ratio (as then in effect) by (ii) the
Average Closing Price. If CCBG makes such an election within such three-day
period it shall give prompt written notice to FABC of such election and the
revised Exchange Ratio, whereupon no termination shall have occurred pursuant
to this Section 9.1(k) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement to "Exchange Ratio" shall
thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to
this Section 9.1(k).
33
If any company belonging to the Index Group or CCBG declares or effects
a stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or CCBG
shall be appropriately adjusted for the purposes of applying this Section
9.1(k).
9.2 EFFECT OF TERMINATION.
--------------------- In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this
Section 9.2 and Article 10 and Sections 7.6(d) and 7.7 shall survive any such
termination and abandonment, and (ii) a termination pursuant to Sections
9.1(b), 9.1(c) or 9.1(f) shall not relieve the breaching Party from Liability
for an uncured willful breach of a representation, warranty, covenant, or
agreement giving rise to such termination.
9.3 ALTERNATE TRANSACTION.
--------------------- Nothing contained in this Agreement shall
be deemed to prohibit any director or officer of FABC from fulfilling his or
her fiduciary duties to FABC shareholders or from taking any action required
by Law. However, in addition to any other payments required by this
Agreement, in the event that this Agreement is terminated as a result of FABC
or the holders of at least a majority of the shares of FABC Common Stock
entering into an agreement with respect to the merger of FABC with a party
other than CCBG or the acquisition of a majority of the outstanding shares
of FABC Common Stock by any party other than CCBG, or is terminated in
anticipation of any such agreement or acquisition, then, in either event,
FABC shall immediately pay CCBG, by wire transfer, $2,320,000 in full
satisfaction of CCBG's losses and damages resulting from such termination.
FABC agrees that $2,320,000 is reasonable under the circumstances, that it
would be impossible to exactly determine CCBG's actual damages as a result of
such a termination and that CCBG's actual damages resulting from the loss of
the transaction are in excess of $2,320,000.
9.4 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS.
--------------------------------------------- The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 9.4 and
Articles 1, 2, 3, 4, and 10 and Sections 6.6, 7.7, 7.13, 7.14, 7.16, and 9.3;
provided, however, that the representations and warranties contained in ARTICLE
4 shall not survive the Effective Time beyond the third anniversary of the
Closing Date.
ARTICLE 10
MISCELLANEOUS
10.1 DEFINITIONS.
-----------
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ACQUISITION PROPOSAL" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving the
acquisition of such Party or any of its Subsidiaries or the acquisition of a
substantial equity interest in, or a substantial portion of the assets of,
such Party or any of its Subsidiaries.
"ADJUSTED PURCHASE PRICE" shall mean the Purchase Price reduced by the
Audit Adjustments.
"ADJUSTED PURCHASE PRICE PER SHARE" shall mean the quotient obtained by
dividing (i) the Adjusted Purchase Price by (ii) the number of shares of FABC
Common Stock issued outstanding immediately prior to the Effective Time,
excluding shares held by any FABC Entity or any CCBG Entity, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted.
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any executive officer, director,
partner, employer, or
34
direct or indirect beneficial owner of any 10% or greater equity or voting
interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"ALACHUA 401(K) PLAN LIABILITIES" shall mean all Liabilities relating to
the EPCRS Application, all failures described in Section 4.15 of the FABC
Disclosure Memorandum, and any Liabilities, including, but not limited to,
excise taxes relating to the Alachua 401(k) Plan.
"ARTICLES OF MERGER" shall mean the Articles of Merger to be executed by
CCBG and filed with the Secretary of State of the State of Florida relating
to the Holding Company Merger as contemplated by Section 1.1.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's
business, directly or indirectly, in whole or in part, whether or not carried
on the books and records of such Person, and whether or not owned in the name
of such Person or any Affiliate of such Person and wherever located.
"AVERAGE CLOSING PRICE" shall mean the average of the daily closing
sales prices of one share of CCBG Common Stock as reported on the Nasdaq
National Market (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by CCBG) for the twenty (20)
consecutive full trading days in which such shares are traded on the Nasdaq
National Market ending at the close of trading on the Determination Date.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"CCB" shall mean Capital City Bank, a Florida chartered commercial bank
and a CCBG Subsidiary.
"CCBG" shall mean Capital City Bank Group, Inc., a Florida corporation.
"CCBG CAPITAL STOCK" shall mean, collectively, the CCBG Common Stock,
the CCBG Preferred Stock and any other class or series of capital stock of
CCBG.
"CCBG COMMON STOCK" shall mean the common stock of CCBG, $.01 par value
per share.
"CCBG DISCLOSURE MEMORANDUM" shall mean the written information entitled
"Capital City Bank Group, Inc. Disclosure Memorandum" delivered prior to the
date of this Agreement to FABC describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"CCBG ENTITIES" shall mean, collectively, CCBG and all CCBG
Subsidiaries.
"CCBG FINANCIAL STATEMENTS" shall mean (i) the consolidated statements
of condition (including related notes and schedules, if any) of CCBG as of
December 31, 2003 and 2002, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules,
if any) for each of the three fiscal years ended December 31, 2003, 2002 and
2001, as filed by CCBG in SEC Documents, and (ii) the consolidated statements
of condition and balance sheets of CCBG (including related notes and
schedules, if any) and related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
included in SEC Documents filed with respect to periods ended subsequent to
December 31, 2003.
"CCBG MATERIAL ADVERSE EFFECT" shall mean an event, change or occurrence
which, individually or together with any other event, change or occurrence,
has a material adverse impact on (i) the financial position, business, or
results of operations of CCBG and its Subsidiaries, taken as a whole, or (ii)
the ability of CCBG to perform its obligations under this Agreement or to
consummate the Mergers or the other transactions contemplated by this
Agreement, including
35
without limitation the tax-free reorganization status of the Mergers;
provided that "Material Adverse Effect" shall not be deemed to include the
impact of (a) changes in banking and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b) changes in
generally accepted accounting principles or regulatory accounting principles
generally applicable to banks and their holding companies, (c) actions and
omissions of CCBG (or any of its Subsidiaries) taken with the prior informed
written Consent of FABC in contemplation of the transactions contemplated
hereby, and (d) the direct effects of compliance with this Agreement on the
operating performance of CCBG, including expenses incurred by CCBG in
consummating the transactions contemplated by this Agreement.
"CCBG PREFERRED STOCK" shall mean the preferred stock of CCBG, $.01 par
value per share.
"CCBG STOCK PLANS" shall mean the existing stock-based plans of CCBG
designated as follows: (i) Associate Incentive Plan, (ii) Associate Stock
Purchase Plan, (iii) Director Stock Purchase Plan and (iv) Dividend
Reinvestment Plan.
"CCBG SUBSIDIARIES" shall mean the Subsidiaries of CCBG, which shall
include the CCBG Subsidiaries described in Section 5.4 and any corporation,
bank, savings association, or other organization acquired as a Subsidiary of
CCBG in the future and held as a Subsidiary by CCBG at the Effective Time.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CODE" shall mean the Internal Revenue Code of 1986. All citations to
the Code, or the Treasury Regulations promulgated thereunder, shall include
all amendments thereto and any substitute and successor provisions. All
section references to the Code (or Treasury Regulations) shall include all
similar provisions under the applicable state, local or foreign tax law.
"CONFIDENTIALITY AGREEMENT" shall mean that certain Confidentiality
Agreement, dated July 26, 2004, between SunTrust Robinson Humphrey, on behalf
of FABC and CCBG.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that
is binding on any Person or its capital stock, Assets or business.
"DEFAULT" shall mean (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, (ii)
any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"DEPOSIT ACCOUNTS" means the deposit accounts held at FABC, the balances
which are included in the Deposits or would be so included if the Deposit
Account had a positive balance.
"DEPOSITS" means all deposits (as defined in 12 U.S.C. Section 1813(I))
held by FABC as of the Close of Business on the Closing Date.
"DETERMINATION DATE" shall mean the fifth full trading day prior to the
day on which the Effective Time occurs.
"ENVIRONMENTAL LAWS" shall mean any and all Laws (which were formerly
effective, are effective currently, or are effective after the Effective
Time, including any amendments thereto) relating in any way to protection or
regulation of public health, human health, or the environment, including, but
not limited to, ambient air, indoor air, surface water, ground water, other
waters, land surface, subsurface strata, or occupational safety and health,
including, but not limited to, those Laws
36
which are administered, interpreted, or enforced by the United States
Environmental Protection Agency or state or local governmental agencies or
authorities with jurisdiction over, and including common law in respect of,
protection or regulation of public health, human health, or the environment,
also including, but not limited to, the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et seq.
("CERCLA"), and the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901 et seq. ("RCRA"), and their state equivalents or
analogs, and including, but limited to, all other Laws relating to the
emission, discharge, disposal, spill, release, or threatened release of any
Hazardous Material, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
any Hazardous Material.
"EQUITY RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings, warrants,
or other binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXHIBITS" 1 through 9, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred
to in this Agreement and any other related instrument or document without
being attached hereto.
"FABC" shall mean First Alachua Banking Corporation, a Florida
corporation.
"FABC AUDITED FINANCIAL STATEMENTS" shall mean the consolidated
statement of condition (including related notes and schedules, if any) of
FABC as of September 30, 2004, and the related statements of income, changes
in shareholders' equity, and cash flows (including related notes and
schedules, if any) for the nine-month period ended September 30, 2004 that
shall be audited pursuant to Section 7.23.
"FABC CAPITAL STOCK" shall mean, collectively, the FABC Common Stock and
any other class or series of capital stock of FABC.
"FABC COMMON STOCK" shall mean (i) Class A Common Stock of FABC, $0.10
par value per share and (ii) Class B Common Stock of FABC, $0.10 par value
per share.
"FABC DISCLOSURE MEMORANDUM" shall mean the written information entitled
"First Alachua Banking Corporation Disclosure Memorandum" delivered prior to
the date of this Agreement to CCBG describing in reasonable detail the
matters contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"FABC ENTITIES" shall mean, collectively, FABC and all FABC
Subsidiaries.
"FABC FINANCIAL STATEMENTS" shall mean (i) for the years ended December
31, 2003, 2002 and 2001, FABC's balance sheets, income statements and
statements of changes in stockholders' equity (including related notes and
schedules, if any), (ii) for the years ended December 31, 2003, 2002 and
2001, the balance sheet, income statement, reconciliation of equity,
reconciliation of reserve for possible loan losses, and Schedule RC-C-loans
and lease financing receivables (including related notes and schedules, if
any), with respect to First National, all on an unaudited basis, and (iii)
the balance sheets, income statements and statements of changes in
stockholders' equity (including related notes and schedules, if any) for FABC
on a consolidated basis, and for First National, for periods ended subsequent
to December 31, 2003.
"FABC MATERIAL ADVERSE EFFECT" shall mean an event, change or occurrence
which, individually or together with any other event, change or occurrence,
has a material adverse impact on (i) the financial position, business, or
results of operations of FABC and its Subsidiaries, taken as a whole, or (ii)
the ability of FABC to perform its obligations under this Agreement or to
consummate the Mergers or the other transactions contemplated by this
Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
37
regulatory accounting principles generally applicable to banks and their
holding companies, (c) actions and omissions of FABC (or any of its
Subsidiaries) taken with the prior informed written Consent of CCBG in
contemplation of the transactions contemplated hereby, and (d) the direct
effects of compliance with this Agreement on the operating performance of
FABC, including expenses incurred by FABC in consummating the transactions
contemplated by this Agreement.
"FABC STOCK PLANS" shall mean all stock-based plans of FABC.
"FABC SUBSIDIARIES" shall mean the Subsidiaries of FABC, which shall
include the FABC Subsidiaries described in Section 4.4 and any corporation,
bank, savings association, or other organization acquired as a Subsidiary of
FABC in the future and held as a Subsidiary by FABC at the Effective Time.
"FBCA" shall mean the Florida Business Corporation Act, as amended.
"FIRST NATIONAL" shall mean the First National Bank of Alachua, a
national banking association and an FABC Subsidiary.
"FIRST NATIONAL CAPITAL STOCK" shall mean, collectively, the First
National Common Stock and any other class or series of capital stock of First
National.
"FIRST NATIONAL COMMON STOCK" shall mean the common stock of First
National, $5.00 par value per share.
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States of America at the time of the preparation of the subject
financial statement, consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance, as those
terms have been, are currently, or after the Effective Time are, regulated,
or defined, by any applicable Environmental Laws, and (ii) any other
chemical, pollutant, constituent, contaminant, substance, material, waste,
petroleum, petroleum product, or oil, or similar or related items, that have
been, are currently, or after the Effective Time are, regulated, or defined,
by any applicable Environmental Laws. The term "HAZARDOUS MATERIAL" shall
specifically include (but is not limited to) asbestos or lead-based paint
requiring abatement, removal, or encapsulation, or otherwise regulated,
pursuant to the requirements of governmental agencies or authorities.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title II
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.
"INDEX GROUP" means the group of the 22 bank holding companies listed
below, the common stock of all of which shall be publicly traded and as to
which there shall not have been, since the Starting Date and before the
Determination Date, an announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquirer's market
capitalization as of the Starting Date. In the event that the common stock
of any such company ceases to be publicly traded or any such announcement is
made with respect to any such company, such company will be removed from the
Index Group, and the weights (which have been determined based on the number
of outstanding shares of common stock) redistributed proportionately for
purposes of determining the Index Price. The 22 bank holding companies are
as follows:
38
Bank Holding Company Ticker Weighting
-------------------- ------
Sterling Bancshares, Inc. SBIB 11.31
United Community Banks, Inc. UCBI 9.13
First Charter Corporation FCTR 7.53
Texas Capital Bancshares, Inc. TCBI 6.38
Prosperity Bancshares, Inc. PRSP 5.64
Main Street Banks, Inc. MSBK 5.43
WesBanco, Inc. WSBC 5.24
Alabama National BanCorporation ALAB 4.28
City Holding Company CHCO 4.17
Bank of the Ozarks, Inc. OZRK 4.14
First Financial Bankshares, Inc. FFIN 3.90
Seacoast Banking Corporation of Florida SBCF 3.89
Simmons First National Corporation SFNC 3.68
Sandy Spring Bancorp, Inc. SASR 3.65
First Bancorp FBNC 3.54
Community Trust Bancorp, Inc. CTBI 3.39
GB&T Bancshares, Inc. GBTB 2.89
First Community Bancshares, Inc. FCBC 2.83
Virginia Commerce Bancorp, Inc. VCBI 2.78
Peoples Holding Company PHC 2.27
Union Bankshares Corporation UBSH 2.19
IberiaBank Corporation IBKC 1.73
"INDEX PRICE" on a given date means the weighted average (weighted in
accordance with the factors listed under the definition of "Index Group") of
the closing prices of the companies comprising the Index Group.
"INTELLECTUAL PROPERTY" shall mean: (a) all inventions (whether
patentable or un-patentable and whether or not reduced to practice), all
rights to all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all re-issuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof; (b)
all trademarks, service marks, trade dress, logos, trade names, corporate
names and domain names together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (c) all copyrightable works (including, but not limited to,
training materials and instruction manuals), all copyrights, and all
applications, registrations, and renewals in connection therewith; (d) all
trade secrets and confidential business information (including ideas, know-
how, formulae, compositions, techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
business methods and business and marketing plans and proposals); (e) all
computer software in source or object code (including data and related
documentation); (f) all other proprietary rights relative to any of the
foregoing; (g) all copies and tangible embodiments of the forgoing (in
whatever form or medium); and (h) all licenses to any of the foregoing.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that
are known or should reasonably have been known after due inquiry by the
chairman, president, chief financial officer, chief accounting officer, chief
operating officer, chief credit officer, general counsel, any assistant or
deputy general counsel, or any senior or executive vice president of such
Person and the knowledge of any such persons obtained or which would have
been obtained from a reasonable investigation.
"LAW" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute applicable
to a Person or its Assets, Liabilities, or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
39
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), claim, deficiency, guaranty
or endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute or contingent, liquidated
or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) for depository institution Subsidiaries
of a Party, pledges to secure deposits and other Liens incurred in the
ordinary course of the banking business, (iii) Liens which do not materially
impair the use of or title to the Assets subject to such Lien, and which are
disclosed in Section 10.1 of the FABC Disclosure Memorandum or the CCBG
Disclosure Memorandum, as applicable.
"LITIGATION" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, governmental or other examination or
investigation, hearing, administrative or other proceeding, including without
limitation, any actual, pending, or threatened condemnation, relating to or
affecting a Party, its business, its Assets (including Contracts related to
it), or the transactions contemplated by this Agreement, but shall not
include regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality
in that instance.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System of the
National Association of Securities Dealers Automated Quotations System.
"OPERATING PROPERTY" shall mean any property owned, leased, managed or
operated by the Party in question or by any of its Subsidiaries and, where
required by the context, includes the owner or operator of such property, but
only with respect to such property.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi- judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
such Party or Subsidiary holds a security interest (including an interest in
a fiduciary capacity) and, where required by the context, said term means the
owner or operator of such facility or property, but only with respect to such
facility or property.
"PARTY" shall mean either FABC and First National, collectively, or
CCBG, and "PARTIES" shall mean FABC, First National, and CCBG.
"PERMIT" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, Assets,
or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in
a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by FABC to solicit
the approval of its shareholders of the transactions contemplated by this
Agreement, which shall include the prospectus of CCBG relating to the
issuance of the CCBG Common Stock to holders of FABC Common Stock.
40
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by CCBG under the 1933
Act with respect to the shares of CCBG Common Stock to be issued to the
shareholders of FABC in connection with the transactions contemplated by this
Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC, the NASD,
the Federal Trade Commission, the United States Department of Justice, the
Board of the Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, the
Florida Department of Financial Services and all other federal, state,
county, local or other governmental or regulatory agencies, authorities
(including self- regulatory authorities), instrumentalities, commissions,
boards or bodies having jurisdiction over the Parties and their respective
Subsidiaries.
"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative engaged by a
Person.
"RETURNS" shall mean all returns, declarations, reports, statements and
other documents required to be filed in respect of Taxes, and any claims for
refunds of Taxes, including any amendments or supplements to any of the
foregoing.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of
FABC to be held pursuant to Section 7.1, including any adjournment or
adjournments thereof.
"SIGNIFICANT SUBSIDIARY" shall mean any present or future consolidated
Subsidiary of the Party in question, the assets of which constitute ten
percent (10%) or more of the consolidated assets of such Party as reflected
on such Party's consolidated statement of condition prepared in accordance
with GAAP.
"STARTING DATE" shall mean the full trading day, immediately prior to
the day on which the Parties execute this Agreement, on which the common
stock of all of the bank holding companies comprising the Index Group are
traded.
"SUBSIDIARIES" shall mean all those corporations, associations, or other
business entities of which the entity in question either (i) owns or controls
50% or more of the outstanding equity securities either directly or through
an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its parent
(provided, there shall not be included any such entity the equity securities
of which are owned or controlled in a fiduciary capacity), (ii) in the case
of partnerships, serves as a general partner,(iii) in the case of a limited
liability company, serves as a managing member, or (iv) otherwise has the
ability to elect a majority of the directors, trustees or managing members
thereof.
"SURVIVING CORPORATION" shall mean CCBG as the surviving corporation
resulting from the Holding Company Merger.
"TAX" or "TAXES" shall mean all federal, state, local, foreign and other
taxes, assessments or other governmental charges, including, without
limitation, (i) income, estimated income, business, occupation, franchise,
property, sales, use, excise, employment, unemployment, payroll, social
security, ad valorem, transfer, gains, profits, capital stock, license, gross
receipts, stamp, real estate, severance and withholding taxes, and any fee
assessment or other charge in the nature or in lieu of any tax and including
any transferee or secondary liability in respect of any tax (imposed by Law,
agreement or otherwise) and (ii) interest, penalties and additions in
connection therewith, in each case, for which FABC is or may be liable
(including as a result of the application of Treas. Reg. Section 1.1502-6).
41
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Adverse Finding Section 7.6(c)
Alachua 401(k) Plan Section 7.14(c)
Allowance Section 4.9
Audit Adjustments Section 2.1(d)
Auditor Section 7.23
Bank Merger Preamble
Bank Plan Section 1.2
Certificates Section 3.1
CCBG SEC Reports Section 5.5(a)
CCBG Stock Multiple Section 2.1(c)
Closing Section 1.3
COBRA Section 4.15(k)
Executive Employment Agreement Section 7.14
Effective Time Section 1.4
Environmental Survey Section 7.20
EPCRS Application Section 7.15
ERISA Affiliate Section 4.15(d)
Exchange Agent Section 3.1
Executive Indexed Salary Continuation Plan Section 7.14(c)
FABC Benefit Plans Section 4.15(a)
FABC Contracts Section 4.16
FABC ERISA Plan Section 4.15(a)
FABC Pension Plan Section 4.15(a)
HIPAA Section 4.15(k)
Holding Company Merger Preamble
Indemnified Party Section 7.16
IRS Section 4.15(a)
Purchase Price Section 2.1(b)
Material Defect Section 7.20
Material Defect Notice Section 7.20
Mergers Preamble
Notices Section 4.12(d)
Participants Section 4.15(a)
PBGC Section 4.15(e)
Property Examination Section 7.20
Real Property Section 4.10(f)
Share Exchange Ratio Section 2.1(c)
Takeover Laws Section 4.21
Tax Opinion Section 8.1(g)
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall
be deemed followed by the words "without limitation."
10.2 EXPENSES.
-------- Except as otherwise provided in this Section 10.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees, printing
fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that CCBG shall bear and
pay the filing fees payable in connection with the Registration Statement and
the Proxy Statement and the printing costs incurred in connection with the
printing of the Registration Statement and the Proxy Statement shall be borne
equally by CCBG and FABC.
10.3 BROKERS AND FINDERS.
------------------- Except for SunTrust Robinson Humphrey as to
FABC and First National and except for McConnell, Budd & Romano, Inc. as to
CCBG, each of the Parties represents and warrants that neither it nor any of
its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial
42
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions
contemplated hereby. In the event of a claim by any broker or finder based
upon his or its representing or being retained by or allegedly representing
or being retained by FABC or by CCBG, each of FABC and CCBG, as the case may
be, agrees to indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
10.4 ENTIRE AGREEMENT.
---------------- Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
7.6(b), for the Confidentiality Agreement). Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Sections 7.14 and 7.16.
10.5 AMENDMENTS.
---------- To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the
approval of each of the Parties, whether before or after shareholder approval
of this Agreement has been obtained; provided, that after any such approval
by the holders of FABC Common Stock, there shall be made no amendment that
reduces or modifies in any Material respect the consideration to be received
by holders of FABC Common Stock; and further provided, that the provisions of
this Agreement relating to the manner or basis in which shares of FABC Common
Stock will be exchanged for shares of CCBG Common Stock shall not be amended
after the Shareholders' Meeting in a manner adverse to the holders of CCBG
Common Stock without any requisite approval of the holders of the issued and
outstanding shares of CCBG Common Stock entitled to vote thereon.
10.6 WAIVERS.
-------
(a) Prior to or at the Effective Time, CCBG, acting through its
Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of
this Agreement by FABC, to waive or extend the time for the compliance or
fulfillment by FABC of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
CCBG under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of CCBG.
(b) Prior to or at the Effective Time, FABC, acting through its
Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of
this Agreement by CCBG, to waive or extend the time for the compliance or
fulfillment by CCBG of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
FABC under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of FABC.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained
in this Agreement in one or more instances shall be deemed to be or construed
as a further or continuing waiver of such condition or breach or a waiver of
any other condition or of the breach of any other term of this Agreement.
10.7 ASSIGNMENT.
---------- Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the Parties and their respective successors and
assigns.
10.8 NOTICES.
------- All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing and shall be
(as elected by the person giving such notice) hand delivered by messenger or
courier service, transmitted by fax, or mailed by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
43
FABC: First Alachua Banking Corporation
15000 N.W. 140th Street
Alachua, Florida 32615
P.O. Box 219
Alachua, Florida 32616
Facsimile Number: (386) 462-6689
Attention: Jerry M. Smith or Marjorie Drummond
First National: First National Bank of Alachua
15000 N.W. 140th Street
Alachua, Florida 32615
P.O. Box 219
Alachua, Florida 32616
Facsimile Number: (386) 462-6689
Attention: Jerry M. Smith or Marjorie Drummond
Copy to FABC and
First National Counsel: Smith, Gambrell & Russell, LLP
1230 Peachtree Street, N.E., Suite 3100
Atlanta, Georgia 30309-3592
Facsimile Number: (404) 685-7058
Attn: Robert C. Schwartz, Esq.
CCBG: Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 33301
Facsimile Number: (850) 878-9150
Attention: J. Kimbrough Davis
Copy to Counsel: Gunster, Yoakley & Stewart, P.A.
500 East Broward Boulevard, Suite 1400
Fort Lauderdale, Florida 33394
Facsimile Number: (954) 523-1722
Attention: Gregory K. Bader, Esq.
or to such other address as any party may designate by notice complying with
the terms of this Section. Each such notice shall be deemed delivered (a) on
the date delivered, if by messenger or courier service; (b) on the date of
the confirmation of receipt, if by fax; and (c) either upon the date of
receipt or refusal of delivery, if mailed.
10.9 GOVERNING LAW.
------------- This Agreement shall be governed by and construed
in accordance with the Laws of the State of Florida, without regard to any
applicable conflicts of Laws.
10.10 COUNTERPARTS.
------------ This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
10.11 CAPTIONS; ARTICLES AND SECTIONS.
------------------------------- The captions contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this
Agreement.
10.12 INTERPRETATIONS.
--------------- Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement
shall be considered the draftsman. The parties acknowledge and agree that
this Agreement has been reviewed, negotiated, and accepted by all parties and
their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes
and intentions of all parties hereto.
44
10.13 ENFORCEMENT OF AGREEMENT.
------------------------ The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or
were otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
10.14 ENFORCEMENT COSTS.
----------------- If any civil action, arbitration or other
legal proceeding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, Default or misrepresentation in connection
with any provision of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees, court costs,
sales and use taxes and all expenses even if not taxable as court costs
(including, without limitation, all such fees, taxes, costs and expenses
incident to arbitration, appellate, bankruptcy and post-judgment
proceedings), incurred in that proceeding, in addition to any other relief to
which such party or parties may be entitled. Attorneys' fees shall include,
without limitation, paralegal fees, investigative fees, administrative costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party (including any fees and costs associated with collecting
such amounts).
10.15 SEVERABILITY.
------------ Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
45
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
CAPITAL CITY BANK GROUP, INC.
By: /s/ J. Kimbrough Davis
-----------------------------
J. Kimbrough Davis
Executive Vice President and Chief
Financial Officer
FIRST ALACHUA BANKING CORPORATION
By: /s/ Jerry M. Smith
-----------------------------
Jerry M. Smith,
as Chairman, President and
Chief Executive Officer
FIRST NATIONAL BANK OF ALACHUA
By: /s/ Jerry M. Smith
-----------------------------
Jerry M. Smith,
as Chairman, President and
Chief Executive Officer
46
LIST OF EXHIBITS
Exhibit Number Description
1. Bank Plan of Merger (Section 1.2).
2. Letter Agreement (Sections 6.6(e), 7.15(e), 7.15(f),
and 8.2(k))
3. Form of Affiliate Agreement (Sections 7.13 and 8.2(e)).
4. Executive Employment Agreement (Sections 7.14(b) and
8.2(j))
5. Form of Director and Voting Agreement (Sections 7.18
and 8.2(g)).
6. Form of Non-Competition Agreement (Section 7.22)
7. Matters as to which Smith, Gambrell & Russell, LLP will
opine (Section 8.2(d)).
8. Form of Claims Letter (Section 8.2(h)).
9. Matters as to which Gunster, Yoakley & Stewart, P.A.
will opine (Section 8.3(d)).
47
APPENDIX B
BANK PLAN OF MERGER
PLAN OF MERGER
AND MERGER AGREEMENT
Pursuant to the provisions of Section 658.42 of the Florida Statutes,
the undersigned banks do hereby adopt and enter into this Plan of Merger and
Merger Agreement (this "Agreement") for the purpose of merging (the "Merger")
First National Bank of Alachua, a national bank ("First National"), with and
into Capital City Bank, a Florida chartered commercial bank ("CCB"):
(a) The name of each constituent bank and the specific location of its main
office are as follows:
1. Capital City Bank
217 North Monroe Street
Tallahassee, Florida 32301
The specific location of each of its branch offices is set forth on
Schedule 1 attached hereto.
2. First National Bank of Alachua
15000 N.W. 140th Street
Alachua, Florida 32615
The specific location of each of its branch offices is set forth on
Schedule 2 attached hereto.
(b) With respect to the resulting state bank:
1. The name and the specific location of the proposed main office are:
Capital City Bank
217 North Monroe Street
Tallahassee, Florida 32301
The name of each of its branch offices will be Capital City Bank. The
specific location of each of its existing and proposed branch offices is
set forth on Schedule 3 attached hereto.
2. The name and address of each director who is to serve until the next
meeting of the shareholders at which directors are elected are set
forth on Schedule 4 attached hereto.
3. The name and address of each executive officer are set forth on
Schedule 5 attached hereto.
4. The resulting bank will have a single class of common stock, par
value $100 per share ("Resulting Bank Common Stock"), consisting of
5,000 authorized shares, of which 1,000 will be outstanding. The
amount of the surplus fund will be $________ and the amount of
retained earnings will be $________.
5. The resulting bank shall have trust powers.
6. The complete articles of incorporation under which the resulting
bank will operate are attached hereto as Schedule 6.
(c) The terms for the exchange of shares of the constituent banks are as
follows:
1. At the Effective Time (as defined below), each issued and
outstanding share of the common stock of First National, par value
$5.00 per share, shall, by virtue of the Merger and without any
action by the holder thereof, be
1
extinguished. At the Effective Time, each of the 1,000 issued and
outstanding shares of the common stock of CCB, par value $100 per
share, shall continue to be outstanding and held by Capital City
Bank Group, Inc., a Florida corporation, and shall constitute all of
the issued and outstanding Resulting Bank Common Stock.
2. The "Effective Time" shall mean 11:59 pm on the date requested by
CCB, as soon as practicable after the delivery of this Agreement and
certified resolutions to the Florida Department of Financial
Services (the "Department").
(d) This Agreement is subject to approval by the Department and by the
shareholders of First National and CCB.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the ___ day of ________ 2005.
CAPITAL CITY BANK
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------
FIRST NATIONAL BANK OF ALACHUA
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------
2
APPENDIX C
DISSENTERS' RIGHTS OF APPRAISAL
607.1301 Appraisal rights; definitions. - The following definitions apply to
ss. 607.1302-607.1333:
(1) "Affiliate" means a person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common
control with another person or is a senior executive thereof. For
purposes of s. 607.1302(2)(d), a person is deemed to be an affiliate of
its senior executives.
(2) "Beneficial shareholder" means a person who is the beneficial owner
of shares held in a voting trust or by a nominee on the beneficial
owner's behalf.
(3) "Corporation" means the issuer of the shares held by a shareholder
demanding appraisal and, for matters covered in ss. 607.1322-607.1333,
includes the surviving entity in a merger.
(4) "Fair value" means the value of the corporation's shares
determined:
(a) Immediately before the effectuation of the corporate action
to which the shareholder objects.
(b) Using customary and current valuation concepts and
techniques generally employed for similar businesses in the
context of the transaction requiring appraisal, excluding any
appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable to the corporation
and its remaining shareholders.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the rate of interest on judgments
in this state on the effective date of the corporate action.
(6) "Preferred shares" means a class or series of shares the holders of
which have preference over any other class or series with respect to
distributions.
(7) "Record shareholder" means the person in whose name shares are
registered in the records of the corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on
file with the corporation.
(8) "Senior executive" means the chief executive officer, chief
operating officer, chief financial officer, or anyone in charge of a
principal business unit or function.
(9) "Shareholder" means both a record shareholder and a beneficial
shareholder.
History. - s. 118, ch. 89-154; s. 21, ch. 2003-283.
607.1302 Right of shareholders to appraisal. -
(1) A shareholder is entitled to appraisal rights, and to obtain
payment of the fair value of that shareholder's shares, in the event of
any of the following corporate actions:
(a) Consummation of a merger to which the corporation is a party
if shareholder approval is required for the merger by s. 607.1103
and the shareholder is entitled to vote on the merger or if the
corporation is a subsidiary and the merger is governed by s.
607.1104;
(b) Consummation of a share exchange to which the corporation is
a party as the corporation whose shares will be acquired if the
shareholder is entitled to vote on the exchange, except that
3
appraisal rights shall not be available to any shareholder of
the corporation with respect to any class or series of shares of
the corporation that is not exchanged;
(c) Consummation of a disposition of assets pursuant to s.
607.1202 if the shareholder is entitled to vote on the
disposition, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds of the
sale will be distributed to the shareholders within 1 year after
the date of sale;
(d) Any other amendment to the articles of incorporation,
merger, share exchange, or disposition of assets to the extent
provided by the articles of incorporation, bylaws, or a
resolution of the board of directors, except that no bylaw or
board resolution providing for appraisal rights may be amended or
otherwise altered except by shareholder approval; or
(e) With regard to a class of shares prescribed in the articles
of incorporation prior to October 1, 2003, including any shares
within that class subsequently authorized by amendment, any
amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would
adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights attached
to any of his or her shares;
2. Altering or abolishing the voting rights pertaining to
any of his or her shares, except as such rights may be
affected by the voting rights of new shares then being
authorized of any existing or new class or series of
shares;
3. Effecting an exchange, cancellation, or
reclassification of any of his or her shares, when such
exchange, cancellation, or reclassification would alter or
abolish the shareholder's voting rights or alter his or her
percentage of equity in the corporation, or effecting a
reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
4. Reducing the stated redemption price of any of the
shareholder's redeemable shares, altering or abolishing any
provision relating to any sinking fund for the redemption
or purchase of any of his or her shares, or making any of
his or her shares subject to redemption when they are not
otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of
any of the shareholder's preferred shares which had
theretofore been cumulative;
6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or
7. Reducing any stated preferential amount payable on any
of the shareholder's preferred shares upon voluntary or
involuntary liquidation.
(2) Notwithstanding subsection (1), the availability of appraisal
rights under paragraphs (1)(a), (b), (c), and (d) shall be limited in
accordance with the following provisions:
(a) Appraisal rights shall not be available for the holders of
shares of any class or series of shares which is:
1. Listed on the New York Stock Exchange or the American
Stock Exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc.; or
4
2. Not so listed or designated, but has at least 2,000
shareholders and the outstanding shares of such class or
series have a market value of at least $10 million,
exclusive of the value of such shares held by its
subsidiaries, senior executives, directors, and beneficial
shareholders owning more than 10 percent of such shares.
(b) The applicability of paragraph (a) shall be determined as of:
1. The record date fixed to determine the shareholders
entitled to receive notice of, and to vote at, the meeting
of shareholders to act upon the corporate action requiring
appraisal rights; or
2. If there will be no meeting of shareholders, the close
of business on the day on which the board of directors
adopts the resolution recommending such corporate action.
(c) Paragraph (a) shall not be applicable and appraisal rights
shall be available pursuant to subsection (1) for the holders of
any class or series of shares who are required by the terms of
the corporate action requiring appraisal rights to accept for
such shares anything other than cash or shares of any class or
any series of shares of any corporation, or any other proprietary
interest of any other entity, that satisfies the standards set
forth in paragraph (a) at the time the corporate action becomes
effective.
(d) Paragraph (a) shall not be applicable and appraisal rights
shall be available pursuant to subsection (1) for the holders of
any class or series of shares if:
1. Any of the shares or assets of the corporation are
being acquired or converted, whether by merger, share
exchange, or otherwise, pursuant to the corporate action by
a person, or by an affiliate of a person, who:
a. Is, or at any time in the 1-year period
immediately preceding approval by the board of
directors of the corporate action requiring appraisal
rights was, the beneficial owner of 20 percent or more
of the voting power of the corporation, excluding any
shares acquired pursuant to an offer for all shares
having voting power if such offer was made within 1
year prior to the corporate action requiring appraisal
rights for consideration of the same kind and of a
value equal to or less than that paid in connection
with the corporate action; or
b. Directly or indirectly has, or at any time in the
1-year period immediately preceding approval by the
board of directors of the corporation of the corporate
action requiring appraisal rights had, the power,
contractually or otherwise, to cause the appointment
or election of 25 percent or more of the directors to
the board of directors of the corporation; or
2. Any of the shares or assets of the corporation are
being acquired or converted, whether by merger, share
exchange, or otherwise, pursuant to such corporate action
by a person, or by an affiliate of a person, who is, or at
any time in the 1-year period immediately preceding
approval by the board of directors of the corporate action
requiring appraisal rights was, a senior executive or
director of the corporation or a senior executive of any
affiliate thereof, and that senior executive or director
will receive, as a result of the corporate action, a
financial benefit not generally available to other
shareholders as such, other than:
a. Employment, consulting, retirement, or similar
benefits established separately and not as part of or
in contemplation of the corporate action;
5
b. Employment, consulting, retirement, or similar
benefits established in contemplation of, or as part
of, the corporate action that are not more favorable
than those existing before the corporate action or, if
more favorable, that have been approved on behalf of
the corporation in the same manner as is provided in
s. 607.0832; or
c. In the case of a director of the corporation who
will, in the corporate action, become a director of
the acquiring entity in the corporate action or one of
its affiliates, rights and benefits as a director that
are provided on the same basis as those afforded by
the acquiring entity generally to other directors of
such entity or such affiliate.
(e) For the purposes of paragraph (d) only, the term "beneficial
owner" means any person who, directly or indirectly, through any
contract, arrangement, or understanding, other than a revocable
proxy, has or shares the power to vote, or to direct the voting
of, shares, provided that a member of a national securities
exchange shall not be deemed to be a beneficial owner of
securities held directly or indirectly by it on behalf of
another person solely because such member is the recordholder of
such securities if the member is precluded by the rules of such
exchange from voting without instruction on contested matters or
matters that may affect substantially the rights or privileges of
the holders of the securities to be voted. When two or more
persons agree to act together for the purpose of voting their
shares of the corporation, each member of the group formed
thereby shall be deemed to have acquired beneficial ownership, as
of the date of such agreement, of all voting shares of the
corporation beneficially owned by any member of the group.
(3) Notwithstanding any other provision of this section, the articles
of incorporation as originally filed or any amendment thereto may limit
or eliminate appraisal rights for any class or series of preferred
shares, but any such limitation or elimination contained in an amendment
to the articles of incorporation that limits or eliminates appraisal
rights for any of such shares that are outstanding immediately prior to
the effective date of such amendment or that the corporation is or may
be required to issue or sell thereafter pursuant to any conversion,
exchange, or other right existing immediately before the effective date
of such amendment shall not apply to any corporate action that becomes
effective within 1 year of that date if such action would otherwise
afford appraisal rights.
(4) A shareholder entitled to appraisal rights under this chapter may
not challenge a completed corporate action for which appraisal rights
are available unless such corporate action:
(a) Was not effectuated in accordance with the applicable
provisions of this section or the corporation's articles of
incorporation, bylaws, or board of directors' resolution
authorizing the corporate action; or
(b) Was procured as a result of fraud or material
misrepresentation.
History. - s. 119, ch. 89-154; s. 5, ch. 94-327; s. 31, ch. 97-102; s. 22,
ch. 2003-283; s. 1, ch. 2004-378.
607.1303 Assertion of rights by nominees and beneficial owners. -
(1) A record shareholder may assert appraisal rights as to fewer than
all the shares registered in the record shareholder's name but owned by
a beneficial shareholder only if the record shareholder objects with
respect to all shares of the class or series owned by the beneficial
shareholder and notifies the corporation in writing of the name and
address of each beneficial shareholder on whose behalf appraisal rights
are being asserted. The rights of a record shareholder who asserts
appraisal rights for only part of the shares held of record in the
record shareholder's name under this subsection shall be determined as
if the shares as to which the record shareholder objects and the record
shareholder's other shares were registered in the names of different
record shareholders.
6
(2) A beneficial shareholder may assert appraisal rights as to shares
of any class or series held on behalf of the shareholder only if such
shareholder:
(a) Submits to the corporation the record shareholder's written
consent to the assertion of such rights no later than the date
referred to in s. 607.1322(2)(b)2.
(b) Does so with respect to all shares of the class or series
that are beneficially owned by the beneficial shareholder.
History. - s. 23, ch. 2003-283.
607.1320 Notice of appraisal rights. -
(1) If proposed corporate action described in s. 607.1302(1) is to be
submitted to a vote at a shareholders' meeting, the meeting notice must
state that the corporation has concluded that shareholders are, are not,
or may be entitled to assert appraisal rights under this chapter. If the
corporation concludes that appraisal rights are or may be available, a
copy of ss. 607.1301-607.1333 must accompany the meeting notice sent to
those record shareholders entitled to exercise appraisal rights.
(2) In a merger pursuant to s. 607.1104, the parent corporation must
notify in writing all record shareholders of the subsidiary who are
entitled to assert appraisal rights that the corporate action became
effective. Such notice must be sent within 10 days after the corporate
action became effective and include the materials described in s.
607.1322.
(3) If the proposed corporate action described in s. 607.1302(1) is to
be approved other than by a shareholders' meeting, the notice referred
to in subsection (1) must be sent to all shareholders at the time that
consents are first solicited pursuant to s. 607.0704, whether or not
consents are solicited from all shareholders, and include the materials
described in s. 607.1322.
History. - s. 120, ch. 89-154; s. 35, ch. 93-281; s. 32, ch. 97-102; s. 24,
ch. 2003-283.
607.1321 Notice of intent to demand payment. -
(1) If proposed corporate action requiring appraisal rights under s.
607.1302 is submitted to a vote at a shareholders' meeting, or is
submitted to a shareholder pursuant to a consent vote under s. 607.0704,
a shareholder who wishes to assert appraisal rights with respect to any
class or series of shares:
(a) Must deliver to the corporation before the vote is taken, or
within 20 days after receiving the notice pursuant to s.
607.1320(3) if action is to be taken without a shareholder
meeting, written notice of the shareholder's intent to demand
payment if the proposed action is effectuated.
(b) Must not vote, or cause or permit to be voted, any shares of
such class or series in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection
(1) is not entitled to payment under this chapter.
History. - s. 25, ch. 2003-283; s. 7, ch. 2004-378.
607.1322 Appraisal notice and form. -
(1) If proposed corporate action requiring appraisal rights under s.
607.1302(1) becomes effective, the corporation must deliver a written
appraisal notice and form required by paragraph (2)(a) to all
shareholders who satisfied the requirements of s. 607.1321. In the case
of a merger under s. 607.1104,
7
the parent must deliver a written appraisal notice and form to all
record shareholders who may be entitled to assert appraisal rights.
(2) The appraisal notice must be sent no earlier than the date the
corporate action became effective and no later than 10 days after such
date and must:
(a) Supply a form that specifies the date that the corporate
action became effective and that provides for the shareholder to
state:
1. The shareholder's name and address.
2. The number, classes, and series of shares as to which
the shareholder asserts appraisal rights.
3. That the shareholder did not vote for the transaction.
4. Whether the shareholder accepts the corporation's offer
as stated in subparagraph (b)4.
5. If the offer is not accepted, the shareholder's
estimated fair value of the shares and a demand for payment
of the shareholder's estimated value plus interest.
(c) State:
1. Where the form must be sent and where certificates for
certificated shares must be deposited and the date by which
those certificates must be deposited, which date may not be
earlier than the date for receiving the required form under
subparagraph 2.
2. A date by which the corporation must receive the form,
which date may not be fewer than 40 nor more than 60 days
after the date the subsection (1) appraisal notice and form
are sent, and state that the shareholder shall have waived
the right to demand appraisal with respect to the shares
unless the form is received by the corporation by such
specified date.
3. The corporation's estimate of the fair value of the
shares.
4. An offer to each shareholder who is entitled to
appraisal rights to pay the corporation's estimate of fair
value set forth in subparagraph 3.
5. That, if requested in writing, the corporation will
provide to the shareholder so requesting, within 10 days
after the date specified in subparagraph 2., the number of
shareholders who return the forms by the specified date and
the total number of shares owned by them.
6. The date by which the notice to withdraw under s.
607.1323 must be received, which date must be within 20
days after the date specified in subparagraph 2.
(d) Be accompanied by:
1. Financial statements of the corporation that issued the
shares to be appraised, consisting of a balance sheet as of
the end of the fiscal year ending not more than 15 months
prior to the date of the corporation's appraisal notice, an
income statement for that year, a cash flow statement for
that year, and the latest available interim financial
statements, if any.
8
2. A copy of ss. 607.1301-607.1333.
History. - s. 26, ch. 2003-283.
607.1323 Perfection of rights; right to withdraw. -
(1) A shareholder who wishes to exercise appraisal rights must execute
and return the form received pursuant to s. 607.1322(1) and, in the case
of certificated shares, deposit the shareholder's certificates in
accordance with the terms of the notice by the date referred to in the
notice pursuant to s. 607.1322(2)(b)2. Once a shareholder deposits that
shareholder's certificates or, in the case of uncertificated shares,
returns the executed forms, that shareholder loses all rights as a
shareholder, unless the shareholder withdraws pursuant to subsection
(2).
(2) A shareholder who has complied with subsection (1) may nevertheless
decline to exercise appraisal rights and withdraw from the appraisal
process by so notifying the corporation in writing by the date set forth
in the appraisal notice pursuant to s. 607.1322(2)(b)6. A shareholder
who fails to so withdraw from the appraisal process may not thereafter
withdraw without the corporation's written consent.
(3) A shareholder who does not execute and return the form and, in the
case of certificated shares, deposit that shareholder's share
certificates if required, each by the date set forth in the notice
described in subsection (2), shall not be entitled to payment under this
chapter.
History. - s. 27, ch. 2003-283.
607.1324 Shareholder's acceptance of corporation's offer. -
(1) If the shareholder states on the form provided in s. 607.1322(1)
that the shareholder accepts the offer of the corporation to pay the
corporation's estimated fair value for the shares, the corporation shall
make such payment to the shareholder within 90 days after the
corporation's receipt of the form from the shareholder.
(2) Upon payment of the agreed value, the shareholder shall cease to
have any interest in the shares.
History. - s. 28, ch. 2003-283.
607.1326 Procedure if shareholder is dissatisfied with offer. -
(1) A shareholder who is dissatisfied with the corporation's offer as
set forth pursuant to s. 607.1322(2)(b)4. must notify the corporation on
the form provided pursuant to s. 607.1322(1) of that shareholder's
estimate of the fair value of the shares and demand payment of that
estimate plus interest.
(2) A shareholder who fails to notify the corporation in writing of
that shareholder's demand to be paid the shareholder's stated estimate
of the fair value plus interest under subsection (1) within the
timeframe set forth in s. 607.1322(2)(b)2. waives the right to demand
payment under this section and shall be entitled only to the payment
offered by the corporation pursuant to s. 607.1322(2)(b)4.
History. - s. 29, ch. 2003-283.
607.1330 Court action. -
(1) If a shareholder makes demand for payment under s. 607.1326 which
remains unsettled, the corporation shall commence a proceeding within 60
days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the 60-day period,
any shareholder who has made a demand pursuant to s. 607.1326 may
commence the proceeding in the name of the corporation.
9
(2) The proceeding shall be commenced in the appropriate court of the
county in which the corporation's principal office, or, if none, its
registered office, in this state is located. If the corporation is a
foreign corporation without a registered office in this state, the
proceeding shall be commenced in the county in this state in which the
principal office or registered office of the domestic corporation merged
with the foreign corporation was located at the time of the transaction.
(3) All shareholders, whether or not residents of this state, whose
demands remain unsettled shall be made parties to the proceeding as in
an action against their shares. The corporation shall serve a copy of
the initial pleading in such proceeding upon each shareholder party who
is a resident of this state in the manner provided by law for the
service of a summons and complaint and upon each nonresident shareholder
party by registered or certified mail or by publication as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) is plenary and exclusive. If it so elects, the
court may appoint one or more persons as appraisers to receive evidence
and recommend a decision on the question of fair value. The appraisers
shall have the powers described in the order appointing them or in any
amendment to the order. The shareholders demanding appraisal rights are
entitled to the same discovery rights as parties in other civil
proceedings. There shall be no right to a jury trial.
(5) Each shareholder made a party to the proceeding is entitled to
judgment for the amount of the fair value of such shareholder's shares,
plus interest, as found by the court.
(6) The corporation shall pay each such shareholder the amount found to
be due within 10 days after final determination of the proceedings. Upon
payment of the judgment, the shareholder shall cease to have any
interest in the shares.
History. - s. 2, ch. 2004-378.
607.1331 Court costs and counsel fees. -
(1) The court in an appraisal proceeding shall determine all costs of
the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court. The court shall assess the costs
against the corporation, except that the court may assess costs against
all or some of the shareholders demanding appraisal, in amounts the
court finds equitable, to the extent the court finds such shareholders
acted arbitrarily, vexatiously, or not in good faith with respect to the
rights provided by this chapter.
(2) The court in an appraisal proceeding may also assess the fees and
expenses of counsel and experts for the respective parties, in amounts
the court finds equitable:
(a) Against the corporation and in favor of any or all
shareholders demanding appraisal if the court finds the
corporation did not substantially comply with ss. 607.1320 and
607.1322; or
(b) Against either the corporation or a shareholder demanding
appraisal, in favor of any other party, if the court finds that
the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this chapter.
(3) If the court in an appraisal proceeding finds that the services of
counsel for any shareholder were of substantial benefit to other
shareholders similarly situated, and that the fees for those services
should not be assessed against the corporation, the court may award to
such counsel reasonable fees to be paid out of the amounts awarded the
shareholders who were benefited.
(4) To the extent the corporation fails to make a required payment
pursuant to s. 607.1324, the shareholder may sue directly for the amount
owed and, to the extent successful, shall be entitled to recover from
the corporation all costs and expenses of the suit, including counsel
fees.
10
History. - s. 30, ch. 2003-283; s. 98, ch. 2004-5.
607.1332 Disposition of acquired shares. - Shares acquired by a corporation
pursuant to payment of the agreed value thereof or pursuant to payment of the
judgment entered therefor, as provided in this chapter, may be held and
disposed of by such corporation as authorized but unissued shares of the
corporation, except that, in the case of a merger or share exchange, they may
be held and disposed of as the plan of merger or share exchange otherwise
provides. The shares of the surviving corporation into which the shares of
such shareholders demanding appraisal rights would have been converted had
they assented to the merger shall have the status of authorized but unissued
shares of the surviving corporation.
History. - s. 31, ch. 2003-283.
607.1333 Limitation on corporate payment. -
(1) No payment shall be made to a shareholder seeking appraisal rights
if, at the time of payment, the corporation is unable to meet the
distribution standards of s. 607.06401. In such event, the shareholder
shall, at the shareholder's option:
(a) Withdraw his or her notice of intent to assert appraisal
rights, which shall in such event be deemed withdrawn with the
consent of the corporation; or
(b) Retain his or her status as a claimant against the
corporation and, if it is liquidated, be subordinated to the
rights of creditors of the corporation, but have rights superior
to the shareholders not asserting appraisal rights, and if it is
not liquidated, retain his or her right to be paid for the
shares, which right the corporation shall be obliged to satisfy
when the restrictions of this section do not apply.
(2) The shareholder shall exercise the option under paragraph (1)(a) or
paragraph (b) by written notice filed with the corporation within 30
days after the corporation has given written notice that the payment for
shares cannot be made because of the restrictions of this section. If
the shareholder fails to exercise the option, the shareholder shall be
deemed to have withdrawn his or her notice of intent to assert appraisal
rights.
History. - s. 32, ch. 2003-283.
11
APPENDIX D
FAIRNESS OPINION OF SUNTRUST ROBINSON HUMPHREY
February 3, 2005
Board of Directors
First Alachua Banking Corporation
15000 N.W. 140th Street
Alachua, Florida 32615
Ladies and Gentlemen:
We understand that First Alachua Banking Corporation, a Florida
corporation (the "Company") is considering a transaction whereby the Company
will be merged (the "Proposed Transaction") with and into Capital City Bank
Group, Inc., a Florida corporation ("Capital City"). Pursuant to the terms
and conditions of the Agreement and Plan of Merger (the "Merger Agreement"),
to be dated as of the date hereof, by and between the Company and Capital
City, among other things, each issued and outstanding share (other than
certain shares specified in the Merger Agreement) of (i) Class A Common
Stock, par value $0.10 per share (the "Class A Common Stock"), of the Company
and (ii) Class B Common Stock, par value $0.10 per share (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Company Common
Stock"), of the Company, will be converted into the following:
(i) a multiple of a share of Capital City common stock, $0.01 per
share ("CCBG Common Stock"), equal to the quotient obtained by
dividing (x) one half of the Adjusted Purchase Price Per Share (as
defined below) by (y) $40.00; and
(ii) cash equal to one half of the Adjusted Purchase Price Per Share.
As defined in the Merger Agreement, the term "Adjusted Purchase Price
Per Share" means the quotient obtained by dividing (i) the Adjusted Purchase
Price by (ii) the number of shares of Company Common Stock outstanding
immediately prior to the effective time of the Proposed Transaction (other
than certain shares specified in the Merger Agreement). The term "Adjusted
Purchase Price" means $58,000,000 reduced by any adjustments as provided in
the Merger Agreement. For purposes of our opinion, we have assumed that the
number of shares of Class A Common Stock outstanding immediately prior to the
effective time of the Proposed Transaction will be 4,456, the number of
shares of Class B Common Stock outstanding immediately prior to the effective
time of the Proposed Transaction will be 5,730 and that the Adjusted Purchase
Price will equal $58,000,000 at the effective time of the Proposed
Transaction. Therefore, each share of Company Common Stock will be exchanged
for 71.176 shares of CCBG Common Stock and $2,847.04 in cash (collectively,
the "Merger Consideration"). Based on the last trading price of CCBG Common
Stock on February 3, 2005, the value of the shares of CCBG Common Stock to be
received in exchange for each share of Company Common Stock was $2,843.48;
therefore the total consideration per share for purposes of our opinion is
$5,690.53 and the total aggregate consideration is $57,963,750.
We have been requested by the Company to render our opinion to the Board
of Directors of the Company with respect to the fairness, from a financial
point of view, of the Merger Consideration to the holders of Company Common
Stock in the Proposed Transaction. Our opinion addresses the aggregate
consideration to be received by the holders of Company Common Stock as a
whole, without regard to size of holdings by individual shareholders, and we
are not opining on the particular situations of specific shareholders.
In arriving at our opinion, we: (1) reviewed the Merger Agreement; (2)
reviewed certain publicly available business and historical financial
information and other data relating to the business and financial prospects
of the Company and Capital City, including certain publicly available
consensus financial forecasts and estimates of Capital City that were
reviewed and discussed with the management of Capital City; (3) reviewed
internal financial and operating information with respect to the business,
operations and prospects of the Company furnished to us by the Company that
is not publicly available; (4) reviewed the reported prices and trading
activity of the CCBG Common Stock and compared those prices and activity with
other
Board of Directors
First Alachua Banking Corporation
February 3, 2005
Page 2
_______________________________________
publicly traded companies which we deemed relevant; (5) compared the
historical financial results and present financial condition of the Company
and Capital City and, for Capital City only, compared stock market data, with
those of publicly traded companies which we deemed relevant; (6) reviewed
certain pro forma effects of the Proposed Transaction on Capital City's
financial statements and potential benefits of the Proposed Transaction and
discussed these items with the management of the Company and Capital City;
and (7) compared the financial terms of the Proposed Transaction with the
publicly available financial terms of certain other transactions which we
deemed relevant. In addition, we have had discussions with the management of
the Company and Capital City concerning their respective businesses,
operations, assets, present condition and future prospects and undertook such
other studies, analyses and investigations, and considered such information,
as we deemed appropriate.
In connection with our review, with your consent, we have assumed and
relied upon, without independent verification, the accuracy and completeness
of all of the financial and other information discussed with or reviewed by
us in arriving at our opinion, and we have not assumed any responsibility or
liability therefor. With respect to the financial forecasts, estimates, pro
forma effects and estimates of synergies and other potential benefits of the
Proposed Transaction provided to or discussed with us, we have assumed, at
the direction of the management of the Company and without independent
verification or investigation, that they have been reasonably prepared on
bases reflecting the best currently available information, estimates and
judgments of the management of the Company and Capital City and are otherwise
reasonable. We have also assumed with your approval that the future
financial results referred to herein that were provided to us by the Company
and Capital City will be achieved, and the synergies and other potential
benefits of the Proposed Transaction will be realized, at the times and in
the amounts estimated by the management of the Company and Capital City. In
arriving at our opinion, we have not conducted a physical inspection of the
properties and facilities of the Company. We did not review individual
credit files nor did we make any independent evaluation or appraisal of any
of the assets or liabilities (including any contingent, derivative or off-
balance-sheet assets or liabilities) of the Company or Capital City or any of
their respective subsidiaries, and we were not furnished with any such
evaluation or appraisal. In addition, we are not an expert in the evaluation
of loan and lease portfolios for purposes of assessing the adequacy of the
allowances for losses with respect to such portfolios and, accordingly, we
have assumed that the Company's and Capital City's allowances for losses are
in the aggregate adequate to cover those losses.
We have assumed that the Proposed Transaction will be treated as a tax-
free reorganization for federal income tax purposes. We have also assumed
that all material governmental, regulatory or other consents and approvals
necessary for the consummation of the Proposed Transaction will be obtained
without any adverse effect on the Company or Capital City or on the expected
benefits of the Proposed Transaction.
Our opinion is necessarily based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter. Our opinion does not address the relative merits of the Proposed
Transaction as compared to other business strategies or transactions that
might be available to the Company or the Company's underlying business
decision to effect the Proposed Transaction. We have not been asked to, nor
do we, offer any opinion as to any terms or conditions of the Merger
Agreement or the form of the Proposed Transaction (other than, as described
below, the Merger Consideration). We express no opinion as to what the value
of CCBG Common Stock will be when issued pursuant to the Merger Agreement or
the prices at which it will trade or otherwise be transferable at any time.
In rendering this opinion, we have assumed, with your consent, that the
Merger Agreement does not differ in any respect from the draft we have
examined and that Capital City and the Company will comply in all material
respects with the terms of the Merger Agreement and that the Proposed
Transaction will be consummated in accordance with its terms without waiver,
modification or amendment of any material term, condition or agreement. It
should be understood that, although subsequent developments or circumstances
may affect this opinion, we do not have any obligation to update or revise
the opinion.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services, a portion of
which is contingent upon the consummation of the Proposed Transaction, and we
will receive a fee upon delivery of this opinion. In addition, the Company
has agreed to indemnify us for certain liabilities arising out of the
rendering of this opinion. In the ordinary course of our business, we and
our affiliates actively trade in the debt and equity securities of Capital
City for our own account and for the accounts of our
Board of Directors
First Alachua Banking Corporation
February 3, 2005
Page 3
_______________________________________
customers and, accordingly, may at any time hold a long or short position in
such securities. In addition, we and our affiliates (including SunTrust
Banks, Inc.) may have other financing and business relationships with the
Company and Capital City in the ordinary course of business.
Based upon and subject to the foregoing, and such other factors as we
deemed relevant, we are of the opinion as of the date hereof, that the Merger
Consideration is fair, from a financial point of view to the holders of
Company Common Stock.
This opinion is being rendered at the behest of the Board of Directors
and is for the benefit of the Board in its evaluation of the Proposed
Transaction, and does not constitute a recommendation as to how any
stockholder should act or vote with respect to any matters relating to the
Proposed Transaction. This opinion may not be disclosed, referred to, or
communicated (in whole or in part) to any third party for any purpose
whatsoever except with our prior written approval. This opinion may be
reproduced in full in any proxy statement/prospectus mailed to shareholders
of the Company but may not otherwise be disclosed publicly in any manner
without our prior written approval.
SUNTRUST CAPITAL MARKETS, INC.
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TABLE OF CONTENTS
Page
39
FTL 264323.5
39
FTL 264323.7A
Exhibit 1
FTL 265230.9